S-1/A

As filed with the Securities and Exchange Commission on November 10, 2011

Registration No. 333-176123

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________

Amendment No. 1 to

FORM S-1

REGISTRATION STATEMENT UNDER

THE SECURITIES ACT OF 1933

LIQUID SPINS, INC.

(Exact name of registrant as specified in its charter)

______________________________

Colorado	7380	27-0471921
(State or other jurisdiction of	(Primary Standard Industrial	(I.R.S. Employer
incorporation or organization)	Classification Code Number)	Identification No.)

5525 Erindale Drive, Suite 200, Colorado Springs, Colorado 80918

(800) 595-1641

(Address and telephone number of principal executive offices)

Herman C. DeBoard, III,

Chairman of the Board and Chief Executive Officer

Liquid Spins, Inc.

5525 Erindale Drive, Suite 200, Colorado Springs, Colorado 80918

(800) 595-1641

(Name, address and telephone number of agent for service)

With a copy to:

David J. Babiarz, Esq.

Dufford & Brown, P.C.

1700 Broadway, Suite 2100

Denver, Colorado 80290-2101

(303) 861-8013

Approximate date of commencement of proposed sale to public: As soon as practical after the effective date of this Registration Statement.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	x

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED November 10, 2011

PROSPECTUS

LIQUID SPINS, INC.

___________________

14,241,875 Shares

of Common Stock

Our shareholders identified in this prospectus under “SELLING SHAREHOLDERS” are offering 14,241,875 shares of our common stock.  All of these shares of common stock are being offered by the selling shareholders or their transferees, pledgees, donees or successors in interest. The selling shareholders will receive all of the proceeds from the sale of the shares of the common stock being offered by this prospectus.

The selling shareholders may sell the shares of common stock being offered by them from time to time at a fixed price of $0.50 per share until such time, if ever, our shares are quoted on the electronic bulletin board, which we refer to as the OTC Bulletin Board, maintained by the Financial Industry Regulatory Authority, which we refer to as FINRA,  or the interdealer quotation system known as OTC Markets following which the shares may be offered at prices prevailing in the market or at privately negotiated prices. The selling shareholders may sell these securities to or through one or more underwriters, broker-dealers or agents, or directly to purchasers on a continuous or delayed basis. The names of any underwriters or agents will be included in a post-effective amendment to the registration statement of which this prospectus is a part, as required.  For additional information on the methods of sale, you should refer to the section entitled “PLAN OF DISTRIBUTION” on page 35.

        There is presently no market for our common stock.

___________________

Investing in our common stock involves a high degree of risk and should only be purchased by those who can afford to lose their entire investment.  See the “RISK FACTORS” section beginning on page 5 of this prospectus.

__________________

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of our common stock or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is ___________, 2011

TABLE OF CONTENTS

	Page
Prospectus Summary	1
Risk Factors	5
Business	11
Use of Proceeds	17
Market for Common Stock and Related Stockholder Information	17
Determination of Offering Price	20
Management’s Discussion and Analysis of Financial Condition and Results of Operation	21
Management	27
Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters	31
Selling Shareholders	31
Plan of Distribution	35
Description of Capital Stock	36
Shares Eligible For Future Sale	37
Where You Can Find More Information	38
Legal Matters	38
Experts	38
Financial Statements	F-1
About This Prospectus	Back Cover

Additional Information

This prospectus contains summary descriptions of certain contracts, agreements or other documents affecting our business. These descriptions are not necessarily complete. For the complete text of these documents, you can refer to the exhibits filed with the registration statement of which this prospectus is a part. (See “WHERE YOU CAN FIND MORE INFORMATION”).

You should rely only on the information contained in this prospectus, or to which we have referred you. We have not authorized anyone to provide you with information other than as contained or referred to in this prospectus. This document may only be used where it is legal to sell these securities. The information in this document may only be accurate as of the date of this document.

Special Note Regarding Forward-Looking Statements

Please see the note under “RISK FACTORS”for a description of special factors potentially affecting forward-looking statements included in this prospectus.

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SUMMARY

The following summary highlights information contained elsewhere in this prospectus. It does not contain all of the information you should consider before investing in our stock.  You should read the entire prospectus carefully, including the sections entitled “RISK FACTORS” and “FINANCIAL STATEMENTS.”

As used in this prospectus, unless the context requires otherwise, the terms “Liquid Spins,” “we,” “our” or “us” refer to Liquid Spins, Inc.

Our Company

Liquid Spins, Inc. was incorporated under the laws of the State of Colorado on June 20, 2009 under the name “Malemark, Inc.” to develop and market a line of greeting cards under the Malemark trademark and logo.  Our original line of greeting cards was geared primarily toward male consumers and was distributed via our website and in a small number of retail locations.  However, our business has evolved substantially since our inception in 2009, and accordingly, on April 26, 2011, we changed our name to “Liquid Spins, Inc.”

While marketing our original greeting cards, we developed the concept of a “lyrical” greeting card, which incorporated lyrics from popular songs as part of the card message.  In conjunction with this concept, we utilized a quick response, or “QR,” code which enabled users to scan the code on their smart phones, preview the song and download it from our website.  These concepts then evolved into various prototype products, including greeting cards that distribute digital media (primarily music) via the Internet, and we began marketing these products and our technology under the “Liquid Spins” name.  However, as of the date of this prospectus, we remain a development stage company with very limited revenue to date.  For the year ended December 31, 2010, the period from inception to December 31, 2009 and the six months ended June 30, 2011, we have reported net losses of $1,486,487, $77,503 and $ 934,438, respectively.  As of December 31, 2010 and 2009 and June 30, 2011, we reported accumulated deficits of $1,563,990, $77,503 and $2,498,429, respectively.

In the course of developing our business plan, we fostered relationships with certain national retailers and participants in the recording and music industry.  Our relationships in the recording industry, which include record executives and performers, allowed us the opportunity to negotiate for and acquire the non-exclusive rights to a significant catalog of digital music.  Our relationships with retailers allowed us to market this catalog of music in a myriad of forms.  The culmination of these events resulted in the genesis of our current business plan.

We currently operate an online music store under the name “Liquid Spins.”  Our proprietary digital music platform allows consumers to sample and download music on computers and certain mobile devices.  We currently have license agreements with three major record labels providing a catalog of a wide range of music, and continue efforts to obtain additional licenses.  Our music store is marketed independently by us and through partnerships with certain participants in the music industry.  We also recently signed an agreement with a national distributor of prepaid and other stored-value products (gift cards) which we hope will create sales of our digital music through grocery, big box and other retail outlets.  Our business plan contemplates eventually partnering with major retailers to private, or “white,” label our store with these retail partners.  We hope to reduce the time-to-market for our prospective retail partners while reducing the complexity and cost of digital asset management and distribution.  However, this latter concept is in the exploratory phase, and there is no assurance that we will be successful in developing formal agreements with any of our prospective retail partners.

Our office is currently located at 5525 Erindale Drive, Suite 200, Colorado Springs, CO 80918 and our telephone number is (800) 595-1641.  We maintain two websites at www.liquidspins.com and www.malemark.com.  None of the information contained on our websites is part of this prospectus.

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Our Revenue Model

Under our existing business plan, we hope to generate revenue by selling music that we have licensed from record labels and collecting a wholesale licensing fee or royalty.  We also hope to provide white label services to prospective retail partners, thus broadening our potential sources of revenue.  We offer the songs at prices ranging from $0.99 to $1.29 each, and albums from $4.49 to $24.99, consistent with other on-line music stores.  Our major selling expense is the licensing fee we must pay to the record labels as owners of the music.  For the period from inception to June 30, 2011, we reported total revenue of $29,084, most of which was from sales of our paper greeting cards and a negligible amount was from music downloads.

We currently have executed music distribution agreements with two major record labels and one small independent label which allow us to market in excess of one million songs.  We believe we have secured the same pricing structure and margins as large competitors such as Apple’s iTunes and Amazon.com.  These distribution agreements require that we pay a portion of the revenue generated from sale of the music to the record company, in some cases offset by prepaid royalties.  As of June 30, 2011, we have invested approximately $337,500 in prepaid royalties, other fees and expenses to acquire our initial catalog of music.

In addition to the direct costs of acquiring our music inventory, we have spent significant sums developing the technology necessary to deliver this product.  Including general and administrative expenses, we have spent approximately $2,368,000 from the inception of our company to June 30, 2011.

Recent Financings

In July 2011, we completed a private placement of our common stock, selling 650,000 shares at a price of $0.40 per share for gross proceeds of $260,000.  We have used a portion of that amount to pay advance royalties related to our music catalog and for other operating expenses.  Prior to that, we conducted a private placement which extended from September 2010 until April 2011 and consisted of the sale of 4,668,750 shares at a price of $0.40 per share for gross proceeds of $1,867,500.  The proceeds from that offering have been used for expenses such as acquiring an inventory of paper greeting cards, creating prototype products, advance royalties on music, salaries, development expenses associated with our website and travel.

The Offering

Common stock outstanding before and after the offering	22,903,750 shares
Common stock offered by the selling shareholders	14,241,875 shares(1)
Use of proceeds	None

__________________

(1) Assumes that all of the common stock offered under this prospectus is sold, of which there is no assurance.

Risk Factors

 This offering involves as high degree of risk.  Our common stock should only be purchased by persons who can afford to lose their entire investment.  Risk factors relating to our company include:

·   We are a new business with a limited operating history and investors have no basis to evaluate our ability to operate profitably;

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·   We are dependent on achieving profitable operations and receipt of additional working capital to continue in business;

·   The rights to substantially all of the music that we offer are owned by third parties and subject to license agreements which may expire or be terminated in the future;

·   We currently have no agreement with any retail partner to distribute our digital music;

·   Our profit margins may be small due to significant competition and other factors and we do not believe that we will enjoy much flexibility is raising our prices above our competitors;

·   We may be required to pay one or more of the record companies with which we have signed distribution agreements a lump sum payment in 2012 if we fail to sell a required minimum number of songs;

·   If we are unsuccessful in managing our mobile music store service offerings, we may fail to meet expectations of our business plan and our results of operations could be harmed;

·   The requirement to secure access to our digital music catalog may require the expenditure of significant amounts of money or the development of new technology;

·   We may be liable for monetary damages to third parties for failure to maintain adequate security of the digital music;

·   Consumers may be reluctant to utilize our service due to concerns about identity theft or unauthorized credit card access;

·   Our business is substantially dependent on our chief executive officer and there is no assurance that we would be able to replace such individual should that become necessary;

·   Our officers and directors have very limited experience operating an online music store;

·   We face intense competition from other, well established businesses;

·   As a company with securities registered with the Securities and Exchange Commission, we will be subject to detailed reporting requirements, including the need to file and deliver audited financial statements and an assessment of our internal controls over financial reporting;

·   A majority of our directors are not be considered “independent” as would be the case if our common stock were listed on a national securities exchange;

·   There is no assurance that any trading market for our common stock will develop;

·   Trading in our common stock may be volatile as a result of not listing on a national securities exchange or having the participation of a registered broker or dealer;

·   We have the ability to issue significant amounts of common stock in the future without the approval of our shareholders; and

·   It is not anticipated that we will pay dividends on our common stock in the foreseeable future.

Prospective investors in our common stock should be aware of these and other risk factors discussed in this prospectus.

Summary Financial Data

The following tables present certain selected historical financial data about our company.  Historical financial information as of and for the year ended December 31, 2010 and the period from inception to December 31, 2009 has been derived from our financial statements, which have been audited by StarkSchenkein, LLP, our independent registered public accounting firm.  The financial information for the six months ended June 30, 2011 and 2010 is unaudited.  All amounts included in these tables and elsewhere in this prospectus are stated in United States dollars.  You should read the data set forth below in conjunction with the section entitled “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS,” our financial statements and related notes included elsewhere in this prospectus.

	Balance Sheet Data
	June 30,		December 31,
	2011		2010		2009
	(unaudited)
Cash	$	808,916	$	251,068	$	2,357
Total Current Assets		1,194,772		274,464		2,357
Total Assets		1,455,087		309,092		21,072
Total Liabilities		221,517		49,082		11,475
Shareholders’ Equity		1,233,570		260,010		9,597

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	Operating Data
	Six months ended June 30,						Year ended December 31,			Period from inception to December 31,
	2011			2010			2010			2009
	(unaudited)
Revenue	$	1,196		$	26,888		$	27,888		$	-
Costs of Sales		86,629			31,694			63,043			-
Other Income		1,184			-			(18,023	)		-
Production and Product  Development		355,643			99,713			256,703			50,931
General and  Administrative Expenses		469,815			78,781			1,433,309			26,572
Total costs and Expenses		850,189			207,630			1,433,309			77,503
Net (Loss)		(934,438	)		(212,436	)		(1,486,487	)		(77,503	)
Net (Loss) per Share	$	(0.04	)	$	(0.01	)	$	(0.09	)	$	(0.01	)

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RISK FACTORS

An investment in our securities involves a high degree of risk.  You should carefully consider the risks described below together with all of the other information included in this prospectus before making an investment decision.  If any of the following risks actually occurs, our business, financial condition or results of operation could materially suffer.  In that case, you may lose all or part of your investment.  

Risks Relating to Our Company

 Since we are a new business with essentially no operating history, investors have no basis to evaluate our ability to operate profitability.  We were incorporated in June 2009 and have limited revenue from operations since our inception.  Our activities to date have been limited to organizational efforts, raising capital, researching and developing our business plan, identifying consultants, and establishing relationships with certain retailers and music industry participants.  We face all of the risks commonly encountered by other new businesses, including the lack of an established operating history or a recognized brand reputation, need for additional capital and personnel, and competition.  There is no assurance that our business will be successful or that we can ever operate profitably.

 We are dependent on achieving profitable operations and receipt of additional working capital to fund continued development and implementation of our business plan, and our failure to obtain this capital may cause the partial or total loss of your investment.  Our company has extremely limited capitalization and is dependent upon achieving profitable operations and receipt of additional financing to continue operations.  As of June 30, 2011, we had working capital of $973,255, a net worth of $1,233,570 and an accumulated deficit of $2,498,429.  For the year ended December 31, 2010, the period from inception to December 31, 2009 and the six months ended June 30, 2011, we realized net losses of $1,486,487, $77,503 and $934,438, respectively.  Continued development of our business plan will require significant additional working capital.  The continued acquisition of an adequate catalog of digital music, refinement of a platform to deliver that content and pursuit of the remainder of our business plan will require substantial additional capital from investors, and we have no established source of obtaining that financing.  We may also require additional capital to pay our administrative expenses, including salaries, rent, and website development.  Adverse developments in our business or general economic conditions may require us to raise additional financing at prices or on terms that are disadvantageous to existing shareholders.  We may not be able to obtain additional capital at all and may be forced to curtail or cease our operations.

 Because we are a relatively new company with very limited assets, we are likely not a candidate for traditional commercial borrowing or debt financing.  Commercial lenders generally require a proven source of cash flow and sufficient assets to secure the loan.  As a result of our status as a newly formed entity with very limited revenue, we do not satisfy either of these criteria.  If we are unable to access a credit line or other form of commercial credit, we may be unable to grow our business.  We may also be forced to finance any accounts receivable that we may generate to free up capital.  If we finance our accounts receivable, it may reduce our cash flow.  As a result, we may have less cash flow and our operations may suffer.

 We do not own the digital content that we propose to offer to our customers, and there is no assurance that such content will be available to us on commercially reasonable terms or at all.  The digital music content that we offer is owned by independent third parties and provided to us under non-exclusive license arrangements.  As of the date of this prospectus, we have executed agreements with three record labels to obtain the rights to their portfolios of digital content.  However, our existing agreements with EMI Music, Warner Music Inc. and RED Distribution, LLC are for a limited period of time, and we expect similar arrangements with other potential providers.  The agreements can be terminated if we fail to honor our obligations, including calculation and payment of licensing fees, and the record companies can suspend or terminate our right to certain songs at any time.  Even if we are successful in negotiating agreements with other labels, there is no assurance we will retain access to their content for more than a limited period of time.  Future agreements, if available, may require us to pay additional fees to obtain or retain access to the content.  Such additional fees may erode our potential profit.  If we are unable to obtain and maintain access to this digital content, our business plan may be unsuccessful and the value of your investment may decline.  

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 Our marketing efforts are limited and we do not have any agreements to partner with retailers to distribute our digital music.  Our plan of operation is predicated on appealing to a large number of customers, since our revenue and profit margin per-song are limited.  To that end, we are negotiating with several prospective retail partners that are interested in our digital music platform.  However, we have not secured an agreement with any of these prospects, and there is no assurance that we will obtain such agreements in the future.  Since our existing marketing efforts are very limited at present, if we are unable to secure an agreement with a major retail partner in the future, our revenue and results of operations will suffer.

 Due to intense competition in the music download industry, we will not enjoy much flexibility in the prices we can charge for our music.  While we expect our business to operate on small profit margins, the large number of competitors in the industry limits the prices that we can charge for our products.  As between the same songs or albums, we believe that music is a fungible commodity and that consumers will not be willing to pay more for the same song or album.  For that reason, we are limited on how much we can raise prices in an effort to generate revenue for our company.  This fact may adversely affect our revenue and profitability, if any.

 We may not have full control and ability to direct the operations we may conduct with any retail partner.  A prospective retail partner may use its size and the prospect of significant business for our company to impose terms and conditions on us which are disadvantageous to our company.  Since we are a relatively new business with very limited revenue, we may be dependent on an arrangement with one or more of these retail partners to sustain operations.  The potential disparity in bargaining power between a prospective partner and our company may result in an arrangement which is not as favorable as we contemplate.

 One or more of our existing music distribution agreements requires payment of a significant advance royalty.  The provisions of one or more of our existing music distribution agreements require payment of a minimum royalty, part of which is payable at inception of the agreement and part of which is payable at the conclusion of the initial term, if we have not sold sufficient songs to satisfy the minimum royalty.  Under the terms of our existing distribution agreements, we would be obligated to pay $150,000 in 2012 if sales do not meet a minimum threshold, in addition to the $337,500 that we have already paid under those agreements.  In the event we are required to pay the balance of this minimum royalty at the conclusion of these agreements, such payment may represent a significant portion of our then-existing working capital, and would deplete funds which would otherwise be available for marketing and other potentially-revenue generating purposes.  Any such fee may adversely affect our results of operation.

 If we are unsuccessful in managing our mobile music store service offerings, we may fail to meet expectations of our business plan and our results of operations could be harmed.  We believe that the future growth in digital music store services depends significantly upon the growth of the mobile market for digital content services, including music and later, video and other digital content.  We have significantly invested in creating a “mobile music platform” that allows smart phone users to decipher special codes to obtain our digital media content.  There are a number of technological and practical challenges that could impact the adoption rate of mobile platforms as an acceptable method of digital music purchase, including the rate of adoption of compatible mobile handsets, availability of high speed mobile data networks, adoption by consumers of mobile data plans, any pricing differential (both wholesale and retail) between content purchased over-the-air to a mobile device and purchased by other means, development of content and digital rights management standards and technologies acceptable to content licensors, and the impact on the economics of the mobile music business of certain issued patents.  Acceptance of our music store services is likely to also depend on significant growth in adoption of internet capable portable music devices.  If we are unsuccessful in meeting the challenges and complexities of mobile music distribution or are unsuccessful in securing additional partners for our services, our results of operations could be harmed.

 Our failure to accurately calculate and pay royalties to the owners of digital content may result in our losing access to such content or the imposition of financial penalties.  The licensing agreements with our existing music providers require that we calculate and pay the royalties on an ongoing basis, and confirm the calculation of these royalties to the owners.  If we do not accurately calculate these royalties, the providers may terminate the agreement or impose financial penalties on our company.  Either event would adversely affect our operations.

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 We may be liable for monetary damages to third parties for music, software, and other content that we encode, distribute, archive or distribute to our customers. We may be liable or alleged to be liable to third parties, such as the recorded music companies, music publishers, recording artists and trade unions, for the content that we distribute, archive or make available to our customers as samples, streams, downloads or otherwise:

·   If the use of the content is not properly licensed by the content owners or their representatives;

·   If our customers violate the intellectual property rights of others by providing content to unauthorized third parties;

·   If the manner of delivery of content is alleged to violate terms of use of third party delivery systems, such as peer-to-peer networks; or

·   If content that we handle is deemed obscene, indecent, or defamatory.

 Any alleged damage could harm our business by damaging our reputation, requiring us to incur legal costs in defense, exposing us to awards of damages and costs and diverting management’s attention.

 The requirement to protect access to digital content and to ensure against any resulting breaches of security may require the expenditure of significant amounts of money or the development of additional technology.  Online and mobile commerce and communications depend on the ability to transmit confidential information and licensed intellectual property securely over private and public networks.  Any compromise of our ability to transmit such information and data securely or reliably, and any costs associated with preventing or eliminating such problems, could harm our business.  Online transmissions are subject to a number of security and stability risks, including:

·   our encryption and authentication technology, and access and security procedures, may be compromised, breached or otherwise insufficient to insure the security of customer information or our music content;

·   we could experience unauthorized access, computer viruses, system interference or destruction and other disruptive problems, whether intentional or accidental, that may inhibit or prevent access to our website or the use of our services;

·   someone could circumvent our security measures and misappropriate our intellectual property, interrupt our operations, or jeopardize our licensing arrangements, which are contingent on our sustaining appropriate security protections;

·   our computer system could fail and lead to service interruptions; or

·   our network may be affected by a natural disaster, terrorist attack or other catastrophic events.

The occurrence of any of these or similar events could damage our business, adversely affect our ability to distribute products and collect revenue, threaten the intellectual property of our vendors and expose us to litigation or liability.  We may be required to expend significant capital or other resources to protect against the threat of security breaches, hacker attacks or system malfunction in order to alleviate problems caused by such breaches, attacks or failures.  In addition, one or more of our music distribution agreements requires that we acquire and maintain Internet media liability, network security liability or other suitable insurance with significant limits to cover errors and omissions in connection with our technology that may lead to breaches of security or other similar losses to the distributors.  There is no assurance that we will be able to acquire such insurance or, if so, on terms which are commercially reasonable.  We are also required to indemnify the record company from liability arising from breaches in security of our technology.  The cost of the insurance and any losses that we are required to pay would also affect our result of operation and financial condition.

 Our management and consultants have no experience in operating an on-line music store, and accordingly, our business may suffer.  Only one of our officers has extensive experience in the music industry, and none of our employees have managed, operated or been employed by businesses that distribute digital media.  They therefore have limited experience obtaining the rights to digital catalogs of songs and otherwise building a platform for distribution.  Our management will be forced to learn the industry, including the strategies for securing rights to the digital media content and formulating a strategy for distribution to consumers.  For these reasons, our business may not be successful.  We have hired several personnel who have experience in the music recording industry and website design; however, there is no assurance that our business plan will be successful.

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 The reluctance of consumers to utilize our service due to security concerns may limit our revenue.  We contract with a third party merchant credit card vendor to facilitate the purchase functionality in our website and facilitate payment from customers.  This service, similar to other merchant credit card services, is subject to breaches of security from, among other sources, hackers and technological problems.  Customer concerns regarding possible identity theft as a result of breaches in security may limit consumer confidence in using our service.  This reluctance, in turn, may limit the revenue which we might otherwise expect from music downloads.  In addition to the potential effect on our revenue, any breach of security may expose us to liability and adversely affect our financial condition.

 Our business is substantially dependent on our chief executive officer and the loss of his service would adversely affect our business.  Herman DeBoard, III is our Chief Executive Officer and is primarily responsible for overseeing our business, developing our business plan and creating the strategic vision of our company.  He is critical to the perceived success of our business.  The loss of service of Mr. DeBoard would adversely affect our business.  If he were to leave our business for any reason, there is no assurance we would be able to replace him, or if so, on terms that were acceptable to our company.  We have no key man life insurance on Mr. DeBoard.

 We face intense competition in the digital media distribution industry from several key players and have limited financial resources and personnel with which to compete.  There are numerous nationally and internationally-known companies which are firmly established as distributors of digital media content, including Apple’s iTunes store and Amazon.com.  Industry source Recording Industry Association of America (“RIAA”) estimates that there are over 400 entities offering music download services.  These competitors include both established companies and new entrants with different market approaches, such as subscription service models.  Some of these companies have established brands and may be affiliated with products.  We are an insignificant participant in the digital media distribution industry due to our brief operating history and limited financial and personnel resources.  We may be unable to attract the necessary investment capital to fully develop our digital media distribution platform and expand our retail offerings.

 We will be required to evaluate our internal controls under Section 404 of the Sarbanes-Oxley Act of 2002 in the future and any adverse results from such evaluation could result in a loss of investor confidence in our financial reports and have a material adverse effect on the price of our common stock. Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we will likely be required to furnish a report by our management on internal controls for the fiscal year ending December 31, 2012.  Such a report must contain, among other matters, an assessment of the effectiveness of our internal controls over financial reporting, including a statement as to whether or not our internal controls are effective. This assessment must include disclosure of any material weaknesses in our internal controls over financial reporting identified by our management.  We are still constructing the system, processing documentation and performing the evaluations needed to comply with Section 404, which is both costly and challenging.  We may not be able to complete our evaluation, testing and any required remediation in a timely fashion. If we are unable to assert that our internal controls over financial reporting are effective, or if we disclose significant deficiencies or material weaknesses in our internal controls, investors could lose confidence in the accuracy and completeness of our financial reports, which would have a material adverse effect on our stock price.

 Because we do not have an audit or compensation committee, shareholders must rely on our Board of Directors to perform the functions typically delegated to these committees, and certain members of our Board are not independent.  We do not presently maintain an audit or compensation committee. These functions are performed by our Board of Directors as a whole.  Since two of our current Board members are also part of our management team, there is a potential conflict where these individuals participate in discussions concerning management compensation and audit issues that may affect management decisions.  This lack of independence may adversely affect our corporate governance and the operation of our business.

 Colorado law and our Articles of Incorporation may protect our directors from certain types of lawsuits at the expense of the shareholders.  The laws of the State of Colorado provide that directors of a corporation shall not be liable to the corporation or its shareholders for monetary damages for all but limited types of conduct.  Our Articles of Incorporation permit us to indemnify our directors and officers against all damages incurred in connection with our business to the fullest extent provided or allowed by law.  The exculpation provisions may have the effect of preventing shareholders from recovering damages against our directors caused by their negligence, poor judgment or other circumstances.

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Risks Related to the Offering and Our Common Stock

 The initial price of our common stock in this offering has been arbitrarily determined and bears no necessary relationship to our lack of earnings, the book value of our common stock or any other traditional criteria of value.  The initial offering price of our common stock has been determined by negotiations between representatives of our management and certain selling shareholders and is based in part on the recent sales price of our common stock.  However, since no underwriter has been involved in the offering of our common stock in the past and no underwriter is involved in this offering, the price has not been negotiated at arm’s length as might otherwise be the case.  Purchasers of our common stock in this offering have no assurance that they will be able to sell the common stock for a profit, or at all.

 Since no broker or dealer has committed to create or maintain a market in our stock, there is no assurance that our stock will be quoted in the OTC Bulletin Board or OTC Markets, and purchasers of our common stock may have difficulty selling their shares, should they desire to do so.  It is our intention to seek one or more broker-dealers to apply for quotation of our common stock on the OTC Bulletin Board or OTC Markets following the date of this prospectus. However, we have no agreement with any broker-dealer at this time, and there is no assurance that we will be successful in finding one in the future. In addition, we believe that our stock will be characterized as a “micro-cap” security and therefore subject to increased scrutiny by FINRA.  A micro-cap security is generally a low priced security issued by a small company, or the stock of a company with low capitalization. If we are unable to obtain quotation of our common stock on the OTC Bulletin Board or OTC Markets, trading in our stock will be limited, and purchasers of our common stock may have difficulty selling their shares, should they desire to do so.

 Even if a trading market for our common stock develops, since we do not have an underwriter for our stock, there may be inadequate support for our stock in the after-market and you may not be able to sell your stock for a profit.  We have not retained an underwriter to sell our common stock, as is customary with many companies “going public” for the first time.  An underwriter, in addition to marketing the stock in connection with the public offering, generally provides after-market support for the stock following the offering.  That after-market support may help to stabilize the price of the stock at a price different than might otherwise result in the absence of that support.  Since we have not retained an underwriter, the price of our stock may not remain at the level that is established when the trading market begins.  As a result, investors in our stock may have difficulty selling their stock at a profit or at all.

 Our stock price may be volatile and as a result you could lose all or part of your investment. In addition to volatility associated with over-the-counter securities in general, the value of your investment could decline due to the impact of any of the following factors upon the market price of our common stock:

• failure to successfully implement our business plan;

• failure to meet our revenue or profit goals or operating budget;

• decline in demand for our common stock;

• sales of additional amounts of common stock;

• downward revisions in securities analysts’ estimates or changes in general market conditions;

• technological innovations by competitors or in competing technologies;

• investor perception of our industry or our prospects; and

• general economic trends.

In addition, stock markets have experienced extreme price and volume fluctuations and the market prices of securities have been highly volatile. These fluctuations are often unrelated to operating performance and may adversely affect the market price of our common stock. As a result, investors may be unable to resell their shares at a fair price.

  A small number of existing shareholders own a significant amount of our common stock, which could limit your ability to influence the outcome of any shareholder vote. Our executive officers and directors beneficially own approximately 52.3% of our common stock as of the date of this prospectus. Under our Articles of Incorporation and Colorado law, the vote of a majority of the shares outstanding is generally required to approve most shareholder action.  As a result, these individuals will be able to control the outcome of shareholder votes for the foreseeable future, including votes concerning the election of directors, amendments to our Articles of Incorporation or proposed mergers or other significant corporate transactions. We have no existing agreements or plans for mergers or other corporate transactions that would require a shareholder vote at this time. However, shareholders should be aware that they may have limited ability to influence the outcome of any vote in the future. (See “SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT”).

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 The sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.  It is likely that market sales of large amounts of common stock (or the potential for those sales even if they do not actually occur) could cause the market price of our common stock to decline, if a trading market is ever established, which may make it difficult to sell our common stock in the future at a time and price which we deem reasonable or appropriate and may also cause you to lose all or a part of your investment. (See “SHARES ELIGIBLE FOR FUTURE SALE”).

 Since our common stock is not presently listed on a national securities exchange, trading in our shares will likely be subject to rules governing “penny stocks,” which will impair trading activity in our shares.  Our common stock may be subject to rules adopted by the SEC regulating broker-dealer practices in connection with transactions in penny stocks.  Those disclosure rules applicable to penny stocks require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized disclosure document required by the SEC.  These rules also require a cooling off period before the transaction can be finalized.  These requirements may have the effect of reducing the level of trading activity in any secondary market for our common stock.  Many brokers may be unwilling to engage in transactions in our common stock because of the added disclosure requirements, thereby making it more difficult for stockholders to dispose of their shares. (See “MARKET INFORMATION”).

 Issuance of our stock in the future could dilute existing shareholders and adversely affect the market price of our common stock, if a public trading market develops.  We have the authority to issue up to 55,000,000 shares of stock, including 50,000,000 shares of common stock and 5,000,000 shares of preferred stock, and to issue options and warrants to purchase shares of our stock without shareholder approval.  Because our common stock is not currently listed on an exchange, we are not required to solicit shareholder approval prior to issuing large blocks of our stock.  These future issuances could be at values substantially below the price paid for our common stock by investors in this offering.  In addition, we could issue large blocks of our stock to fend off unwanted tender offers or hostile takeovers without further shareholder approval.  Because there is presently no trading market for our common stock, the issuance of our stock may have a disproportionately large impact on its price compared to larger companies.

 We have never paid dividends on our common stock and we do not anticipate paying any in the foreseeable future. We have not paid dividends on our common stock to date, and we may not be in a position to pay dividends for the foreseeable future. Our ability to pay dividends will depend on our ability to successfully develop our business plan and generate revenue from operations. Further, our initial earnings, if any, will likely be retained to finance our operations. Any future dividends will depend upon our earnings, our then-existing financial requirements and other factors, and will be at the discretion of our Board of Directors. (See “MARKET INFORMATION”).

Forward-Looking Statements

 This prospectus contains statements that plan for or anticipate the future. Forward-looking statements include statements about our future business plans and strategies, statements about future revenue, profit and the receipt of working capital, and most other statements that are not historical in nature.  In this prospectus, forward-looking statements are often identified by the words “anticipate,” “plan,” “intend,” “believe,” “expect,” “estimate,” and the like. Because forward-looking statements involve future risks and uncertainties, there are factors that could cause actual results to differ materially from those expressed or implied. Prospective investors are urged not to put undue reliance on these forward-looking statements.

 A few of the uncertainties that could affect the accuracy of forward-looking statements, besides the specific Risk Factors identified above, include:

      • Changes in the general economy affecting the disposable income of the public;

      • Technological changes in the entertainment industry;

      • Our costs;

      • The level of demand for our products; and

      • Changes in our business strategy.

 The Private Securities Litigation Reform Act of 1995, which provides a “safe harbor” for similar statements by existing public companies, does not apply to our offering, as we have not been previously registered with the SEC.

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BUSINESS

Our History

 Liquid Spins, Inc. was incorporated under the laws of the State of Colorado on June 20, 2009 under the name “Malemark, Inc.” to develop and market a line of greeting cards under the Malemark trademark and logo.  Our original line of greeting cards was geared primarily toward male consumers and was distributed via our website and in a small number of retail locations.  The thrust of the Malemark brand was ‘For Men Who Make Mistakes.’  We created more than 1,100unique cards divided among nine character lines.  We designed 14 unique greeting card displays that we offered for sale to retailers.  We also own multiple domain names including “malemark.com” and have paid for the development, implementation, testing and marketing of multiple aspects of a large website capable of supporting online sales of our greeting cards.

 In the course of our initial development, we were able to secure vendor agreements for our cards with:

·   Fry’s Electronics. Fry’s has 34 locations nationwide and a customer base that is 83% male.  Stores average approximately 2,000 customers per day (68,000 total daily foot traffic).

·   Various flower and gift shops and golf courses.

 Our vendor agreement with Fry’s was terminated effective August 12, 2011.

 In addition, we applied for and were awarded an official license by the Collegiate Licensing Company (CLC).  Colorado State University Bookstore has sold three lines of our cards in its bookstore to students and visitors.  

 While marketing our original greeting cards, we developed the concept of a “lyrical” greeting card, which incorporated lyrics from popular songs as part of the card message.  In conjunction with this concept, we utilized a quick response, or “QR,” code which enabled recipients to scan the code with their smart phones, preview the song and download it from our website.  These concepts then evolved into various prototype products, including greeting cards that distribute digital media (primarily music) via the Internet, and we began marketing these products and our technology under the “Liquid Spins” name.

 In the course of developing our business plan, we fostered relationships with certain national retailers and participants in the recording and music industry.  Our relationships in the recording industry, which include record executives and performers, allowed us the opportunity to negotiate for and acquire the non-exclusive rights to a significant catalog of digital music.  Our relationships with retailers allowed us to market this catalog of music, originally as part of our lyrical cards and later in a myriad of forms.  In conjunction with the new focus of our business plan, we changed our name to “Liquid Spins, Inc.” on April 26, 2011.   Also in conjunction with the new focus of our business plan, we essentially ceased active marketing of our paper greeting cards but continue to offer such products on our website.  As of the date of this prospectus, revenue from the sale of our paper greeting cards was extremely limited.

 In July 2011, we completed a private placement of our common stock, selling 650,000 shares at a price of $0.40 per share for gross proceeds of $260,000.  We have used a portion of that amount to pay advance royalties related to our music catalog and other operating expenses.  Prior to that, we completed a private placement which extended from September 2010 to April 2011 and consisted of 4,668,750 shares at a price of $0.40 per share for gross proceeds of $1,867,500.  The proceeds from that offering have been used for expenses such as acquiring an inventory of paper greeting cards, creating prototype products, advance royalties on music, salaries, development expenses associated with our website and travel.

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Our Digital Music Store

 We currently operate an online music store under the name “Liquid Spins.”  Our proprietary digital music platform allows consumers to sample and download music on computers and certain mobile devices.  We currently have license agreements with two major and one small, independent record labels providing a catalog of a wide range of music, and continue efforts to obtain additional licenses.  Our music store is marketed independently by us and through partnerships with certain participants in the music industry.  Our business plan contemplates eventually partnering with major retailers to private, or “white,” label our store with these retail partners.  We hope to reduce the time-to-market for our prospective retail partners while reducing the complexity and cost of digital asset management and distribution.  However, this latter concept is in the exploratory phase, and there is no assurance that we will be successful in developing formal agreements with any of our prospective retail partners.

 The use of the Internet and wireless networks as mediums for media distribution has continued to evolve and grow in recent years.  Traditional media and entertainment companies, such as major record labels, have in recent years faced significant challenges associated with digital distribution of music.  Such challenges have eroded revenues from traditional sources of music, such as CDs.  To replace that lost revenue, record companies now license the rights to some of their content for certain forms of digital distribution over the Internet and wireless networks.  Consumers enjoy this content by means of many different types of service and offerings, including purchased downloads, paid subscriptions, prepaid credit offerings and streaming radio.  Consumers acquire and consume content using personal computers, mobile devices and other digital devices.

 Our primary emphasis at present is developing a platform that can be used as a means to distribute digital media content to consumers and acquiring an adequate inventory of music to offer consumers.  We have completed the initial development of the platform using digital music files in MP3 format and hope to expand our offerings to include digital video in the future.  The digital music file can be played on any device capable of playing an MP3 file.

 We have constructed the Liquid Spins website and platform to enable consumers to sample and purchase digital music content.  The website is maintained in the cloud on server space leased from Amazon Web Services.  In order to offer the digital music content on the website, we have licensed the content from various record labels and are required to pay a continuing royalty to the record label each time a consumer purchases a digital song through our website.  The continuing royalty consists of a percentage of the retail sales price of the song.  We contract with a third party merchant credit card vendor to power the purchase functionality on the website and pay over the revenue generated from sales of downloads of the digital music files.  We continue to invest in our platform.

 In conjunction with our website and platform, we have developed several products using technology known as a “quick response code” or “QR code,” which is two-dimensional bar code.  Similar to a traditional bar code, one must use a “reader” to translate the QR code.  Companies across all industries are using QR codes as part of their marketing and communication strategies.  Various smart phone applications contain software that enables the smart phone to scan the code using its camera feature and decipher the QR code, and these applications are currently the primary method of decoding the QR codes.  Once deciphered, the QR code often contains a URL link to a particular website or other information such as contact information or a map location.  Smart phones will typically display the website or other information from the QR code, depending on the smart phone’s capability.

 The Liquid Spins prototype products have utilized the QR code to provide a URL link to our website where the digital media file can be accessed.  We refer to the URL link to our website embedded in the QR code as a Liquidclix™.  Once a consumer activates the Liquidclix™ by using his or her smart phone application to decipher the QR code and link to the website, the consumer is able to listen for free to a sample of a particular song or purchase a download of the digital file containing the entire song.

 We have licensed our QR technology to record labels in an effort to increase distribution of our music products.  In turn, these record labels utilized the QR code in marketing initiatives, such as concert programs, sponsorships, fan clubs, artist websites, merchandising and touring promotions in an effort to increase interest in their content.  These codes allow recipients to immediately access our website and download samples or complete songs offered by these record companies.  While these licensing arrangements do not produce revenue directly to us, they are designed to indirectly increase revenue by driving additional traffic to our website, the results of which we expect to manifest in the future.

Our Music Catalog

 Our existing music catalog includes a vast array of music, the digital rights to which are owned by two major record labels, EMI and Warner Music Inc., and one small, independent label, RED Distribution, LLC.  We have the right to distribute this music digitally, either directly or through approved partners.  The catalog includes music from diverse musical genres such as rock, pop, country, religious, rap and blues.  Noted artists include Frank Sinatra, Katy Perry, Coldplay, Pink Floyd, the Rolling Stones, the Beach Boys, John Lennon/Paul McCartney, Madonna, Van Helen, Prince, Led Zeppelin, Ray Charles, the Eagles and Fleetwood Mac.  The catalog currently consists of approximately one million songs.

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 We are pursuing additional distribution agreements with other companies in an effort to expand our digital content.

Our Agreement with Tim Rushlow

 In an effort to increase our visibility and provide additional revenue, we have entered into two agreements with singer, composer and performing artist Timothy Rushlow.  Mr. Rushlow is a recording artist in Nashville and the former lead singer for the band Little Texas.  That band sold in excess of 11 million records during its existence, which ceased in 1998.  Mr. Rushlow continues to enjoy a successful solo career.

  On December 1, 2010, we executed a recording agreement with Mr. Rushlow pursuant to which he agreed to provide a minimum of 5 master recordings to us.  The initial 5 masters have been completed as of March 11, 2011.  We have agreed to pay the recording costs for each master that he provides under the terms of the agreement.  Pursuant to that arrangement, we have advanced to Mr. Rushlow the sum of $30,000 as an advance toward the costs of the initial 5 masters. This advance of $15,000 was paid on December 09, 2010 and the remainder on March 21,2011. We do not expect additional costs associated with the production of this 5 master. In exchange, Mr. Rushlow is obligated to provide us with substantiating invoices, receipts, vouchers and similar satisfactory evidence of such recording costs and account to us for any difference.  We are entitled to recoup the advance from the proceeds of any revenue under the recording agreement.  Also under the terms of the agreement, we have the exclusive right to negotiate with him to enter into a longer-term recording contract for additional songs.  In the event that we exercise that option, we are obligated to negotiate the material terms and conditions of the arrangement in good faith.  The contract provides that the Company must exercise its option within 60 days of the expiration of the initial term on December 31, 2011. We anticipate the masters may be recorded and sold in the form of an extended play.  This music is within the Contemporary Christian Music (“CCM”) genre and has cross-over Adult Contemporary (“AC”) potential.

 Under the terms of the recording agreement, Liquid Spins owns all of the masters, the performances embodied therein and the worldwide copyright in perpetuity.  Such agreement provides us with the exclusive right of a copyright owner, including without limitation, the right to reproduce in copies and embody the masters in phonograph records, including promotional compact disc and compilations.  However, we must obtain the consent of Mr. Rushlow to commercially exploit the masters, which consent shall not be unreasonably withheld or delayed.

 We intend to offer the music embodied in such masters on our website as part of our digital music catalog.

 On March 1, 2011, we executed an exclusive songwriting agreement with Mr. Rushlow.  Pursuant to the terms of that agreement, Mr. Rushlow assigned to us his entire publisher’s interest in all musical compositions and related works and materials written, composed, arranged, adapted or acquired in whole or in part by Mr. Rushlow, together with all copyrights therein and all renewals or extensions thereof throughout the world.  Mr. Rushlow also agreed to render his service exclusively to us as an author, composer, arranger and adapter of musical compositions during the period of the agreement.  During each year of the term of the agreement, Mr. Rushlow agreed to compose and deliver to us not less than 12 new and original musical compositions of marketable commercial quality at the rate of not less than 1 such composition per month.  The initial term of the songwriting agreement is 12 months, following which it will be automatically renewed for at least two subsequent terms of 12 months each unless either party notifies the other prior to expiration that they do not wish to extend the agreement.

 We intend to review and, where appropriate, market any compositions as part of our music catalog.  In exchange, we have agreed to advance to Mr. Rushlow the sum of $2,000 per month for the first 12 months of the agreement and to pay Mr. Rushlow 50% of any gross receipts generated by sale of the music after we recoup any advances.  The option payment for the subsequent periods is subject to further negotiation.

Our Potential Retail Partners

 During discussions with various retailers regarding the distribution of our Liquid Spins products, we determined there was a market opportunity to provide companies with a platform to create a music store.  Using the Liquid Spins website as the underlying platform that already has the capability of hosting digital content and offering it for sale to customers provides us with an opportunity to partner with various companies to offer the content through a website co-branded with a company that has more name recognition than us.  This could significantly increase the distribution of our music and our revenue.

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 In an effort to attract these retail partners, we may build additional websites to the specification of the customer that includes the customer’s name and branding which are “powered by” Liquid Spins.  An example of this is creating an online music store for a large national retailer that does not currently offer its customers the ability to purchase digital media content on the Internet.  The retailer would determine which digital media content would be offered on its website and we would license to the retailer the QR codes that contain the link to the location of the file on the website.  The retailer could then replicate the QR code on its own products and communications with its customers.  The retailer would receive a percentage of the revenue generated from the purchase of a download of the digital music file.

 We hope to provide our customers with a highly scaleable consumer-facing digital music commerce and delivery solution that includes:

·   Hosting and managing digital music content and delivering such content to end users on behalf of those customers;

·   Support for private label user interfaces that have the look, feel and branding of the customer’s existing commerce platform;

·   Delivery across both Internet and mobile delivery protocols, and in various forms, such as sampling and full-song download;

·   Integration to a customer’s website and mobile application, inventory and account management;

·   Integrated payment functionality supporting multiple end consumer payment alternatives; and

·   Digital rights management and licensing, usage reporting, royalty settlement, customer support and publishing related services.

 All of our significant licensing agreements require the content owner to pre-approve each of our potential customers in advance of launching that service.

 We believe that our ability to provide “white label” platforms for other companies to use their own brand recognition while offering digital media content for sale to their customers has tremendous potential for growth because it can decrease time to market while reducing the complexity and cost of digital asset management and distribution.  In addition, due to the unique properties of a smart phone to decipher the QR code and almost instantaneously link the user to the website where he or she can sample and purchase a download of the digital media file, there is potential to create a customer out of every smart phone user, irrespective of the venue the user is in, so long as the user has internet access on the smart phone.   Since our products would represent a supplement to the products offered by the retailers and not compete for similar sales, we do not believe that retailers will be resistant to our plan.

 This white label model also provides us the opportunity to offer our digital media platform to a wide variety of prospects that are not limited to traditional retail organizations.  We believe that there is the potential to partner with restaurants, clothing brands, sports teams, tourist attractions and any other type of organization that is interested in offering digital media to its customers or visitors.  By partnering with one or more of these retail organizations and having access to their customers, we could increase the visibility of our site and our service far beyond what we might accomplish with our own marketing efforts.

Marketing and Advertising

 Our existing marketing efforts consist of distributing our proprietary QR codes to consumers to drive traffic to our website, social networking and what might be characterized as grassroots marketing.  Our current efforts include an arrangement with a record company under which we offer our QR code in connection with concert promotions and musical events.  Through these efforts, we believe that the record company is promoting the artists that it represents and driving traffic to our website, thus potentially increasing their revenue and ours through downloads of digital music.  We hope to increase such efforts in the future, as the costs are relatively insignificant compared to what we believe to be the potential revenue.  We are also active on Facebook and other social networking sites and utilize school ambassadors to appeal to younger users.

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 We also recently executed a distribution agreement with a company marketing and distributing prepaid gift cards and other stored value products.  Under the terms of that agreement, we granted the exclusive rights to promote, market, distribute and sell our products at retail locations throughout the United States.  These products consist of prepaid gift cards redeemable for digital music from our website and any other products which we may develop in the future which utilize a PIN-based or card-based program.  We hope such agreement substantially increases traffic to our website.

 To assist in our marketing efforts, we have engaged the services of Jessie Griffith under the terms of a consulting agreement effective November 1, 2010.  Pursuant to the terms of that agreement, Mr. Griffith serves as an independent contractor to assist with business development, including developing products and advertisements and as a spokesman for our company, in person and in video presentations.  The initial term of the agreement extended from November 1, 2010 until February 28, 2011, and continues thereafter on a month-to-month basis unless terminated by either party upon not less than 30 days advance written notice.  Mr. Griffith is compensated at the rate of $5,000 per month and is reimbursed for reasonable and necessary expenses incurred on our behalf.

Operations and Technology

 Liquid Spins is a digital service provider which sells music through www.LiquidSpins.com and through “The Liquid Spins Mobile Network” which uses a unique QR code placed in strategic high traffic public locations. We call this feature “Liquid Clix™.” Customers access our store using smart phone bar code scanners or through our website. They purchase music through the mobile network and then manage and download their music through the web-based interface. We report to Soundscan and use Authorize.net to manage payments.

 Our mobile network was officially launched on or about November 1, 2011.  The network is currently undergoing beta testing and we believe the technology will be sufficiently tested by the end of the fourth quarter of 2011.  We are hoping to execute an agreement with a third major record label in that time which in turn will provide a significant addition to our library of songs.  With that addition, we hope to formally launch the mobile network and the offering of prepaid gift cards prior to year-end 2011.

 The number one difference between Liquid Spins and all of our competitors is the simple way we drive customers to our site.  We have or intend to strategically place  “Mobile Access Signage” around the United States in high traffic areas.  The signage does not include artist or label images or logos; is our own branding driving potential customers to the music download site.

 The Liquid Spins website is set up similar to a traditional Pay-Per-Download digital media server with the exception of our “Spin Code” feature, which allows users to purchase various approved retail products for music. Every user has a registered profile where they can manage their purchases.

 Our online store, in its basic form, is a Pay-Per-Download site. It is organized by ARTIST – ALBUM – SONG respectively.

 One unique aspect of our online store is “My Music” Player. This player allows the user to build a playlist of 30 second samples in real-time that they can listen to while browsing the site. If they like the playlist they have built, they can use our one-click technology to “Purchase My Music”. This player also allows the user to build a playlist and send it to their friends creating a viral music experience.

 In order to protect the propriety of their products, record labels and artists require that digital providers such as our company maintain adequate security to discourage and defeat unauthorized downloading and sharing of the music.  One such form of security is referred to as digital rights management (“DRM”).  Our content is DRM-free.  Rather, we utilize a unique code, known as the unique identifier transfer code (“UITC”), assigned to each song downloaded from our website.  The assignment of a unique code to each song helps insure that unauthorized copying or distribution is limited.

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Mobile Gateways

 The single most unique aspect of Liquid Spins pertains to our use of QR codes and Mobile Gateways. For each artist, album and song in our system, we create a branded QR code called Liquid Clix. We intend to distribute these QR codes throughout the United States and approved territories through partnerships with media outlets such as magazines, newspapers, television, campus posters, billboard signage and much more. Each QR can be scanned using a bar code-enabled smart phone. When scanned, the smart phone will open a mini mobile web page we call Mobile Gateways. These Mobile Gateways allow a user to preview and purchase songs using the browser in their smart phone.

 Some smart phones allow a user to download directly to their phone. If this function is not available, the user will receive a message prompting them to download their purchase the next time they log into their Liquid Spins account.

Our Licensing Arrangements

 Effective May 15, 2011, the Company entered into a “MP3 Download Aggregator Agreement” (“Agreement”) with Warner Music Inc.     The Agreement provides us access to a catalog of music provided by Warner and allows us to distribute the music in exchange for payment of a licensing fee to Warner.  We may distribute this music directly, or through third party vendors that are approved by Warner.  The Agreement also requires that we maintain certain information regarding distribution of the Warner music and to provide this information to Warner on a monthly basis.  We are also required to indemnify Warner against liabilities that they may incur as a result of our activities under the Agreement.  We have executed similar agreements with EMI and RED Distribution, LLC.

Intellectual Property

 We are working diligently to build a strong portfolio of intellectual property.  We have a federally registered trademark on the term “Malemark,” have applied for a trademark on “Liquid Spins” and we have filed for a patent on “Paper Records”.  We are currently evaluating all of our other intellectual property needs, including a federal tradename for our name, Liquid Spins, and potential patent and copyright protection of Liquidclix.TM

 We own multiple domain names including “liquidspins.com” and “malemark.com”.  We also own multiple social networking domains and groups on twitter.com, facebook.com, flickr.com, and myspace.com.

Competition

 We face intense competition in the distribution of digital media content.  The RIAA estimates that over 400 licensed services are available to consumers.  Apple’s iTunes is the national market leader for offering digital media content to consumers for purchase.  Retailers such as Amazon.com also have their own online digital media stores where consumers can purchase music by downloading digital files.  These companies are all better known than us in the marketplace and have significantly greater resources than our company.  If any of these companies were to begin offering a platform to other companies to sell digital media under a branded or co-branded strategy, we likely would have to change our marketing strategy or target different white label customers.

 The large number of licensed services currently offering digital content requires that we invest significant time and money in our marketing and business development efforts.  Even after our product offerings are launched, we will be required to invest significantly in marketing our service.  However, we believe that we are situated favorably to meet the challenge posed by the other competitors, especially those that limit their product offerings to downloads, due to the relationships that we have developed in the music, entertainment and recording industries.

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Company Facilities

 Our principal executive office is located at 5525 Erindale Drive, Suite 200, Colorado Springs, Colorado 80918 where we lease approximately 2,000 square feet of office space.  The term of the lease extends until November 30, 2011 and we have prepaid all the rent for that term.  The lease is renewable at the discretion of both parties.

 We also lease approximately 950 square feet of office space in Nashville, Tennessee on a month to month basis for $1,250 per month.  We believe that these facilities are adequate for our needs for the foreseeable future.

Employees

 We currently employ seven full time employees, including our Chief Executive Officer, Chief Operating Officer, President of Entertainment, Director of Design, Senior Designer, an executive assistant, and an accountant.  We also engage two contractors, six part time employees and expect to employ additional individuals in an operational and administrative capacity to assist in our business in the future as working capital permits.

Legal Proceedings

 Neither our company nor any of our officers or directors in their capacity as such is a party to any pending legal proceeding and no such proceeding is contemplated to the best of their knowledge and belief.

USE OF PROCEEDS

 We will not receive any proceeds from the sale by the selling shareholders of shares of common stock pursuant to this prospectus.

MARKET FOR COMMON STOCK

AND RELATED STOCKHOLDER INFORMATION

Market Information

 There currently exists no public trading market for our common stock.  However, following the date of this prospectus, we intend to identify one or more registered broker-dealers who might be interested in making application to FINRA to quote our common stock on the OTC Bulletin Board or OTC Markets. There can be no assurance that a public trading market will develop at that time, or be sustained in the future.  Without an active public trading market, you may not be able to liquidate your shares without considerable delay, if at all.  If a market does develop, the price for our securities may be highly volatile and may bear no relationship to our actual financial condition or results of operations.  Factors that we discuss in this prospectus, including the many risks associated with an investment in our stock, may have a significant impact on the market price of our common stock.  Also, because of the relatively low expected initial trading price of our common stock, many brokerage firms may be unwilling to effect transactions in the common stock.

 Any market which may develop for our common stock will be affected by the offer and sale of securities by the selling shareholders, as well as future sales of securities. We currently have outstanding 22,903,750 shares of our common stock which may be sold under Rule 144 of the Securities Act.  See “SHARES ELIGIBLE FOR FUTURE SALE” for additional information.

Holders of our Common Stock

 As of November 9, 2011, we had approximately 122 record holders of our common stock.

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Penny Stock Rules

 Due to the price of our common stock, as well as the fact that we are do not expect our stock to be listed on a national securities exchange, our stock may be characterized as a “penny stock” under applicable securities regulations.  If our stock is or becomes a penny stock, we will be subject to rules adopted by the SEC regulating broker-dealer practices in connection with transactions in penny stocks.  The broker or dealer proposing to effect a transaction in a penny stock must furnish the customer with a document containing information prescribed by the SEC and obtain from the customer an executed acknowledgment of receipt of that document.  The broker or dealer must also provide the customer with pricing information regarding the security prior to the transaction and with the written confirmation of the transaction.  The broker or dealer must also disclose the aggregate amount of any compensation received or receivable by him in connection with such transaction prior to consummating the transaction and with the written confirmation of the trade.  The broker or dealer must also send an account statement to each customer for which he has executed a transaction in a penny stock each month in which such security is held for the customer’s account.  The existence of these rules may have an adverse effect on the price of our stock, and the willingness of certain brokers to effect transactions in our stock.

Transfer Agent

 We currently act as our own transfer agent for our common stock. We anticipate hiring Corporate Stock Transfer, Inc. of Denver, Colorado as our transfer agent in the future in the event that a public market for our stock develops.

Securities Authorized for Issuance under Equity Compensation Plans

 On April 21, 2011, upon the recommendation of our Board of Directors, our shareholders approved an amendment and restatement of our equity incentive plan.  The plan, as amended and restated, is referred to in this discussion as the Plan.

 The Plan is administered by the Board of Directors or a committee appointed by the Board.  The committee has the power to select the participants to be granted awards, determines the time or times when awards will be made, and determines the form of an award, the number of shares of our common stock subject to the award, and all the terms, conditions (including performance requirements), restrictions and/or limitations, if any, of awards, including the time and conditions of exercise or vesting, with the following exceptions:

 •   the maximum number of shares subject to one or more options that may be granted during any calendar year to any participant is 1,000,000 shares of common stock; and

 •   the maximum number of shares that may be issued under the Plan is 5,000,000 shares of common stock (including those previously granted).

 Incentive options may be granted only to employees.  Non-qualified options, restricted stock, and other stock grants may be made to employees, directors, consultants and advisors.

 The Plan provides that the committee may delegate authority to specified officers to grant options and other awards, provided that no grants of options or other awards may be made by such specified officers to any employee, consultant or advisor whose compensation is, or may become, subject to the $1 million limit on deductible compensation under Section 162(m) of the Code. At this time, the committee has not made such a delegation.

 Shares Subject to the Plan.  There are currently 5,000,000 shares of common stock reserved for the grant of awards under the Plan.  No more than 2,000,000 shares may be issued under incentive options.  As of the date of this prospectus, no options or other grants have been made under the Plan.

 Adjustment of Shares.  The number of shares available under and subject to the Plan, and each share reserved for issuance under the Plan, are subject to adjustment on account of stock splits, stock dividends, recapitalizations and other dilutive changes in our common stock. Any shares of our common stock related to awards that terminate by expiration, forfeiture, cancellation or otherwise will be available again for grant under the Plan.

 Exercise of Options.  The committee determines the exercise price for each option, but no option may be granted at an exercise price that is less than the fair market value of our common stock on the date of grant (or at least 110% of the fair market value of our common stock on the date of grant in the case of an incentive option granted to an individual who owns stock of our company having more than 10% of the voting power).  An option holder may exercise an option by written notice and payment of the exercise price in cash or by check, bank draft or money order payable to the order of us, or a combination of the foregoing. In addition, an option may be exercised by a broker-dealer acting on behalf of the participant if the broker-dealer has received from the participant a notice of exercise and adequate provision has been made with respect to the payment of any withholding taxes due upon exercise.  If the exercise price of the shares being purchased is $2,000 or less, the exercise price must be paid in cash or by check, bank draft or money order payable to the order of us.

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 Option Term.  The committee determines the period and the conditions of exercisability, the minimum periods during which participants must be employed by us or must hold options before they may be exercised, the minimum periods during which shares acquired upon exercise must be held before sale, conditions under which the options or shares may be subject to forfeiture, the frequency of exercise or the minimum or maximum number of shares that may be acquired at any one time. Incentive options must expire no later than 10 years from the date of grant (five years in the case of an incentive option granted to an individual who owns stock of our company having more than 10% of the voting power).  If a participant’s employment terminates for any reason other than cause or death, the participant will be entitled to purchase all or any part of the shares subject to any vested option for a period of up to three months from the date of termination (not longer than one year in the case of death). If the participant’s employment terminates for cause, as determined by us, the unexercised option will be forfeited and expire.

 Restricted Stock.  The committee may grant a participant a number of shares of restricted stock as determined by the committee in its sole discretion. Grants of restricted stock may be subject to such restrictions, including for example, continuous employment with us for a stated period of time or the attainment of performance goals and objectives, as determined by the committee in its sole discretion. The restrictions may vary among awards and participants. If a participant dies or becomes disabled or retires pursuant to our retirement policy, the restricted stock will become fully vested as to a pro rata portion of each award based on the ratio of the number of months of employment or service completed at termination of employment or service from the date of the award to the total number of months of employment or service required for each award to become fully vested. The remaining portion of the restricted stock will be forfeited. If a participant terminates employment for any other reason, all unvested shares of restricted stock will be forfeited. 

Stock Grants.  The committee may grant shares of our common stock to participants. The committee determines the number of shares of our common stock to be granted, the vesting conditions and other restrictions, if any, the time and manner of payment, and any other terms and conditions of the stock grants. The committee may also, in its sole discretion, accelerate vesting and waive other restrictions and conditions under such circumstances as it deems appropriate.

 Non-transferability.  Except as may otherwise be provided by the committee at the time of a grant, options and restricted stock awards are not transferable except by will or pursuant to the laws of descent and distribution.

 Amendment and Termination.  The Board of Directors may alter, suspend or terminate the Plan at any time and may, from time to time, amend the Plan in any manner, but may not without shareholder approval adopt any amendment that would increase the aggregate number of shares of common stock available under the Plan or modify any provision of the Plan that would materially increase the benefit or rights of any participant in the Plan. Unless terminated sooner, the Plan will terminate on April 5, 2021.

 Change of Control.  Upon the occurrence of a corporate transaction involving a change of control of the Company, as defined in the Plan, the committee may take action with respect to outstanding awards under the Plan, including the immediate vesting of options, lapse of restrictions on restricted stock or provide for assumption or substitution of options by any successor company.  The committee may also provide that any awards that are outstanding at the time the corporate transaction is closed shall expire at the time of the closing. The committee need not take the same action with respect to all outstanding awards or to all outstanding awards of the same type.

Federal Income Tax Consequences of the Grant and Exercise of Options

 Certain of the federal income tax consequences applicable to the grant and exercise of non-qualified options and incentive options are as follows:

 Non-Qualified Options.  There are no income tax consequences to the participant or to us when a non-qualified option is granted. When a non-qualified stock option is exercised, in general, the participant recognizes compensation, subject to wage withholding and income tax, equal to the excess of the fair market value of the common stock on the date of exercise over the exercise price. We are generally entitled to a deduction equal to the compensation recognized by the participant, assuming that the compensation satisfies the ordinary, necessary and reasonable compensation requirements for deductibility and that the deduction is not limited by Section 162(m) of the Code.

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 Incentive Options.  When an incentive option is granted, there are no income tax consequences for the participant or us. When an incentive option is exercised, the participant does not recognize income and we do not receive a deduction. The participant, however, must treat the excess of the fair market value of our common stock on the date of exercise over the exercise price as an item of adjustment for purposes of the alternative minimum tax. If the participant makes a “disqualifying disposition” of the common stock (described below) in the same taxable year the incentive option was exercised, there are no alternative minimum tax consequences.

 If the participant disposes of our common stock after the participant has held it for at least two years after the incentive option was granted and at least one year after the incentive option was exercised, the amount the participant receives upon the disposition over the exercise price is treated as capital gain. We are not entitled to a deduction for this amount. If the participant makes a “disqualifying disposition” of common stock by disposing of common stock before it has been held for at least two years after the date the incentive option was granted and at least one year after the date the incentive option was exercised, the participant recognizes compensation income equal to the excess of:

 •   the fair market value of common stock on the date the incentive option was exercised or, if less, the amount received on the disposition, over

 •   the exercise price.

 We are not required to withhold income or other taxes in connection with a “disqualifying disposition.” We are generally entitled to a deduction equal to the compensation recognized by the participant, assuming that the compensation satisfies the ordinary, necessary and reasonable compensation requirements for deductibility and that the deduction is not limited by Section 162(m) of the Code.

 Code Section 409A.  Section 409A of the Code provides that all amounts deferred under a nonqualified deferred compensation plan are currently includible in gross income to the extent they are not subject to a substantial risk of forfeiture and have not been taxed previously unless the plan satisfies both the plan document and operational requirements specified in Section 409A of the Code. If the deferred compensation plan fails to satisfy the requirements of Section 409A, all amounts deferred for the year of the failure and all preceding years (to the extent they are not subject to a substantial risk of forfeiture) are included in the gross income of the participant(s) affected by the failure. The amount included in gross income is also subject to an additional tax equal to 20% of that amount and to interest. Incentive options are not subject to Section 409A. We have structured the Plan and expect to administer the Plan with the intention that non-qualified options will qualify for an exemption from Section 409A of the Code.

 Code Section 162(m).  Under Section 162(m) of the Code, we may be limited as to federal income tax deductions to the extent that total annual compensation in excess of $1 million is paid to our chief executive officer or any one of the four highest paid executive officers who were employed by us on the last day of the taxable year. However, certain “performance-based compensation,” the material terms of which are disclosed to and approved by our shareholders, is not subject to this limitation on deductibility. We have structured the Plan with the intention that compensation resulting from options granted under the plan would be deductible without regard to the limitations otherwise imposed by Section 162(m) of the Code.

Dividend Policy

 We have never declared or paid dividends on our common stock.  Payment of future dividends, if any, will be at the discretion of our Board of Directors after taking into account various factors, including the terms of any credit arrangements, our financial condition, operating results, current and anticipated cash needs and plans for expansion.  At the present time, we are not party to any agreement that would limit our ability to pay dividends.

DETERMINATION OF OFFERING PRICE

 Our common stock is being offered by the selling shareholders at a price of $0.50 per share, until such time, if ever as our common stock is listed on the OTC Bulletin Board or OTC Markets. The price of the shares was determined by us in negotiation with certain of our selling shareholders and primarily with reference to recent sales prices of our common stock. We also considered factors such as our history and limited revenue and other factors which our management considered in determining, in their best judgment, the fair market value of our common stock. However, the offering price of the common stock should not be used as an indication of the value of the securities or an assurance that purchasers will be able to resell the securities for an amount equal to the offering price or an amount in excess thereof.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Overview

 The following discussion summarizes our plan of operation for the next 12 months.  It also analyzes our financial condition at June 30, 2011 and December 31, 2010 and compares our financial condition at those dates to our condition at the end of the previous accounting period.  The discussion also analyzes our results of operations for the six months ended June 30, 2011 and 2010, the year ended December 31, 2010 and the period from inception to December 31, 2009.  Our discussion and analysis of financial condition and results of operation should be read in conjunction with the financial statements and related notes included in this prospectus and with the understanding that the actual future results may be materially different from what we currently expect.

 We were organized in 2009 and have very limited operations to date.  Our business plan has changed in the last 12 months and we have generated very limited revenue from operations.  We remain in the development stage for accounting purposes at June 30, 2011 under criteria established by the SEC since we have not yet demonstrated the ability to generate revenue sufficient to fund operations.  We are still developing our business plan, including efforts to secure relationships with additional record companies and potential retail partners.  As required by applicable guidelines of the SEC, substantially all of our expenditures to date have been expensed, and we expect to expense additional expenditures in 2011 related to securing agreements and developing our products.  We expect to remain as a development stage company for the foreseeable future, although we expect to achieve some revenue from our online music store in 2011.

Plan of Operation

 Our plan of operation for the next 12 months is to continue development of our website and online music platform, invest in additional marketing initiatives and generate revenue from the sale of our digital music catalog.  As of the date of this prospectus, we are positioned to generate revenue, as a beta version of our website is operable and the technology required to deliver music is complete.  However, due to the fact that we only recently executed agreements with some of the major record labels and concurrently obtained the rights to offer their music online, we expect to remain in the development stage until such time, if ever, as we have completed the loading all of the music in our database, our testing is complete and our marketing initiatives have matured in order that we can generate sufficient revenue to fund our operations.  We have budgeted approximately $100,000 in the twelve months following the date of this prospectus for product development.  We expect our website to begin generating revenue in the fourth quarter of 2011, when we expect that our catalog of music will be adequate, the operation of our website will be perfected and our marketing efforts sufficiently underway.   The Company does not have any additional requirements for capital expenditures for the balance of 2011.  During the year 2012, the Company anticipates additional capital expenditures in association with additional record label affiliation in an approximate amount of $525,000.

 We are currently offering our digital music downloads for prices ranging from $0.99 to $1.29 per song and from $4.49 to $24.99 per album.  We believe these prices are competitive with other participants in the industry.  Due to limited revenue and profit margin for each item that is downloaded from our site, it will be necessary for us to achieve significant volume to become profitable.  Further, we do not believe that we will enjoy much flexibility to raise our prices due to significant competition in the industry.  Our current estimate is that we need 100,000 song downloads per month to break even from a cash flow standpoint, taking into account the advance royalties that we paid when the distribution agreements were executed, and 325,000 downloads per month, once the advance royalties are extinguished.   For the month of October 2011, the music downloaded from our site was negligible.

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 Under the terms of our distribution agreements with record companies, we are required to pay a significant portion of the revenue generated from digital downloads to those companies in exchange for the licensing rights to the songs.  Accordingly, the success of our business plan depends on our ability to generate sufficient downloads to cover fixed and variable expenses.  The major components of fixed expenses include labor, office overhead, including rent, server space leased from a third party and insurance.  Variable expenses primarily included the royalties payable to the record companies for the music that they provide to us.

 Our existing marketing efforts consist of distribution of our proprietary QR codes to consumers in an effort to drive traffic to our website.  We have an arrangement with EMI, Warner Music and RED which utilize the QR code in connection with concert promotions and other advertising initiatives.  We hope to increase such efforts in the future, as the costs are relatively insignificant compared to what we believe to be the potential revenue.  We also recently executed a distribution agreement with a company marketing and distributing prepaid gift cards and other stored-value products.  Under the terms of that agreement, we granted the exclusive rights to promote, market, distribute and sell our products at retail locations throughout the United States through the use of prepaid gift cards redeemable for digital music from our website and any other products which we may develop in the future which utilize a PIN-based or card-based program.  We have agreed to pay the distributor 15% of any sales generated through this medium.  We expect the rollout of this initiative to occur in the fourth quarter of 2011, following what we hope will be the completion of an agreement with a third major record label.  We expect this distribution arrangement to substantially increase traffic to our website.

 A future focus of our business efforts in the fourth quarter of 2011 and in 2012 will be to secure agreements with large retailers and other organizations that are interested in partnering with us to offer a co-branded website utilizing our Liquid Spins platform.  We expect that such an arrangement would supplement our marketing efforts and that any sales through third-party retail partners would not come at the expense of sales through our marketing efforts.  The most significant difference between sales initiated by third-party retailers is that we would be required to pay the retailer a portion of the revenue generated by each download.  In other cases, we retain all the revenue except that which is required to be paid to the record company.  In connection with sales through affiliates, we expect to pay such retailer approximately 10 to 20% of the net revenue that we receive for each download, after payment of the royalty to the record company.  In the event we are successful in executing agreements with one or more of these retailers, we expect the distribution of our digital music would be increased substantially.  

 Since our website and music platform are nearly complete, we believe that the incremental costs necessary to construct a private label platform are small.  Such efforts would require gateway development with the retailer to allow users to “click through” the retailer’s website to our website and gain access to our music catalog.  The costs to distribute the QR codes to allow the retailer to distribute those codes to its customers would also be minimal.  Accordingly, we believe that the net revenue that we receive from each song or album download would be sufficient to cover our fixed costs for operating the platform, such as labor, server space, overhead and insurance, together with the relatively small variable costs necessary to construct a platform for any retailer.   

 Our corporate overhead consists primarily of salaries for our employees, rent and other general and administrative expenses.  With our current commitments for facilities and staff, we expect to incur approximately $900,000, or $75,000 per month, over the next 12 months for general and administrative expenses, including marketing.   We anticipate that we may add additional staff in the near future.  In addition, we are contractually obligated to provide public relations support for our large retail customers and record labels, such as public interviews, national advertising campaigns and nationally sponsored events and we anticipate outsourcing those duties to a firm which specializes in such services.  We expect these expenses and all other expenses will be paid from the proceeds of recent stock offerings until such time, if ever, as we move past the start-up phase and generate sufficient revenue to cover our expenses.

 As discussed in more detail below, our working capital at June 30, 2011 equaled $973,255.  We believe this working capital will be sufficient for the next 12 months.

Liquidity and Capital Resources

June 30, 2011.  At June 30, 2011, our working capital of $973,255 consisted of current assets of $1,194,772 and current liabilities of $221,517.  Substantially all of our current assets at that date consisted of cash. 

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 As has been the case since our inception, all of our cash during 2011 has been generated from the sale of our common stock.  During the six months ended June 30, 2011, we generated $1,675,000 from the sale of our common stock at a price of $0.40 per share.  Historically, all of the sales of our common stock, including those during the first half of 2011, have come in transactions exempt from the registration requirements of state and federal securities laws.  As of the date of this prospectus, there is no public market for our common stock.  However, if we are successful in identifying one or more broker-dealers interested in making a market for our common stock, and creating some trading volume, we believe our ability to raise financing in the future may be enhanced.

 During the six months ended June 30, 2011, we completed a private placement which extended from September 2010 to April 2011 and consisted of the sale of 4,668,750 shares of common stock at a price of $0.40 per share for gross proceeds of $1,867,500.  We also completed an additional placement of our common stock subsequent to June 30, selling 650,000 shares at a price of $0.40 per share for gross proceeds of $260,000.  The proceeds from the latter offering have been, and will continue to be, utilized to pay our administrative expenses, including salaries and other overhead, advance royalties to acquire our catalog of digital music, and marketing expenses.

 Our operating and investing activities continue to consume cash generated from our financing activities.  Cash used in operations for the first six months of 2011 was $769,208, including our net loss for that period of $934,438.  The cash consumed in connection with our net loss was partially offset by payment of certain professional services with our common stock and other non-cash expenses.

 Cash used in investing activities for the first half of 2011 totaled $429,044, including capital expenditures of $128,739 and web and infrastructure costs of $81,824.  In addition, Recoupable Music Costs of $218,481 were incurred in the first half of 2011, in accordance with our music distribution agreements and an agreement that obligated us to pay for certain recording costs for song masters in return for certain recording services and other copyright deliverables.  Upon execution of specific terms by the Artist, we expect to be reimbursed promptly for all monies advanced, and are entitled to a royalty in accordance with the terms of the agreement.

 December 31, 2010.  As of December 31, 2010, our working capital totaled $224,182, consisting of current assets of $273,264 and current liabilities of $49,082. During the period from inception to December 31, 2010, we received $869,000 in cash, services and other property through the issuance of our common stock.  At December 31, 2010, we did not have any debt.   Due to our status as a development stage company, as well as the absence of significant amounts of tangible assets on our balance sheet, we do not believe we are a candidate for debt financing.

 During 2009 and 2010, we conducted various financing transactions.  During the period from inception to December 31, 2009, we sold 7,210,000 shares of our common stock for aggregate proceeds of $79,000.  During that period, we also issued 8,100,000 shares of common stock for intellectual property valued at $8,100.  During the year ended December 31, 2010, we sold 2,496,250 shares of common stock, some at a price of $0.25 per share and the remainder at a price of $0.40 per share.  Aggregate proceeds from those sales during 2010 totaled $790,000.  During that time, we also issued 497,500 shares for accrued expenses valued at $190,000.

Results of Operations

 Six Months Ended June 30, 2011.  During the six months ended June 30, 2011, we reported a net loss of $934,438 or $0.04 per share.  Revenue during that time, consisting primarily of the sale of paper greeting cards, was $1,196.  This compares to a net loss for the six months ended June 30, 2010 of $212,436.  As of June 30, 2011, we have reported negligible revenue from our online music store.  We expect to incur losses until such time, if ever, that we secure retail contracts or secure sufficient traffic and purchases through our website and can exit the development stage when our revenue is sufficient to cover expenses, including continued product development, sales, marketing and operations.

 Our accounting treatment as a development stage company, specifically regarding the classification of pre-production product testing and development costs as a operating expense rather than a capital expenditure, has caused us to report large losses since inception.  During the six months ended June 30, 2011, production startup expense and product development totaled $355,643, compared to $99,713 for the six months ended June 30, 2010.  These expenses represented a significant portion of our net loss for those periods.  The other most significant expense was general and administrative.  For the six months ended June 30, 2011, general and administrative expenses totaled $469,815, compared to $78,781 for the comparable period of 2010.  Included in general and administrative expenses for the six months ended June 30, 2011 was $153,000 in stock compensation for services.

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 Year Ended December 31, 2010.  During the year ended December 31, 2010, we reported a net loss of $1,486,487, or $0.09 per share, on revenue of $27,888.  This compares to a net loss during the period from inception, June 20, 2009, to December 31, 2009 of $77,503 on no revenue.  Our first revenue was recorded in June 2010.  We sold paper greeting cards, primarily through retail venues, for $27,888 during the year ended December 31, 2010.

 Product research and development for the year ended December 31, 2010 totaled $256,703, compared to $50,931 for the period from inception through December 31, 2009.  Research and development efforts during 2010 were primarily geared toward our digital music store, while efforts during 2009 related to our paper greeting card business.

 Labor and other operating costs associated with our paper greeting card business during the year ended December 31, 2010 totaled $63,043.  There was no comparable cost during 2009, as we had not reported any sales during that time.

 Selling, distribution and marketing expenses during 2010 totaled $38,853.  There were no comparable expenses during 2009.

 General and administrative expenses during the year ended December 31, 2010, which represented the single largest category of expense during that time, totaled 1,137,753.  Comparable expenses during 2009 totaled $26,572.  Included in this amount for 2010 was $756,900 in non-cash expense for shares transferred by an officer and two directors who are also the beneficial owners of more than 5% of our common stock, to consultants and employees.  Also, included in general and administrative expenses for 2010 was $190,000 in non-cash expense for financial management provided by a consulting firm that we retained in September 2010.

 During the year ended December 31, 2010, we realized a loss on the disposal of an asset when we wrote off $15,262, the cost of our Malemark website, again due to slow sales.

Off-Balance Sheet Arrangements

 As of December 31, 2010, we had no off-balance sheet arrangements.

Contractual Obligations

 Our known obligations at December 31, 2010 are set forth in the table below:

	Payments Due by Period
Contractual Obligations	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Management Consulting Agreement(1)	$	22,000	$	22,000		--		--		--
Management Services Agreement(2)	$	62,500	$	62,500		--		--		--
Management Services Agreement – Stock(2)	$	62,500	$	62,500		--		--		--
Employment Agreement(3)	$	161,500	$	88,000	$	73,500		--		--
Production Services Agreement(4)	$	30,000	$	15,000		--		--		--
Sales Consulting Agreement(5)	$	8,000	$	8,000
Printer Maintenance Agreement(6)	$	13,844	$	2,406		10,836		602

_______________

(1)	Represents amounts due to a management consulting firm.
(2)	Represents amounts due under a management services agreement in the amount of $25,000 per month payable in common stock valued at $0.40 per share, plus fees incurred for the first three months. The agreement ended on March 15, 2011.
(3)	Represents future payments related to the employment agreement with our Chief Executive Officer.
(4)	Represents future payments related to a production services agreement.
(5)	Represents future payments related to the Jesse Griffith consulting agreement.
(6)	Represents future payments related to the maintenance agreement with Xerox Corp.

Critical Accounting Policies

 We believe that application of the following accounting policies, which are critical to our financial position and results of operations, requires significant judgments and estimates on the part of management.

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Use of Estimates

 The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Management routinely makes judgments and estimates about the effects of matters that are inherently uncertain.  Estimates that are critical to the accompanying consolidated financial statements include estimates related to asset impairments of long lived assets and investments, estimates related to asset impairment of trade receivables, classification of expenditures as either an asset or an expense, valuation of deferred tax assets, and the likelihood of loss contingencies.  Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Estimates and assumptions are revised periodically and the effects of revisions are reflected in the financial statements in the period it is determined to be necessary.  Actual results could differ from these estimates.

Property and Equipment

 All items of property and equipment are carried at cost not in excess of their estimated net realizable value.  Normal maintenance and repairs are charged to operations while expenditures for major maintenance and betterments are capitalized.  Gains or losses on disposition are recognized in operations.  Equipment and software are reviewed for impairment in accordance with ASC Topic 360 (“ASC 360”), “Property, Plant, and Equipment.”  In assessing the recoverability of its long-lived assets, the Company makes certain assumptions regarding the useful life and contribution to the estimated future cash flows.  If such assumptions change in the future, the Company is required to record impairment charges for these assets not previously recorded.

Deferred Recording Production Costs

 The Company is engaged in the production of recording-based entertainment, which is generally exploited in the CD or broadcast format.  Deferred costs are contractually recouped first from initial sales.  The artist is not paid until deferred costs have been recouped in full by the Company.

 Record production costs are accounted for pursuant to ASC Topic 928 “Entertainment – Music” (“ASC 928”), and are stated at the lower of cost or net realizable value based on anticipated total revenue (ultimate revenue).  Recording production costs are capitalized and then recognized ratably based on the ratio of the current period’s revenue to estimated remaining ultimate revenue. Ultimate revenues are calculated in accordance with ASC 928 and require estimates and the exercise of judgment.  Accordingly, these estimates are periodically updated to include the actual results achieved or new information as to anticipated revenue performance of each title.  As of December 31, 2010, there were no revenues generated related to the recording production costs, and no production costs amortized and recognized to expense.

Intangible Assets/Website Application and Infrastructure Development Costs

 The Company has a federally registered trademark on the term “Malemark” and owns multiple domain names including “Liquidspins.com” and “Malemark.com”.  The Company also manages multiple social networking on twitter.com, facebook.com, flickr.com, and myspace.com.  The domain’s value is based on the average number of users, demographics of these users, geography and number of advertisers and general sales it generates.

 Costs related to the domain name are capitalized and amortized over a 3-year period.  Periodic costs of maintaining the websites are expensed as operating costs as incurred.  In accordance with ASC Topic 350 (“ASC 350-50”), “Website Development Costs”, fees incurred for website hosting are expensed over the period of benefit, while costs incurred during the website application and infrastructure development stage are accounted for in accordance with ASC Topic (“ASC 350-40”) “Internal Use Software”, and capitalized.  This includes costs to purchase software tools, or costs incurred during the application development stage for internally developed tools, costs to maintain and register an internet domain.  Graphics are generally considered a component of software costs.  Modifications to graphics after the software is launched are evaluated to determine whether the modifications represent maintenance or enhancements to the website.

 The primary business of Liquid Spins is no longer greeting cards.  The Company decided to direct their resources towards digital media distribution and has therefore determined that the cost of Malemark's website value should be written off as of December 31, 2010.

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Income Taxes

 Income taxes are computed using the liability method.  Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial and tax reporting purposes and the effect of net operating loss carry-forwards.  Deferred tax assets are evaluated to determine if it is more likely than not that they will be realized.  Valuation allowances have been established to reduce the carrying value of deferred tax assets in recognition of significant uncertainties regarding their ultimate realization.  Further, the evaluation has determined that there are no uncertain tax positions required to be disclosed.

Recent Accounting Pronouncements

 We evaluate the pronouncements of various authoritative accounting organizations, primarily the Financial Accounting Standards Board (“FASB”), the SEC, and the Emerging Issues Task Force (“EITF”), to determine the impact of new pronouncements on US GAAP and the impact on the Company.

Recently Adopted Accounting Standards

 The Company evaluates the pronouncements of various authoritative accounting organizations, primarily the Financial Accounting Standards Board (“FASB”), the SEC, and the Emerging Issues Task Force (“EITF”), to determine the impact of new pronouncements on US GAAP and the impact on the Company.  The Company has adopted the following new accounting standards during the period ended September 30, 2011:

Fair Value Measurements:

 Accounting Standards Update (“ASU”) No. 2010-06 amended existing disclosure requirements about fair value measurements by adding required disclosures about items transferring into and out of levels 1 and 2 in the fair value hierarchy; adding separate disclosures about purchase, sales, issuances, and settlements relative to level 3 measurements; and clarifying, among other things, the existing fair value disclosures about the level of disaggregation. The final provisions of ASU No. 2010-06 were adopted during the period ended September 30, 2011, and had no impact on the Company’s consolidated financial position, results of operations or cash flows.

 ASU No. 2010-13 clarifies the classification of an employee share based payment award with an exercise price denominated in the currency of a market in which the underlying security trades. The Company adopted ASU No. 2010-13 during the period ended September 30, 2011 and its adoption had no impact on the Company’s consolidated financial position, results of operations or cash flows.

 ASU No. 2010-29 requires a public entity to disclose pro forma information for business combinations that occurred in the current reporting period. The disclosures include pro forma revenue and earnings of the combined entity for the current reporting period as though the acquisition date for all business combinations that occurred during the year had been as of the beginning of the annual reporting period. This ASU is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010, with early adoption permitted.  The adoption of this ASU had no impact on the Company’s consolidated financial position, results of operations or cash flows.

Recently Issued Accounting Standards Updates:

 There were various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries. None of the updates are expected to a have a material impact on the Company's consolidated financial position, results of operations or cash flows.

Revenue Recognition and Sales Returns Policy:

 Revenue will derived from downloads of digital music; sales of gift cards for the downloading of digital music, and from the licensing of copyrighted song rights.  The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collection is probable. Product is considered delivered to the customer once it has been downloaded or shipped and title and risk of loss have been transferred. For the Company’s online digital download sales, these criteria are met at the time the product is purchased and downloaded. The Company has implemented a no refund policy.

 The Company currently has no customer incentive programs.  Future market conditions and product transitions may require the Company to add customer incentive programs and incur incremental price protection obligations that could result in additional reductions to revenue at the time such programs are offered. Additionally, certain customer incentive programs would require management to estimate the number of customers who will actually redeem the incentive. Management’s estimates would be based on the specific terms and conditions of particular incentive programs. If a greater than estimated proportion of customers redeem such incentives, the Company would be required to record additional reductions to revenue, which would have a negative impact on the Company’s results of operations.

 The Company anticipates that a licensee will pay a minimum guarantee to the Company for the right to sell or distribute its music rights. The Company will then record any minimum guarantee payment received as unearned or deferred revenue and recognize earnings under its licensing agreement, absent a clear indication in the agreement, on a proportional basis over the life of the agreement. 

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 There have been no changes in or disagreements with our independent registered public accounting firm on accounting or financial disclosure.

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MANAGEMENT

Directors and Officers

 The following persons serve as our officers and directors as of the date of this prospectus:

Name	Age	Positions With the Company	Board Position Held Since
Herman C. DeBoard, III	39	Chairman of the Board of Directors and Chief Executive Officer	June 2009
Raymond E. McElhaney	55	Director	June 2009
Bill M. Conrad	55	Director	June 2009
Christy P. DiNapoli	48	President of Entertainment and Director	April 2011
Paul D. Myers	33	Chief Operating Officer, Secretary and Treasurer	N/A
James M. Poage	58	Chief Financial Officer	N/A

 Each of our directors is serving a term which expires at the next annual meeting of our shareholders and until his successor is elected and qualified or until he resigns or is removed.  Our officers serve at the will of our board of directors.

 Mr. DeBoard should be considered the “founder” of our company (as such term is defined by rule under the Securities Exchange Act of 1934, as amended (the “Securities Exchange Act”)).

 The following information summarizes the business experience of each of our directors and officers for at least the last five years:

 Herman C. DeBoard, III.  Mr. DeBoard was appointed our President and Chief Executive Officer at inception, and served in that capacity until April 2011 when he assumed the title of Chairman and Chief Executive Officer.

 Mr. DeBoard’s business and educational background has provided him broad experience, primarily focused in the areas of communication and technology.  From July 2006 to November 2008, he served as chief information officer of Giant 5 Funds, a mutual fund company registered under the Investment Company Act of 1940.  In that capacity, he served as the chief of technology, working on Internet technology, disaster preparedness and IT administration.  From April to June 2006, he was Director of Functional Technology for the United States Army at Fort Carson in Colorado Springs, Colorado, where he was responsible for all technology, software, hardware, disaster preparedness and security.  From March 2002 to April 2004, Mr. DeBoard was Chief of Emergency Communications at Schriever Air Force Base.  Mr. DeBoard was a Program Director III and liaison for the Centers of Disease Control from 2000 to 2002.  Mr. DeBoard began his career in the United States Air Force where he served during the first Gulf War in the early 1990’s, and was awarded the National Defense Service Medal, the Southwest Asia Service Medal and was a member recipient of the Presidential Unit Citation.  Following his time in the Air Force, he earned his Bachelor’s and Master’s Degree in Communication Studies from Marshall University, and has begun working toward a Ph.D.  Mr. DeBoard has not served on the board of directors of any other public companies or registered investment companies during the past five years.  Our board believes that the technical and management experience gained by Mr. DeBoard in his prior career makes him well qualified to be a director of our company.

 Raymond E. McElhaney.  Mr. McElhaney has served as a director of our company since inception.  Mr. McElhaney is the president and co-founder of MCM Capital Management, Inc, a privately held financial management firm providing financial services since 1990.  From May 2005 until September 2008, Mr. McElhaney served as the president and chief executive officer of Brishlin Resources, Inc., now known as Synergy Resources Corporation, a publicly-traded Colorado-based corporation engaged in the oil and gas industry with securities quoted on the NYSE Amex.  Mr. McElhaney continues to serve as a director of Synergy Resources.  He has not served on the board of directors of any other public companies or registered investment companies during the past five years.  From February 2002 until June 2005, Mr. McElhaney served as chairman and secretary of Wyoming Oil & Minerals, Inc., now known as Sun Motor International Inc., which is quoted on the OTC Pink.  From May 2000 until April 2003, he served as vice president and secretary of New Frontier Energy, Inc., which is quoted on the OTCQB.  Our board believes that the management and corporate finance experience developed by Mr. McElhaney over many years serving as an executive officer and director of numerous publicly traded companies makes him well qualified to be a director of our company.

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 Bill M. Conrad.  Mr. Conrad has served as a director of the Company since inception.   In 1990, Mr. Conrad co-founded MCM Capital Management Inc. with Mr. McElhaney and has served as its vice president, chief financial officer and a director since that time.  From May 2005 until September 2008, Mr. Conrad served as the vice president and secretary of Synergy Resources Corporation, where he continues to serve as a director.  Mr. Conrad also currently serves as a director of Gold Resource Corporation, a publicly-traded corporation involved in mineral exploration and production with securities traded on the NYSE Amex.  He has not served on the board of directors of any other public companies or registered investment companies during the past five years.  From February 2002 until June 2005, Mr. Conrad served as president and a director of Sun Motor International Inc.  From May 2000 until April 2003, he served as vice president and a director of New Frontier Energy, Inc.  Our board believes that the management and corporate finance experience developed by Mr. Conrad over many years serving as an executive officer and director of numerous publicly traded companies make him well-qualified to be a director of our company.

 Christy P. DiNapoli.  Mr. DiNapoli was elected as a director in April 2011 and has served as our President of Entertainment since March, 2011.  He has a lengthy background and extensive experience in the music and recording industry.  Since March 2007, Mr. DiNapoli has been the president of THE Music Group in Nashville, Tennessee, a privately-held company that manages a song catalog and various recording artists and also provides music industry consulting services.  Prior to 2007, Mr. DiNapoli was Vice President of KMG Entertainment, an entity formed in 2005.  In addition to his experience running music entertainment companies, Mr. DiNapoli is also an award-winning songwriter, music producer and publisher.  He formed the band known as Little Texas and served as its manager, co-producer and music publisher for nine years, winning various awards during that time.  Mr. DiNapoli serves on the boards of several non-profit organizations in Nashville, is a voting member of the National Academy of Recording Arts and Sciences (the distributor of the Grammy Awards) and is a former board member of the Academy of Country Music.  Mr. DiNapoli has not served on the board of directors of any other public companies or registered investment companies during the past five years.  Our board believes that the management and music industry experience that Mr. DiNapoli has acquired over many years as well as his experience in managing several companies makes him well qualified to be a director of our company.

 Paul D. Myers.  Mr. Myers joined our company in February 2010 and was appointed to serve as Chief Operating Officer, Secretary and Treasurer effective June 1, 2010.  From June 2006 to November 2009, he served as interim chief compliance officer, fund secretary and fund treasurer at Giant 5 Funds.  From May 2004 to June 2006, he worked as an account executive and assistant editor in the music industry.  Mr. Myers possesses a diverse business and educational background that provides a wide range of experience and resources to our company. Mr. Myers graduated from graphic design school and Arizona State University with degrees in Visual Communication, Business Marketing and Communication.

 James M. Poage.  Mr. Poage was named our Chief Financial Officer in March 2011 and serves in this capacity on a contract basis.  Mr. Poage was also appointed in March 2011 as the interim Chief Financial Officer for Earthstone Energy, Inc., a publicly-traded Colorado-based corporation engaged in the oil and gas industry with securities quoted on Nasdaq. Since January 2009, Mr. Poage has been a principal of QAS, LLC, a private consulting firm providing financial services, including inventory valuation, risk analysis, fraud investigation, internal control and business process reviews and SOX 404 compliance. From 1999 until 2009, Mr. Poage was self employed, and provided financial and tax accounting services to clients mostly in the Oil and Gas industry.

Director Independence

 Our Board of Directors believes that Messrs. McElhaney and Conrad are independent within the meaning of the Nasdaq Listing Rules.  Section 5605(a)(2) of those rules defines an independent director as a person other than an executive officer or employee of the company or any other individual having a relationship which, in the opinion of the company’s board of directors, may interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

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Director Compensation

 Our independent directors are currently compensated at the rate of $3,000 per month, which they may elect to receive in the form of cash or our common stock.  If the directors elect to receive stock for their services, the stock is valued at not less than the price at which it was sold in the Company’s most recent stock offering or the 20 day average closing bid price immediately preceding the payment, if a trading market for the stock develops.  We also reimburse our directors for reasonable and necessary expenses incurred by them in that capacity.  We will review our compensation arrangements periodically in the future and may compensate our directors as our business needs dictate and our resources permit.

The following table summarizes the compensation of our directors who are not also compensated in their capacities as officers for the fiscal year ended December 31, 2010:

Name	Fees Earned or paid In cash ($)		Stock Awards ($)		Option Awards ($)		Non-equity Incentive plan Compensation ($)		Non-qualified Deferred Compensation Earnings ($)		All other Compen- sation ($)		Total ($)
Bill M. Conrad	$	3,000		—		—		—		—	$	----	$	3,000
Raymond E. McElhaney		3,000		—		—		—		—		-----		3,000

Executive Compensation

The following table summarizes the total compensation of our named executive officers for the fiscal year ended December 31, 2010 and the period from inception (June 20, 2009) to December 31, 2009:

Summary Compensation Table

Name and Principal Position	Year	Salary		Bonus		Stock Awards		Option Awards		Non-Equity Incentive Plan Compensation		All Other Compen- sation			Total
Herman C. DeBoard III, Chairman of the Board and	2010	$	49,000	$	—	$	—	$	—	$	—	$	39,000	(2)	$	68,000
Chief Executive Officer (1)	2009		—		—		—		—		—		33,833	(2)		33,833
Christy P. DiNapoli, President of Entertainment	2010	$	—	$	—	$	—	$	—	$	—	$	—		$	—
Paul Myers, Chief Operating Officer,	2010	$	30,000	$	—	$	—	$	—	$	—	$	25,000	(2)	$	55,000
Secretary and Treasurer	2009		—		—		—		—		—		—			—

______________

(1)           The executive officer did not receive additional compensation for his service as a director of our company.

(2)           The individuals were paid as independent contractors for a portion of the year, which amount is reflected as ‘Other Compensation.’

 We entered into an employment agreement with Mr. DeBoard effective October 1, 2009.  The agreement is effective for a minimum three-year term expiring on September 30, 2012 unless sooner terminated in accordance with the provisions of the agreement.  This agreement, as amended, provides that Mr. DeBoard was compensated at the rate of $6,500 per month through June 30, 2010, following which his compensation was raised to $8,166.67 per month.  Mr. DeBoard is also entitled to participate in other compensation programs applicable to our other executive officers.

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 The agreement with Mr. DeBoard may be terminated prior to its expiration either by us or the employee.  We may terminate the agreement immediately for cause and for any reason on not less than 60 advance written notice.  “Cause” for purposes of the agreement means such conduct by the employee which constitutes in fact or law a breach of fiduciary duty or felonious conduct having the effect, in the opinion of our board of directors, of materially and adversely affecting our company or its reputation.  If we terminate the agreement without cause, or if Mr. DeBoard resigns in connection with a merger, acquisition, buy-out or any corporate restructure, he is entitled to be paid any amount remaining under the agreement for the balance of the initial three-year term, payable in full at the time of separation.

Certain Relationships and Related Transactions

 Initial Capitalization.  On July 20, 2009, we issued 9,000,000 shares of our common stock to Herman DeBoard, III for a price of $9,000, including cash and property, and 2,500,000 shares of common stock each to Raymond McElhaney and Bill Conrad for $2,500 cash each, or $0.001 per share.  Messrs. DeBoard, McElhaney and Conrad were the only members of our Board of Directors approving that transaction on our behalf.

 Consulting Agreement with MCM Capital.  Upon formation of the Company, we entered into an agreement with MCM Capital Management, Inc. to provide consulting services to the company as needed.  We entered into a written agreement with MCM Capital effective December 1, 2010 pursuant to which we agreed to pay MCM $2,000 per month in consulting fees.  MCM provides advice in the areas of capital formation, finance and strategic planning.  The agreement is for a term of one year and is renewable upon mutual agreement of the parties.  Bill Conrad and Ray McElhaney, the shareholders, officers and directors of MCM Capital, are also members of our board of directors and the beneficial owners of more than five percent of our common stock.

 Lease Agreement.  Effective March 1, 2011, we entered into a lease agreement with DiAffari Properties under which we lease office space in the city of Nashville, Tennessee.  The term of the lease is on a month-to-month basis, and provides for payment of $1,250 per month.  Christy DiNapoli, an officer and director of our company, is the owner of DiAffari Properties.

Indemnification and Limitation on Liability of Directors

 Our Articles of Incorporation and Bylaws provide that we must indemnify, to the fullest extent permitted by Colorado law, any of our directors, officers, employees or agents made or threatened to be made a party to a proceeding, by reason of the person serving or having served in a capacity as such, against judgments, penalties, fines, settlements and reasonable expenses incurred by the person in connection with the proceeding if certain standards are met. At present, there is no pending litigation or proceeding involving any of our directors, officers, employees or agents where indemnification will be required or permitted. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

 The Colorado Business Corporation Act (the “CBCA”) allows indemnification of directors, officers, employees and agents of a company against liabilities incurred in any proceeding in which an individual is made a party because he was a director, officer, employee or agent of the company if such person conducted himself in good faith and reasonably believed his actions were in, or not opposed to, the best interests of the company, and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. A person must be found to be entitled to indemnification under this statutory standard by procedures designed to assure that disinterested members of the board of directors have approved indemnification or that, absent the ability to obtain sufficient numbers of disinterested directors, independent counsel or shareholders have approved the indemnification based on a finding that the person has met the standard. Indemnification is limited to reasonable expenses.

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 Our Articles of Incorporation limit the liability of our directors to the fullest extent permitted by the CBCA. Specifically, our directors will not be personally liable for monetary damages for breach of fiduciary duty as directors, except for:

·     any breach of the duty of loyalty to our company or our sharehholders;

·     acts or omissions not in good faith or that involved intentional misconduct or a knowing violation of law;

 ·     dividends or other distributions of corporate assets that are in contravention of certain statutory or contractual restrictions;

·     violations of certain laws; or

·     any transaction from which the director derives an improper personal benefit.

Liability under federal securities law is not limited by the Articles.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 As of November 9, 2011, there were a total of 22,903,750 shares of our common stock outstanding, our only class of voting securities currently outstanding.  The following table describes the ownership of our voting securities by: (i) each of our officers and directors; (ii) all of our officers and directors as a group; and (iii) each shareholder known to us to own beneficially more than 5% of our common stock.  The table also describes the percentage of our voting securities owned by the foregoing individuals before the offering and after the offering, assuming receipt of the maximum proceeds.  Unless otherwise stated, the address of each of the individuals is our address, 5525 Erindale Drive, Suite 200, Colorado Springs, CO 80918.

	Shares Beneficially Owned
Name and Address of Beneficial Owner	Number		Percentage (%)
Herman C. DeBoard, III(1)		6,476,875		28.3
Raymond E. McElhaney(2)		2,185,000		9.5
Bill M. Conrad(2)		2,000,000		8.7
Christy P. DiNapoli(1)		550,000		2.4
Paul D. Myers(3)		775,000		3.4
James Poage(3)		-0-		-0-
All officers and directors as a group (6 persons)		11,986,875		52.3

___________________

(1)      Officer and director.

(2)      Director.

(3)      Officer.

Changes in Control

 We are aware of no circumstances that may give rise to a change in control of our company.

SELLING SHAREHOLDERS

 We have agreed to file the registration statement which contains this prospectus on behalf of our selling shareholders. We have also agreed to use our best efforts to keep the registration statement effective and update the prospectus until the securities owned by the selling shareholders have been sold or may be sold without registration or prospectus delivery requirements under the Securities Act. We will pay the costs and fees of registering the shares, but the selling shareholders will pay any brokerage commissions, discounts or other expenses relating to the sale of the shares.

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 The registration statement which we have filed with the SEC, of which this prospectus forms a part, covers the resale of our common stock by the selling shareholders from time to time under Rule 415 of the Securities Act. Our agreement with the selling shareholders is designed to provide those shareholders some liquidity in their ownership of common stock and to permit secondary public trading of our securities. The selling shareholders may offer our securities covered under this prospectus for resale from time to time. The selling shareholders may also sell, transfer or otherwise dispose of all or a portion of our securities in transactions exempt from the registration requirements of the Securities Act. (See “PLAN OF DISTRIBUTION”).

 The table below presents information as of November 9, 2011 regarding the selling shareholders and our common stock that the selling shareholders may offer and sell from time to time under this prospectus. The table is prepared based on information supplied to us by those shareholders. Except as otherwise noted, the individuals listed in the table below have sole voting and investment power over the shares.  Although we have assumed, for purposes of the table below, that the selling shareholders will sell all of the securities offered by this prospectus, because they may offer all or some of the securities in transactions covered by this prospectus or in another manner, no assurance can be given as to the actual number of shares that will be resold by the selling shareholders. Information covering the selling shareholders may change from time to time, and changed information will be presented in a supplement to this prospectus if and when required. If we are advised of a change in selling shareholders and the new selling shareholders, any pledges, donees or transferees wish to rely upon this prospectus in the resale of their shares, we will file an amendment to the registration statement of which this prospectus is a part. Except as described above, there are no agreements, arrangements or understandings with respect to resale of any of the securities covered by this prospectus.

		Shares Owned After the Offering(2)
Name of Selling Shareholder	Number of Shares to be Offered	Number	Percent
Herman C. DeBoard III(1)	1,000,000	5,476,875	23.9
John Michael Talley	40,000	–	–
Caron Talley	20,000	–	–
Herman C. DeBoard	40,000	–	–
Raymond E. McElhaney(1)	500,000	1,685,000	7.4
Bill M. Conrad(1)	500,000	1,500,000	6.5
Erik B. Carlson	500,000	–	–
Donna K. Klimas	100,000	–	–
Verne P. Collier	220,000	–	–
Henderson Convenience, LLC(3)	280,000	–	–
Paul Davis and Nageeba L. Davis, JTWROS	100,000	–	–
Dewey Williams	50,000	–	–
Jay W. Roth	100,000	–	–
Judith C. Jacobsen Trust(4)	20,000	–	–
William E. Skeith	125,000	–	–
Accredited Members Holding Corporation(5)	745,000	–	–
Mark McGinnis Trust(6)	20,000	–	–
Steven M. Bathgate	20,000	–	–
Michael E. Donnelly	20,000	–	–
Kevin E. Duis	570,000	–	–
Jon B. Kruljac	20,000	–	–
Karen McClaflin	45,000	–	–
David C. Reid	100,000	–	–
Jolie Slaton	335,875	–	–
Robert C. Fay	20,000	–	–
William E. Scaff Jr. and Kim R. Scaff, JTWROS	80,000	–	–
Ed Holloway and Renee Holloway, JTWROS	180,000	–	–
Walton Financial	20,000	–	–

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Verne P. Collier, Custodian for Angela R. Collier, UGMA	20,000	–	–
Verne P. Collier, Custodian for David R. Collier, UGMA	20,000	–	–
Robert M. Igo and Jane M. Igo, JTWROS	40,000	–	–
Robert Igo	40,000	–	–
Jason Reid	40,000	–	–
Dollar Investments(7)	80,000	–	–
Brian Inglis	38,750	–	–
Dewey Williams PSP&T, Dewey Williams, Trustee	50,000	–	–
Amber Robinson	40,000	–	–
Paul D. Myers(1)	775,000	–	–
Christina Wedge	25,000	–	–
Chad M. Mansfield	100,000	–	–
Christy P. DiNapoli(1)	550,000	–	–
Timothy R. Rushlow	500,000	–	–
G. Mark Rowe	37,500	–	–
H. Leigh Severance	375,000	–	–
David Inglis	275,000	–	–
Chris David Abeyta	25,000	–	–
Bill Walton	100,000	–	–
Cary Jeansonne	50,000	–	–
Brian K. Livie and Roberta L. Livie	125,000	–	–
Carol Audra Cooper	25,000	–	–
Michael S. Barish	625,000	–	–
Kenneth Ray Harder & Kay G. Harder, Trustees of the Kenneth Ray Harder Living Trust dated January 31, 2008	50,000	–	–
Gene Smith	1,000	–	–
Mark Hamilton	50,000	–	–
Beau A. Oblinger and Stacey L. Oblinger	37,500	–	–

Ronni L. Wiley	25,000	–	–
John Robert Munro	125,000	–	–
Carl A. Phillips and Teresa L. Norris-Phillips	25,000	–	–
Clayton L. Andrews	50,000	–	–
Jerome Jaroska and Faythe Ann Jaroska	25,000	–	–
Faythe Ann Jaroska	25,000	–	–
Boco Investments, LLC(8)	250,000	–	–
Mohammed Osman	25,000	–	–
Leslie S.R. Leohr	100,000	–	–
Carla Renee Retief	25,000	–	–
Dennis J. Wells and Doris M. Wells	62,500	–	–
Libertadores Investment Group, LLC(9)	750,000	–	–
Larry Noffsinger and Vicki Noffsinger	25,000	–	–
Richard Emory Tewch and Darcy Anne Derler as Tenants in Common	25,000	–	–
Howard Crosby	40,000	–	–
Lee Edmondson and Donna Edmondson	25,000	–	–
James J. Brown and Teresa Brown	50,000	–	–
David W. Mealer and Sheryl L. Mealer	37,500	–	–
Jeffery L. Bright and Sandra K. Bright	25,000	–	–
Michael W. Taylor and P. Diane Taylor	25,000	–	–
Brian W. Pettersen	40,000	–	–
Glen S. Davis	37,500	–	–

33

Delray Wannemacher	100,000	–	–
James E. Mayer	75,000	–	–
Peter G. Traber	125,000	–	–
James C. Czirr	62,500	–	–
YENRAB Investing(10)	50,000	–	–
Larry L. Holmes, Jr.	25,000	–	–
Jay Senter	100,000	–	–
Joe Patton	150,000	–	–
Jesse Griffith	150,000	–	–
Valerie A. Ochsendorf	25,000	–	–
Bryan and Diane Myers	150,000	–	–
Craig Collier	125,000	–	–
Brett Collier	190,000	–	–
Brett Collier, Custodian for Angela R. Collier, UGMA	65,000	–	–
Brett Collier, Custodian for David R. Collier, UGMA	65,000	–	–
Brian Conrad	165,000	–	–
Angie Ricther	20,000	–	–
Sue McElhaney-Lew	20,000	–	–
Michelle Catherine McElhaney	50,000	–	–
Caitlin M. McElhaney	50,000	–	–
Ted and Susan Mohr	10,000	–	–
Eric Douglas Sickler	6,250	–	–
Brian C. Beatty	125,000	–	–
Link Home & Land, LLC(11)	100,000	–	–
Z, Inc.(12)	37,500	–	–
Robert C. Lombardi & Cyndy L. Kraft JTWROS	125,000	–	–
Jeremy Jon Van Sickle	62,500	–	–
David M. Limpert	110,000	–	–
Larry W. Douglas	100,000	–	–
Reid Grandchildren Trust J Reid & L Reid TTEE U/A DTD 12/07/2007	60,000	–	–
Patterson Grandchildren Trust J Patterson & G Patterson TTEE U/A DTD 12/07/2007	60,000	–	–
TOTAL	14,241,875

(1)  Officer and/or director of our company.

(2)  Assumes that all of shares offered under this prospectus are sold, of which there is no assurance.

(3) The selling shareholder has identified William E. Scaff, Jr. as the individual with voting and investment power over these shares.

(4) The selling shareholder has identified Judith C. Jacobsen as the individual with voting and investment power over these shares.

(5) The selling shareholder has identified Jay W. Roth as the individual with voting and investment power over these shares.

(6) The selling shareholder has identified Mark McGinnis as the individual with voting and investment power over these shares.

(7) The selling shareholder has identified John Dollarhide as the individual with voting and investment power over these shares.

(8) The selling shareholder has identified Joseph Zimlich as the individual with voting and investment power over these shares.

(9) The selling shareholder has identified Jorge Sprevtels as the individual with voting and investment power over these shares.

(10)  The selling shareholder has identified Jerry D. Barney as the individual with voting and investment power over these shares.

(11)  The selling shareholder has identified Tom Golden as the individual with voting and investment power over these shares.

(12)  The selling shareholder has identified Darin Zaruba as the individual with voting and investment power over these shares.

 Except as otherwise noted in the table above and to the best of our knowledge, the selling shareholders are not associated with or affiliates of United States broker-dealers, and at the time of purchase the selling shareholders purchased the securities in the ordinary course of business and did not have any agreements or understandings, directly or indirectly, with any persons to distribute or dispose of the securities.  Further, except as otherwise stated, none of the selling shareholders have any relationship to our company, except as a shareholder.

34

PLAN OF DISTRIBUTION

 The selling shareholders and their pledgees, donees, transferees or other successors in interest may offer the shares of our common stock from time to time after the date of this prospectus and will determine the time, manner and size of each sale in the over the counter market, in privately negotiated transactions or otherwise.  The shares will be offered at a price of $0.50 per share until such time, if ever, our shares are quoted on the Over the Counter Bulletin Board or the Over the Counter Markets, following which the shares may be offered at prices prevailing in the market or at privately negotiated prices. The selling shareholders may negotiate, and may pay, brokers or dealers commissions, discounts or concessions for their services. In effecting sales, brokers or dealers engaged by the selling shareholders may allow other brokers or dealers to participate. However, the selling shareholders and any brokers or dealers involved in the sale or resale of the shares may qualify as “underwriters” within the meaning of Section 2(a)(11) of the Securities Act. In addition, the brokers’ or dealers’ commissions, discounts or concessions may qualify as underwriters’ compensation under the Securities Act.

 The methods by which the selling shareholders may sell the shares of our common stock include:

· A block trade in which a broker or dealer so engaged will attempt to sell the shares as agent but may position and resell a portion of the block, as principal, in order to facilitate the transaction;

· Sales to a broker or dealer, as principal, in a market maker capacity or otherwise and resale by the broker or dealer for its account;

· Ordinary brokerage transactions and transactions in which a broker solicits purchases;

· Privately negotiated transactions;

· Short sales;

· Any combination of these methods of sale; or

· Any other legal method.

 In addition to selling their shares under this prospectus, the selling shareholders may transfer their shares in other ways not involving market makers or established trading markets, including directly by gift, distribution, or other transfer, or sell their shares under Rule 144 of the Securities Act rather than under this prospectus, if the transaction meets the requirements of Rule 144. Any selling shareholder who uses this prospectus to sell his shares will be subject to the prospectus delivery requirements of the Securities Act.

 Regulation M under the Securities Exchange Act of 1934 provides that during the period that any person is engaged in the distribution of our shares of common stock, as defined in Regulation M, such person generally may not purchase our common stock. The selling shareholders are subject to these restrictions, which may limit the timing of purchases and sales of our common stock by the selling shareholders. This may affect the marketability of our common stock.

 The selling shareholders may use agents to sell the shares. If this happens, the agents may receive discounts or commissions. The selling shareholders do not expect these discounts and commissions to exceed what is customary for the type of transaction involved. If required, a supplement to his prospectus will set forth the applicable commission or discount, if any, and the names of any underwriters, brokers, dealers or agents involved in the sale of the shares. The selling shareholders and any underwriters, brokers, dealers or agents that participate in the distribution of our common stock offered hereby may be deemed to be “underwriters” within the meaning of the Securities Act, and any profit on the sale of shares by them and any discounts, commissions, concessions or other compensation received by them may be deemed to be underwriting discounts and commissions under the Securities Act. The selling shareholders may agree to indemnify any broker or dealer or agent against certain liabilities relating to the selling of the shares, including liabilities arising under the Securities Act.

 Upon notification by the selling shareholders that any material arrangement has been entered into with a broker or dealer for the sale of the shares through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, we will file a supplement to this prospectus, if required, pursuant to Rule 424(b) under the Securities Act, disclosing the material terms of the transaction.

35

DESCRIPTION OF CAPITAL STOCK

 Our authorized capital consists of 50,000,000 shares of common stock, $0.001 par value per share, and 5,000,000 shares of preferred stock, $0.01 per share.  As of November 9, 2011 we had 22,903,750 shares of common stock issued and outstanding, and no shares of preferred stock outstanding.

 The following discussion summarizes the rights and privileges of our capital stock.  This summary is not complete, and you should refer to our Articles of Incorporation, as amended, filed with the Colorado Secretary of State.

Common Stock

 The holders of our common stock are entitled to one vote for each share held of record on all matters submitted to stockholders, including the election of directors.  Cumulative voting for directors is not permitted.  Except as provided by special agreement, the holders of common stock are not entitled to any preemptive rights and the shares are not redeemable or convertible.  All outstanding common stock is, and all common stock offered hereby will be, when issued and paid for, fully paid and non-assessable.  The number of authorized shares of common stock may be increased or decreased (but not below the number of shares then outstanding or otherwise reserved under obligations for issuance by us) by the affirmative vote of a majority of shares cast at a meeting of our shareholders at which a quorum is present.

 Our Articles of Incorporation and Bylaws do not include any provision that would delay, defer or prevent a change in control of our company.  However, as a matter of Colorado law, certain significant transactions would require the affirmative vote of a majority of the shares eligible to vote at a meeting of shareholders which requirement could result in delays to or greater cost associated with a change in control of our company.

 The holders of our common stock are entitled to dividends if, as and when declared by our Board of Directors from legally available funds, subject to the preferential rights of the holders of any outstanding preferred stock.  Upon any voluntary or involuntary liquidation, dissolution or winding up of our affairs, the holders of our common stock are entitled to share, on a pro rata basis, all assets remaining after payment to creditors and prior to distribution rights, if any, of any series of outstanding preferred stock.

Preferred Stock

 Our Articles of Incorporation vest our board of directors with authority to divide the preferred stock into series and to fix and determine the relative rights and preferences of the shares of any such series so established to the full extent permitted by the laws of the State of Colorado and our Articles of Incorporation in respect to, among other things:

(i) the number of shares to constitute such series and the distinctive designations thereof;

(ii) the rate and preference of dividends, if any, the time of payment of dividends, whether dividends are cumulative and the date from which any dividend shall accrue;

(iii) whether preferred stock may be redeemed and, if so, the redemption price and the terms and conditions of redemption;

(iv) the liquidation preferences payable on preferred stock in the event of involuntary or voluntary liquidation;

(v) sinking fund or other provisions, if any, for redemption or purchase of preferred stock;

(vi) the terms and conditions by which preferred stock may be converted, if the preferred stock of any series are issued with the privilege of conversion; and

(vii) voting rights, if any.

36

 As of the date of this memorandum, we have not designated or authorized any preferred stock for issuance.

Restrictions on Future Sales of Our Common Stock

 All of our common stock currently outstanding is subject to restrictions on resale.  The shares being offered have not been registered under the Securities Act or under any state securities laws or regulations.  Purchasers of the shares may not offer, sell or otherwise dispose of the common stock in the absence of (i) an effective registration for such securities under the Securities Act, or (ii) an opinion of Company’s counsel that such registration is not required.

 Under Rule 144 of the Securities Act, a person holding such restricted securities who is not an affiliate of our company and who beneficially owns those securities that were not acquired from us or an affiliate of our company within the previous one year would be entitled to sell their shares free of any restrictions, should a market for our common stock develop.  An affiliate of our company would be entitled to sell, within any 12-month period, a number of shares that does not exceed the greater of:

● one percent (1%) of the then outstanding shares of our common stock, or

● the average weekly trading volume of our common stock during the four calendar weeks preceding the date of the proposed sale.

 The sale of any shares in the future, either pursuant to this prospectus or pursuant to Rule 144, could depress the price of our common stock in any market which might develop.

SHARES ELIGIBLE FOR FUTURE SALE

 Sales of substantial amounts of common stock (including shares issued upon the exercise of outstanding options) in the public market after this offering could cause the market price of our common stock to decline.  Those sales also might make it more difficult for us to sell equity-related securities in the future or reduce the price at which we could sell any equity-related securities.

Rule 144

 In general, under Rule 144 as currently in effect, a person who is not an affiliate of our company holding restricted securities that were not acquired from us or an affiliate of our company within the previous year would be entitled to sell those shares free of any restrictions.  An affiliate of our company would be entitled to sell, within any three-month period, a number of shares that does not exceed the greater of:

·   1% of the then outstanding shares of our common stock, or

·   the average weekly trading volume of our common stock during the four calendar weeks preceding the date of proposed sale.

 Sales by affiliates under Rule 144 are also subject to requirements relating to manner of sale and filing of notice with the SEC.

WHERE YOU CAN FIND MORE INFORMATION

 You may read and copy any document we file at the SEC’s Public Reference Rooms at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Rooms. You can also obtain copies of our SEC filings by going to the SEC’s website at http://www.sec.gov.

 We have filed with the SEC a registration statement on Form S-1 to register the shares of our common stock. This prospectus is part of that registration statement and, as permitted by the SEC’s rules, does not contain all of the information set forth in the registration statement. For further information about us or our common stock, you may refer to the registration statement and to the exhibits filed as part of the registration statement. The description of all agreements or the terms of those agreements contained in this prospectus are specifically qualified by reference to the agreements, filed or incorporated by reference in the registration statement.

37

 We will provide copies of our reports and other information which we file with the SEC without charge to each person who receives a copy of this prospectus. Your request for this information should be directed in writing to our secretary, Paul Myers, at our corporate office in Colorado Springs, Colorado. You can also review this information at the public reference rooms of the SEC and on the SEC’s website as described above.

LEGAL MATTERS

 We have been advised on the legality of the shares included in this prospectus by Dufford & Brown, P.C., of Denver, Colorado.

EXPERTS

 Our financial statements as of December 31, 2010 and for the period from inception to December 31, 2010 included in this prospectus have been included in reliance on the report of StarkSchenkein, LLP, our independent registered public accounting firm. These financial statements have been included on the authority of this firm as an expert in auditing and accounting.

 38

FINANCIAL STATEMENTS

Table of Contents

Balance Sheets as of June 30, 2011 (unaudited) and December 31, 2010	F-2
Statements of Operations for the six months ended June 30, 2011 and 2010, and for the period from Inception (June 20, 2009) to June 30, 2011 (unaudited)	F-3
Statements of Cash Flows for the six months ended June 30, 2011 and 2010, and for the period from Inception (June 20, 2009) to June 30, 2011 (unaudited)	F-4
Notes to Financial Statements – June 30, 2011 (unaudited)	F-5
Report of Independent Registered Public Accounting Firm	F-13
Balance Sheets at December 31, 2010 and 2009	F-14
Statements of Operations for the year ended December 31, 2010, the period from Inception (June 20, 2009) to December 31, 2009, and the period from Inception (June 20, 2009) to December 31, 2010	F-15
Statement of Changes in Shareholders’ Equity for the period from Inception (June 20, 2009) to December 31, 2010	F-16
Statements of Cash Flows for the year ended December 31, 2010, the period from Inception (June 20, 2009) to December 31, 2009, and the period from Inception (June 20, 2009) to December 31, 2010	F-17
Notes to Financial Statements – December 31, 2010 and 2009	F-18

F-1

LIQUID SPINS, INC.

(A Development Stage Company)

BALANCE SHEETS

	June 30, 2011			December 31, 2010
	(Unaudited)
ASSETS
Current assets:
Cash	$	808,916		$	251,068
Restricted cash		1,000			2,100
Accounts receivable, net		570			13,429
Prepaid  Expenses		46,786			6,667
Recoupable payments-MP3 Music		337,500			-
Total current assets		1,194,772			273,264
Music catalog		35,981			15,000
Publishing catalog		10,000			-
Recording studio equipment, computer equipment, software and furniture		147,364			18,625
Accumulated depreciation		(12,301	)		(2,664	)
Web application and infrastructure costs, net		86,224			4,400
Accumulated amortization		(8,953	)		(733	)
Deposits		2,000			1,200
Total assets	$	1,455,087		$	309,092
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	61,638		$	36,777
Accrued Expenses and Other Current Liabilities		9,879			12,305
Recoupable payment due – MP3 Music		150,000			-
Total current liabilities		221,517			49,082
Shareholders' equity:
Preferred stock - $0.01 par value, 5,000,000 shares authorized:
no shares issued and outstanding		-			-
Common stock - $0.001 par value, 50,000,000 shares authorized:
22,878,750 and 18,303,750 shares issued and   outstanding, respectively		22,878			18,304
Additional paid-in capital		3,709,121			1,805,696
(Deficit) accumulated during the production stage		(2,498,429	)		(1,563,990	)
Total shareholders' equity		1, 233,570			260,010
Total liabilities and shareholders' equity	$	1,455,087		$	309,092

The accompanying notes are an integral part of these financial statements.

F-2

LIQUID SPINS INC.

(A Development Stage Company)

STATEMENT OF OPERATIONS

For the six months ended June 30, 2011 and 2010,

 and Inception (June 20, 2009) to June 30, 2011

	Six months ended June 30,						Inception (June 20, 2009) to
	2011			2010			June 30, 2011
Music download sales	$	40		$	-		$	40
Printing sales		498			-			498
Card sales		658			26,888			28,546
Total sales	$	1,196		$	26,888		$	29,084
Cost of sales
Cost of product applicable to sales		4,285			14,240			40,211
Music contract distribution payments		68,150			-			68,150
Labor & operations		14,194			17,454			34,135
Total costs of sales		86,629			31,694			142,496
Gross profit		(85,433	)		(4,806	)		(113,412	)
Costs and Expenses:
Production start up expense and product development		355,643			99,713			663,277
Selling, distribution and marketing		6,874			25,296			45,727
General and administrative		469,815			78,781			1,626,961
Depreciation and amortization		17,857			3,840			32,213
Total costs and expenses		850,189			207,630			2,368,178
Operating (loss)		(935,622	)		(212,436	)		(2,481,590	)
Other income (expense):
Loss on sale of assets		-			-			(2,917	)
Loss on disposal of asset		-			-			(15,262	)
Interest income		1,184			-			1,340
Total other income		1,184			-			(16,389	)
(Loss) before income taxes		(934,438	)		(212,436	)		(2,498,429	)
Provision for income taxes		-			-			-
Net (loss)	$	(934,438	)	$	(212,436	)	$	(2,498,429	)
Net (loss) per common share:
Basic and Diluted	$	(0.04	)	$	(0.01	)
Weighted average shares outstanding:
Basic and Diluted		21,166,512			15,924,420

The accompanying notes are an integral part of these financial statements.

F-3

LIQUID SPINS INC.

(A Development Stage Company)

STATEMENTS OF CASH FLOWS

For the six months ended June 30, 2011 and 2010,

and Inception (June 20, 2009) to June 30, 2011

	Six months ended June 30,						Inception (June 20, 2009)
	2011			2010			to June 30, 2011
Cash flows from operating activities:
Net (loss)	$	(934,438	)	$	(212,436	)	$	(2,498,428	)
Adjustments to reconcile net (loss) to net cash
(used in) operating activities:
Allowance for doubtful accounts		(13,549	)		-			-
Inventory impairment		-			-			10,724
Depreciation and amortization		17,857			3,840			32,213
Professional services paid in stock		75,000			15,000			265,000
Services paid in stock		78,000			-			834,900
Loss on sale of asset		-			-			2,918
Loss on disposal of asset		-			-			15,262
Changes in operating assets and liabilities:
Accounts receivable		26,408			(26,374	)		570
Inventory		-			-			(10,724	)
Prepaid expenses		(40,120	)		(6,000	)		(46,787	)
Deposit		(800	)		(1,200	)		(2,000	)
Accounts payable		24,860			23,895			61,637
Accrued expenses and other liabilities		(2,426	)		-			9,879
Total adjustments		165,230			9,161			1,172,452
Net cash (used in) operating activities		(769,208	)		(203,275	)		(1,325,976	)
Cash flows from investing activities:
Capital expenditures		(128,739	)		(2,595	)		(152,365	)
Web application and infrastructure costs		(81,824	)		-			(102,262	)
Restricted Cash		-			-			-
Other assets/Deferred record production costs		(218,481	)		-			(233,481	)
Net cash (used in) investing activities		(429,044	)		(2,595	)		(488,108	)
Cash flows from financing activities:
Proceeds from sales of stock		1,675,000			270,000			2,544,000
Recording studio equipment purchased with stock		80,000			-			-
Net cash provided by financing activities		1,755,000			270,000			2,544,000
Net increase in cash		556,748			49,130			729,916
Cash at beginning of period		253,168			2,357			-
Cash at end of period	$	809,916		$	51,487		$	729,916
Supplemental Cash Flow Information
Interest paid	$	-		$	-		$	-
Income taxes paid	$	-		$	-		$	-
Non-cash investing and financing activities:
Non-cash related party purchase of intellectual property paid in stock	$	80,000		$	-		$	88,100

The accompanying notes are an integral part of these financial statements.

F-4

LIQUID SPINS, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

June 30, 2011

1.     Summary of Significant Accounting Policies

Basis of Presentation:    Liquid Spins, Inc. (the “Company”) was incorporated under the laws of the State of Colorado on June 20, 2009 under the name “Malemark, Inc.” to develop and market a line of greeting cards under the Malemark trademark and logo that were primarily targeted towards male consumers.  On April 26, 2011, the Company changed its name to “Liquid Spins, Inc.”  While working on the greeting card portfolio, the Company developed a “lyrical greeting card” product which incorporated lyrics from popular songs as part of the card message.  The lyrical greeting card evolved into additional web-based products that focused on distributing digital media (primarily music) via the internet, and the Company began marketing these products under the “Liquid Spins” name.  While the Company is still maintaining web-based greeting card products, the Company’s business continues to evolve into a digital media platform including associated products.  The Company has emerged as a distribution company building a digital media platform that can be used as a system for distributing digital media to customers.

The financial statements included herein are expressed in United States dollars, the Company's reporting currency.  The accounting policies conform to accounting principles generally accepted in the United States of America (“US GAAP”).  The financial statements are accounted for in accordance with ASC 915 (“ASC 915”) “Development Stage Companies”.  In accordance with ASC 915, a development stage company is a company whose primary activities, include, but are not limited to financial planning, raising capital, and research and development.  It is an entity devoting substantially all its efforts to establishing a new business for which either of the following conditions exist:

·   Planned principal operations have not commenced; or

·   Planned principal operations have commenced, but there has been no significant revenue therefrom.

Use of Estimates:    The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Management routinely makes judgments and estimates about the effects of matters that are inherently uncertain.  Estimates that are critical to the accompanying financial statements include estimates related to impairments of long lived assets and investments and trade receivables, classification of expenditures as either an asset or an expense, valuation of deferred tax assets, and the likelihood of loss contingencies.  Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Estimates and assumptions are revised periodically and the effects of revisions are reflected in the financial statements in the period it is determined to be necessary.  Actual results could differ from these estimates.

F-5

Accounts Receivable and Allowance for Doubtful Accounts:    Accounts receivables consists of uncollateralized customer obligations generally due under normal trade terms requiring payment within 30 days from the invoice date. However, as is customary in the industry, the Company’s accounts receivable may extend up to 90 days.  Accounts receivable are stated at the amount billed to the customer net of an allowance for doubtful accounts. During the six months ended June 30, 2011 the Company utilized $13,549 of it allowance for doubtful accounts.  At June 30, 2011 the balance of the allowance for doubtful accounts is zero.

Stock Based Compensation:   The Company follows ASC 718 “Compensation – Stock Compensation,” which requires it to provide compensation costs for its stock option plans determined in accordance with the fair value based method prescribed in ASC 718.  The fair value of each stock option is estimated at the grant date by using the Black-Scholes option-pricing model and provides for expense recognition over the service period, if any, of the stock option.  As of June 30, 2011, there were no issued or outstanding stock options and no stock option activity for the six months then ended.

Share-based Payment Transactions:  Share-based payments awarded to employees and consultants of the Company by a related party and other holder of an economic interest in the Company as compensation for services provided to the Company are accounted for under ASC Topic 718.  Under ASC Topic 718, the economic interest holder makes a capital contribution to the Company, and the Company makes a share-based payment to certain employee and contractors in exchange for services rendered.  Share-based payment transactions are recorded as the difference between the market value of the shares of stock, as determined by the price paid for shares of the Company stock by non-related parties on or about the date of the share-based payments, and the price originally paid for the stock by the related party and other holder of an economic interest in the company.

Per Share Amounts:    The Company computes earnings per share under ASC subtopic 260-10, “Earnings Per Share” (“ASC 260-10”). Net earnings (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and dilutive common stock equivalents outstanding during the period. Dilutive common stock equivalents consist of shares issuable upon conversion of convertible preferred shares and the exercise of the Company’s stock options.   As of June 30, 2011 and June 30, 2010, there were no dilutive common stock equivalents.

     Revenue Recognition and Sales Returns: Revenue is recognized when all applicable recognition criteria have been met, which generally include (a) persuasive evidence of an existing arrangement; (b) fixed or determinable price; (c) delivery has occurred or service has been rendered; and (d) collectability of the sales price is reasonably assured.

     Revenue will derived from downloads of digital music; sales of gift cards for the downloading of digital music, and from the licensing of copyrighted song rights.  The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collection is probable. Product is considered delivered to the customer once it has been downloaded or shipped and title and risk of loss have been transferred. For the Company’s online digital download sales, these criteria are met at the time the product is purchased and downloaded. The Company has implemented a no refund policy.

The Company currently has no customer incentive programs.  Future market conditions and product transitions may require the Company to add customer incentive programs and incur incremental price protection obligations that could result in additional reductions to revenue at the time such programs are offered. Additionally, certain customer incentive programs would require management to estimate the number of customers who will actually redeem the incentive. Management’s estimates would be based on the specific terms and conditions of particular incentive programs. If a greater than estimated proportion of customers redeem such incentives, the Company would be required to record additional reductions to revenue, which would have a negative impact on the Company’s results of operations.

The Company anticipates that a licensee will pay a minimum guarantee to the Company for the right to sell or distribute its music rights. The Company will then record any minimum guarantee payment received as unearned or deferred revenue and recognize earnings under its licensing agreement, absent a clear indication in the agreement, on a proportional basis over the life of the agreement. 

The Company sells music downloads at its website utilizing third-party vendors such as PayPal to process payments.  Sales are recognized when title and the risk of loss have been transferred to the customer.  The Company’s music download business had no sales during 2009 and 2010.

Recently Issued Accounting Standards Updates:   

The following accounting standards updates were recently issued and have been adopted by the Company.  

ASU No. 2010-13 was issued in April 2010, and will clarify the classification of an employee share based payment award with an exercise price denominated in the currency of a market in which the underlying security trades.  This ASU was effective for the first fiscal quarter beginning after December 15, 2010.

F-6

There were various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries.  None of the updates are expected to a have a material impact on the Company's financial position, results of operations or cash flows.

2.     Recoupable Payments -MP3 Music

During 2011, the Company entered into certain “MP3 Download Aggregator Agreements” (“Agreements”), the terms of which are contractually confidential.  The initial term of the Company’s current agreements will remain in effect for a period of (12) months.  Some of the agreements entered into by the Company require non-refundable recoupable payments.   The Company expects to recoup certain of these costs through sales of MP3 music in 2011 and 2012.

Recoupable Payments – MP3 Music paid to date

The Company has paid $337,500 to date in non-refundable recoupable payments. As of March 31, 2011 $75,000 was classified as other assets/Deferred costs and recoupables.

Recoupable Payments Due – MP3 Music

In addition to the payments already paid, the Company is contractually obligated to pay $150,000 in non-refundable payments which are due on May 15, 2012. 

Recoupable Payments – MP3 Music

The Company has expensed $68,150 of $337,500, on a pro-rata basis, to cost of sales as of June 30, 2011 per terms of the agreements.

3.      Music Catalog:

The Company has entered into agreements in order to develop master recordings, and recorded its costs for those rights into its Music Catalog.  The Company will evaluate the fair market value of its Music Catalog on an on-going basis, and the Company’s Music Catalog will be valued at the lower of its costs or market valuation. As of June 30, 2011 $35,981was classified as Music Catalog, representing an increase of $20,981 for the period from December 31, 2010 to June 30, 2011.

4.     Publishing Catalog:

On March 1, 2011, the Company entered into an Exclusive Songwriting Agreement with a composer and the composer’s co publisher.  Under the terms of the agreement, in exchange for certain exclusive composer services and assignment of composer's entire interest in all related works and materials, along with other conditions imposed on the Composer and co publisher, the Company agrees to pay certain nonreturnable advances regard to each Composition, including, but not limited to $24,000 during the initial period of the term payable in equal monthly installments of $2,000 per month, and 50% of all sums expended by Publisher in connection with independent promotion.   The advances are recoupable from any and all royalties otherwise payable to Composer pursuant to the terms of the agreement, including, but not limited to, fifty percent (50%) of any and all gross receipts derived from uses of the Composition, with certain restrictions.  The term of the agreement consists of an initial period of one year ending February 29, 2012 with the mutual option to extend the term for two consecutive option periods of one year each.As of June 30, 2011, $10,000 had been paid to the Composer.In accordance with ASC 928, the Company as the owner of these original music compositions and music copyrights has the right to license the right to distribute records or music to others, but has not licensed any rights as of this date. The Company has recorded its payments as an asset and will amortize these costs to expense as these rights are sold.

The Company has recorded its costs for developing these copyrights into its Publishing Catalog.  The Company will evaluate the fair market value of its Publishing Catalog on an on-going basis, and the Company’s Publishing Catalog will be valued at the lower of its costs or market valuation.

F-7

5.    Distribution Agreement Stored-Value Gift Cards:

Effective May 26, 2011, the Company entered into a distribution agreement (“Agreement”) with Interactive Communications International, Inc. (“InComm”).  InComm is a marketer, distributor and technology innovator of stored-value gift and prepaid products. The initial term of this agreement ends on January 1, 2013 and shall be automatically extended after this initial term for successive consecutive terms of one (1) year unless either party gives notice of termination.   The costs incurred for these stored-value gift cards will be capitalized as inventory.  The Company will recognize the revenue from its sales of these stored-value gift cards and charge its related inventory costs to the Company’s Costs of Sales as its stored-value gift cards are sold.

As of June 30, 2011, the Company has no gift card or other stored value products.

6.     Recording Studio Equipment, Computer Equipment & Purchased Software and Office Furniture

In May 2011 the Company purchased recording studio equipment (“Equipment”) from a shareholder of the Company in exchange for 200,000 shares of its common stock valued at $0.40 per share or a total valuation of $80,000.  Since the shareholder’s historical cost exceeded the market valuation of the equipment (based on research by the Company at time of purchase), and exceeded the cost calculated by using the value of shares paid, the Company has capitalized this equipment using the price of the shares paid or $80,000, plus the applicable shipping costs of $6,971 to move the equipment to Nashville. The equipment is available for use and is being depreciated on a straight line basis over 60 months, and the depreciation expense relating to equipment and software is set out below.

During 2011, the Company acquired an additional $34,592 of equipment and software.  The equipment and software is being depreciated on a straight line basis over 36 months, and the depreciation expense relating to equipment and software is set out below.

On June 7, 2011 the Company acquired $7,176 of office furniture. The office furniture is being depreciated on a straight line basis over 60 months, and the depreciation expense relating to the office furniture is set out below.

Equipment, software and office furniture consist of the following:

	June 30,			December 31,
	2011			2010
Recording Equipment	$	86,971		$	-
Less accumulated depreciation		(2,899	)		-
Equipment and software		53,218			18,625
Less accumulated depreciation		(9,282	)		(2664	)
Office Furniture		7,179			-
Less accumulated depreciation		(120	)		-
	$	135,064		$	15,961

 The Company evaluates the recoverability of property and equipment when events and circumstances indicate that such assets might be impaired.

F-8

7.    Website Application and Infrastructure Development Costs:

 Amortization expense relating to website application and infrastructure costs amounted to $8,219 and $2,517 for the six months ended June 30, 2011 and 2010, respectively.  Website Application and Infrastructure Development Costs consists of the following:

	June 30,			December 31,
	2011			2010
Website application and infrastructure development costs	$	86,224		$	4,400
Less accumulated amortization		(8,953	)		(733	)
	$	77,271		$	3,667

8.    Long-term Leases and Prepaid Expenses

The Company leases its office facilities under a non-cancelable lease agreement for a total sum of $8,000. The lease expired on May 31, 2011. On June 1, 2011 the Company entered into a non-cancelable prepaid lease agreement for $12,000 which expires on November 30, 2011.  $11,250 and $6,667 is recorded as prepaid lease expense as of June 30, 2011 and December 31, 2010, respectively.

Retainers for legal and accounting professional service fees related to the Company’s public registration statement are recorded as prepaid expense when paid and amortized to expense as the services are rendered.  Prepaid expenses consist of the following:

	June 30,		December 31,
	2011		2010
Prepaid Rent	$	11,250	$	6,667
Professional Services		26,831		-
Other		8,755		-
	$	46,786	$	6,667

9.    Deferred Income Taxes

Since inception, the Company has accumulated substantial net operating loss carry forwards for tax purposes.  At June 30, 2011 and December 31, 2010, the Company had deferred tax assets of approximately $671,077 and $303,137, respectively, attributable to tax loss carry forwards for U.S. tax purposes.  The principal difference between the net loss reported for financial reporting purposes and the loss reported for tax purposes relates to stock based compensation, asset valuation and impairment, and depreciation and amortization differences for financial reporting purposes versus tax reporting purposes.

F-9

Deferred income taxes are stated at tax rates expected to be in effect when taxes are actually paid or recovered. Deferred income tax assets represent amounts available to reduce income tax payments in future years.  Significant components of the Company’s deferred tax assets are as follows:

	June 30, 2011			December 31,  2010
Deferred tax Assets
Net operating loss carry forwards	$	671,077		$	303,137
Stock Compensation		330,514			299,603
Other		15,668			15,667
Total deferred tax assets		1,017,259			618,407
Valuation allowance		(1,017,259	)		(618,407	)
Total net deferred taxes		-			-
Net deferred tax assets:
Current portion:		-			-
Deferred portion:		-			-
Total		-			-
Provision for income taxes:
Federal		-			-
State		-			-
Total		-			-
Current portion:		-			-
Deferred portion:		-			-
Total	$	-		$	-

Net operating loss carry forwards approximates $671,077 and $303,137 as of June 30, 2011 and December 31, 2010, respectively. There are statutory limitations on the Company’s ability to realize any future benefit from the related potential tax assets, including a requirement that losses be offset against future taxable income, if any.  If the Company were to experience a change in ownership under Section 382, the Company may be limited in its ability to fully utilize its net operating losses.

If not used, the carry forward will expire through 2030 and 2032.   The Company is uncertain as to whether it will ever utilize the operating loss carry forwards.  Accordingly, the deferred tax assets of approximately $1,017,259 and $618,407 relating to the operating loss carry forward have been fully reserved as of June 30, 2011 and December 31, 2010, respectively.  The increase in the valuation allowance related to the deferred tax asset was approximately $398,851 during the period ended June 30, 2011.

The Company’s provision for income taxes differs from applying the statutory United States federal income tax rate to income before income taxes.   The difference results from the Company’s net operating loss.  Deferred tax assets at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets are expected to be settled or realized.  A reconciliation of the U.S. federal tax rate and the effective tax rate is as follows:

Income tax provision at federal statutory rate:	35%
Effect of net operating loss	(35%	)
Effective tax rate:	-%

The Company is subject to examination by the IRS and various U.S. state and local jurisdictions for tax years 2009 to the present.

10.    Shareholders' Equity

On July 18, 2009, the Company commenced the sale of its common shares under exemptions offered by federal and state securities regulations of those laws in what may be referred to as a private placement.  As a result, its securities were subject to restrictions on resale.  The sales were made pursuant to a subscription agreement between the Company and each subscriber.  

F-10

During 2009, the Company sold 6,500,000 shares of common stock at par value of $0.001 (total $6,500).  8,100,000 shares were exchanged for the intellectual property of Malemark, Inc. valued $8,100, from an officer of the Company.

On July 22, 2009, the Company sold 100,000 shares of common stock at $.025 or $2,500.

On July 23, 2009, the Board approved a private offering of the Company’s common stock at a price of $0.10 per share on a best efforts basis for a period not to exceed 90 days. 550,000 shares were sold at $.10 per share or $55,000.

On September 9, 2009, the Board approved a private offering of the Company’s common stock at a price of $0.25 per share on a best efforts basis for a period not to exceed 90 days.   During 2009, the Company sold 60,000 shares at $0.25 per share or $15,000.  During 2010, the Company sold 1,390,000 shares at $0.25 per share or $347,500.

During 2010, pursuant to a contract, the Company agreed to issue common stock to a consultant performing management consulting and investor relations work on its behalf.  The 60,000 shares issued in 2010 in exchange for the services were valued at $0.25 per share, or $15,000.    The 187,500 shares issued during the quarter ending March 31, 2011 in exchange for services were valued at $0.40 per share, or $75,000.

During 2010, pursuant to a contract effective September 15, 2010, the Board of Directors approved the issuance of 125,000 shares of common stock per month, (aggregating 437,500 shares valued at $0.40 per share, or $175,000 for the period September 15, 2010 through December 31, 2010), as payment for financial management consulting.

 On August 16, 2010 the Board of Directors approved a private offering of 5,000,000 of the Company’s common stock at $0.40 per share on a best efforts basis until November 30, 2010.  During 2010, 1,106,250 shares of common stock were issued for an aggregate of $442,500.

During the year ended December 31, 2010, an officer who is also the beneficial owner of more than 5% of our common stock transferred 900,000 shares of his stock at a discount to two employees of the Company and 1,000,000 shares of his shares to two consultants of the Company as compensation for services rendered.  Share-based compensation and share-based payment for consulting services amounted to $358,900 and $398,000, respectively, for the year ended December 31, 2010.  

During 2011, pursuant to a contract effective September 15, 2010, the Board of Directors approved the issuance of 187,500 shares of common stock valued at $0.40 per share, or $175,000 for the period January 1, 2011 through March 15,2011, as payment for financial management consulting.

During the period ended June 30, 2011, an officer who is also the beneficial owner of more than 5% of our common stock transferred 200,000 shares of his stock at a discount to two officers of the Company.  Share-based compensation amounted to $78,000 for the period ended June 30, 2011.

During the period ending June 30, 2011 the Company sold 4,187,500 shares of common stock at $0.40 or $1,675,000

11.    Commitments and Contingencies

Consulting Agreement – MCM: -  Effective December 1, 2010, the Company entered into a consulting agreement (“Agreement”) with MCM Capital Management, Inc. (“MCM”) in the amount of $2,000 per month beginning on December 1, 2010 and effective for a period of one year.

Future minimum payments relating to the management services agreement are as follows at June 30, 2011:

 2011  $10,000

F-11

Employment Agreement: - The Company entered into an employment agreement with a key employee for a three-year term commencing October 01, 2009 for $6,500 per month until July 1, 2010, and increasing to $8,167 per month thereon and terminating September 30, 2012, to be renewed by the Company and the individuals upon mutual agreement.

Future payments relating to the employment agreement are as follows as of June 30, 2011:

2011	$49,002
2012	$82,503

Future payments relating to MP3 Download Aggregator Agreements as of June 30, 2011:

2011	$    -
2012	$150,000

Future payments relating to Xerox Corporation Maintenance Agreement as of June 30, 2011:

2011	$1,806
2012	$3,612
2013	$3,612
2014	$3,612
2015	$   602

Legal Proceedings: - Neither the Company nor any of its officers or directors in their capacity as such is a party to any pending legal proceeding and no such proceeding is contemplated to the best of their knowledge and belief.

Office Lease/Commitment: - On June 01, 2011 the Company entered into a non-cancelable prepaid lease agreement for its Colorado Springs location.  The lease cost was $12,000 and expires on November 30, 2011.

Distribution Agreement: - Effective June 30, 2011, the Company entered into a certain “Digital Download Sales Agreement” with RED Distribution, LLC, the terms of which are contractually confidential.

12.    Related Party Transactions

Initial Capitalization:  -   On July 20, 2009, the Company issued 9,000,000 shares of its common stock to Herman DeBoard III for a price of $9,000, including $800 cash and $8,100 of intellectual property, and 2,500,000 shares of common stock each to Raymond McElhaney and Bill Conrad for $2,500 cash each, or $0.001 per share.  Messrs. DeBoard, McElhaney and Conrad were the only members of our board of directors approving that transaction on the Company’s behalf.

Consulting Agreement with MCM Capital: - Upon formation of the Company, the Company entered into an agreement with MCM Capital Management, Inc.(“MCM”) to provide consulting services to the company as needed. On December 1, 2010 the Company entered into a formal agreement with MCM Capital in the amount of $2,000 per month for a period of one year.  The agreement is renewable upon mutual agreement of the parties.  Bill Conrad and Ray McElhaney, the shareholders, officers and directors of MCM Capital, are also members of the Company’s board of directors and shareholders of the Company.   MCM consulting fees included in General and Administrative expense amounted to $12,000 for the six months ended June 30, 2011 incurred under the December 1, 2010 formal contract.

Note Receivable: - On March 1, 2011, the Company loaned the Medina Group, dba The Music Group the principal amount of $13,792.  The note was due and paid in full on April 30, 2011.  Christy DiNapoli, Chief Manager of the Medina Group and noteholder, along with other members of the Medina Group became employees of Liquid Spins, Inc. as of March 1, 2011.  Christy DiNapoli was elected as a corporate director at the 2011 Annual Shareholder's meeting held on April 21, 2011.

Related-party Accounts Payable: - Related party payables as of June 30, 2011 and December 31, 2010 are as follows:

	June 30, 2011		December 31, 2010
Directors and Shareholders	$	-	$	8,401
Employee Officer and Shareholder		1,799		282
Employee and Shareholder				49
Vendor under common ownership
with certain directors and shareholders of the Company		2,000		2,000
Total	$	3,799	$	10,732

F-12

Recording Studio Equipment (see note 6)  In May, 2011 the Company purchased recording studio equipment (“Equipment”) from a shareholder of the Company in exchange for 200,000 shares of its common stock valued at $0.40 per share or a total valuation of $80,000.  The market valuation of the equipment, based on research by the Company at time of purchase, exceeds shares value paid.  The Company has capitalized this equipment at $80,000, plus the applicable shipping costs of $6,971 to move the equipment to Nashville.

Share-based Payment Transactions:  During the year ended December 31, 2010, an officer who is also the beneficial owner of more than 5% of our common stock transferred 900,000 shares of his stock at a discount to two employees of the Company and 1,000,000 shares of his shares to two consultants of the Company as compensation for services rendered.  Share-based compensation and share-based payment for consulting services amounted to $358,000 and $398,000, respectively, for the year ended December 31, 2010.    During the six months ended June 30, 2011, an officer who is also the beneficial owner of more than 5% of our common stock transferred 200,000 shares of his stock to two officers of the Company.  Share-based compensation amounted to $78,000 for the six months ended June 30, 2011.

13.    Subsequent Events

The Company has evaluated all transactions and events subsequent to the balance sheet date and determined that no further disclosures are necessary.

F-13

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and Board of Directors

Liquid Spins, Inc.

We have audited the accompanying balance sheets of Liquid Spins, Inc., as of December 31, 2010 and 2009, and the related statements of operations, stockholders' equity, and cash flows for the year ended December 31, 2010 and the period inception (June 20, 2009) to December 31, 2009 and for the period from inception (June 20, 2009) to December 31, 2010.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Liquid Spins, Inc., as of December 31, 2010 and 2009, and the results of its operations, and its cash flows for the year ended December 31, 2010 and the period inception (June 20, 2009) to December 31, 2009 and for the period from inception (June 20, 2009) to December 31, 2010, in conformity with accounting principles generally accepted in the United States of America.

/s/ StarkSchenkein, LLP

Denver, Colorado

July 29, 2011

3600 South Yosemite Street | Suite 600 | Denver, CO  80237 | P: 303.694.6700 | TF: 888.766.3985 | F: 303.694.6761 | www.starkcpas.com

An Independent Member of BKR International

F-14

LIQUID SPINS, INC.

(A Development Stage Company)

BALANCE SHEETS

	December 31,
	2010			2009
ASSETS
Current assets:
Cash	$	251,068		$	2,357
Restricted cash		2,100			-
Accounts receivable, net		13,429			-
Prepaid Expenses		6,667			-
Total current assets		273,264			2,357
Music Catalog		15,000			-
Equipment and software		18,625			7,023
Accumulated depreciation		(2,664	)		(975	)
Web application and infrastructure costs, net		4,400			15,100
Accumulated amortization		(733	)		(2,433	)
Deposits		1,200
Total assets	$	309,092		$	21,072
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	36,777		$	11,475
Accrued expenses and other current liabilities		12,305			-
Total current liabilities		49,082			11,475
Shareholders' equity:
Preferred stock - $0.01 par value, 5,000,000 shares authorized:
no shares issued and outstanding		-			-
Common stock - $0.001 par value, 50,000,000 shares authorized:
18,303,750 and 15,310,000 shares issued and outstanding, respectively		18,304			15,310
Additional paid-in capital		1,805,696			71,790
(Deficit) accumulated during the development stage		(1,563,990	)		(77,503	)
Total shareholders' equity		260,010			9,597
Total liabilities and shareholders' equity	$	309,092		$	21,072

The accompanying notes are an integral part of these financial statements.

F-15

LIQUID SPINS, INC.

(A Development Stage Company)

STATEMENTS OF OPERATIONSFor the year ended December 31, 2010, the period from inception (June 20, 2009) to December31, 2009

and for the period from inception (June 20, 2009) to December31, 2010

			2010			Inception (June 20, 2009) to December 31, 2009			Inception (June 20, 2009) to December 31, 2010
Sales		$	27,888		$	-		$	27,888
Cost of Sales
Cost of product applicable to sales			35,926			-			35,926
Labor & operations			27,117			-			27,117
	Total cost of sales		63,043			-			63,043
Gross (loss)			(35,155	)		-			(35,155	)
Costs and Expenses:
Product research and development			256,703			50,931			307,634
Selling, distribution and marketing			38,853			-			38,853
General and administrative			1,137,753			26,572			1,164,325
	Total costs and expenses		1,433,309			77,503			1,510,812
Operating (loss)			(1,468,464	)		(77,503	)		(1,545,967	)
Other income (expense):
Loss on sale of assets			(2,917	)		-			(2,917	)
Loss on disposal of assets			(15,262	)		-			(15,262	)
Interest income			156			-			156
	Total other income		(18,023	)		-			(18,023	)
(Loss) before income taxes			(1,486,487	)		(77,503	)		(1,563,990	)
Provision for income taxes			-			-			-
Net (loss)		$	(1,486,487	)	$	(77,503	)	$	(1,563,990	)
Net (loss) per common share:
Basic and Diluted		$	(0.09	)	$	(0.01	)
Weighted average shares outstanding:
Basic and Diluted			16,516,620			7,536,548

The accompanying notes are an integral part of these financial statements.

F-16

LIQUID SPINS, INC.

(A Development Stage Company)

STATEMENTS OF SHAREHOLDERS' EQUITY

For the period from Inception (June 20, 2009) to December 31, 2010

	Common Stock				Additional		Accumulated			Shareholders'
	# of Shares		Par Value		Paid-In Capital		Deficit			Equity
BALANCE, JUNE 20, 2009		-	$	-	$	-	$	-		$	-
Sales of shares for cash at $0.001   per share (par value)		6,500,000		6,500		-		-			6,500
Shares issued for purchase of  intellectual capital		8,100,000		8,100		-		-			8,100
Sale of shares for cash at $0.025 per share		100,000		100		2,400		-			2,500
Sale of shares for cash at $0.10 per share		550,000		550		54,450		-			55,000
Sale of shares for cash at $0.25 per share		60,000		60		14,940		-			15,000
Net Loss		-		-		-		(77,503	)		(77,503	)
BALANCE, DECEMBER 31, 2009		15,310,000		15,310		71,790		(77,503	)		9,597
Shares issued for services		60,000		60		14,940		-			15,000
Sale of shares for cash at $0.25 per share		1,390,000		1,390		346,110		-			347,500
Sale of shares for cash at $0.40 per share		1,106,250		1,106		441,394		-			442,500
Shares issued for services		437,500		438		174,562		-			175,000
Shares transferred for employee services		-		-		398,000		-			398,000
Shares transferred for consulting services		-		-		358,900		-			358,900
Net loss		-		-		-		(1,486,487	)		(1,486,487	)
BALANCE, DECEMBER 31, 2010		18,303,750	$	18,304	$	1,805,696	$	(1,563,990	)	$	260,010

The accompanying notes are an integral part of these financial statements.

F-17

LIQUID SPINS, INC.

(A Development Stage Company)

STATEMENTS OF CASH FLOWS

for the year ended December 31, 2010, the period from Inception (June 20, 2009) to December 31, 2009

and for the period from Inception (June 20,. 2009) to December 31, 2010

				Inception (June 20, 2009) to			Inception (June 20, 2009) to
	2010			December 31, 2009			December 31, 2010
Cash flows from operating activities:
Net (loss)	$	(1,486,487	)	$	(77,503	)	$	(1,563,990	)
Adjustments to reconcile net (loss) to net cash
(used in) operating activities:
Allowance for doubtful accounts		13,549			-			13,549
Inventory impairment		10,724			-			10,724
Depreciation and amortization		10,948			3,408			14,356
Professional services agreement paid in stock		190,000			-			190,000
Services paid in stock		756,900			-			756,900
Loss on sale of asset		2,918			-			2,918
Loss on disposal of asset		15,262			-			15,262
Changes in operating assets and liabilities:
Accounts receivable		(26,978	)		-			(26,978	)
Inventory		(10,724	)		-			(10,724	)
Prepaid leases expense		(6,667	)		-			(6,667	)
Deposits		(1,200	)		-			(1,200	)
Accounts payable		25,302			11,475			36,777
Accrued expenses and accrued liabilities		12,305			-			12,305
Total adjustments		992,339			14,883			1,007,222
Net cash (used in) operating activities		(494,148	)		(62,620	)		(556,768	)
Cash flows from investing activities:
Capital expenditures		(16,603	)		(7,023	)		(23,626	)
Web application and infrastructure costs, capitalized		(13,438	)		(7,000	)		(20,438	)
Restricted cash		(2,100	)		-			(2,100	)
Deferred record production costs		(15,000	)		-			(15,000	)
Net cash (used in) investing activities		(47,141	)		(14,023	)		(61,164	)
Cash flows from financing activities:
Proceeds from sales of stock		790,000			79,000			869,000
Net cash provided by financing activities		790,000			79,000			869,000
Net increase in cash and equivalents		248,711			2,357			251,068
Cash at beginning of period		2,357			-			-
Cash at end of period	$	251,068		$	2,357		$	251,068
Supplemental Cash Flow Information
Interest paid	$	-		$	-		$	-
Income taxes paid	$	-		$	-		$	-
Non-cash investing and financing activities:
Non-cash related party purchase of intellectual property paid in stock	$	-		$	8,100		$	8,100

The accompanying notes are an integral part of these financial statements.

F-18

LIQUID SPINS, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

December 31, 2010 and 2009

1.     Summary of Significant Accounting Policies

 Basis of Presentation:    Liquid Spins, Inc. (the “Company”) was incorporated under the laws of the State of Colorado on June 20, 2009 under the name “Malemark, Inc.” to develop and market a line of greeting cards under the Malemark trademark and logo that were primarily targeted towards male consumers.  On April 26, 2011, the Company changed its name to “Liquid Spins, Inc.”.  While working on the greeting card portfolio, the Company developed a “lyrical greeting card” product which incorporated lyrics from popular songs as part of the card message.  The lyrical greeting card evolved into additional web-based products that focused on distributing digital media (primarily music) via the internet, and began marketing these products under the “Liquid Spins” name.  The Company began exploring other opportunities with the retail outlets it was pursuing in connection with its Liquid Spins products and discovered a market opportunity to partner with certain retailers to provide them with a branded platform for digital media distribution.  While the Company is still maintaining web-based greeting card products, the Company’s business continues to evolve into a digital media platform including associated products.  The Company has emerged as a distribution company building a digital media platform that can be used as a system for distributing digital media to customers.

 The financial statements included herein are expressed in United States dollars, the Company's reporting currency.  The accounting policies conform to accounting principles generally accepted in the United States of America (“US GAAP”).  The financial statements are accounted for in accordance with ASC 915 (“ASC 915”) “Development Stage Companies”.  In accordance with ASC 915, a development stage company is a company whose primary activities, include, but are not limited to financial planning, raising capital, and research and development.  It is an entity devoting substantially all its efforts to establishing a new business for which either of the following conditions exist:

·   Planned principal operations have not commenced; or

·   Planned principal operations have commenced, but there has been no significant revenue therefrom.

 Research is generally defined as planned research or critical investigation aimed at discovery of new knowledge with the hope that such knowledge will be useful in developing a new product or service or a new process or technique or in bringing about a significant improvement to an existing product or process.   Development is generally defined as the translation of research findings or other knowledge into a plan, or design for a new product or process, or for a significant improvement to an existing product or process whether intended for sale or use.  It includes the conceptual formulation, design, and testing of product alternatives, construction of prototypes, and operation of pilot programs.

 Use of Estimates:    The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Management routinely makes judgments and estimates about the effects of matters that are inherently uncertain.  Estimates that are critical to the accompanying financial statements include estimates related to impairments of long lived assets and investments and trade receivables, classification of expenditures as either an asset or an expense, valuation of deferred tax assets, and the likelihood of loss contingencies.  Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Estimates and assumptions are revised periodically and the effects of revisions are reflected in the financial statements in the period it is determined to be necessary.  Actual results could differ from these estimates.

F-19

 Cash:   The Company’s operating cash balances are maintained in financial institutions and periodically exceed federally insured limits. The Company believes that the financial strength of these institutions mitigates the underlying risk of loss.  To date, these concentrations of credit risk have not had a significant impact on the Company’s financial position or results of operations.

 Restricted Cash:    Pursuant to the terms of an on-line vendor agreement, the Company agreed to place cash in escrow, to be released to the vendor upon the Company’s satisfaction with the service.  The restricted cash balances were placed in separate non- interest bearing accounts.   As of December 31, 2010, $2,100 of website project services related to restricted cash in escrow had not been completed.

 Accounts Receivable and Allowance for Doubtful Accounts:  Accounts receivables consists of uncollateralized customer obligations generally due under normal trade terms requiring payment within 30 days from the invoice date. However, as is customary in the industry, the Company’s accounts receivable may extend up to 90 days.  Accounts receivable are stated at the amount billed to the customer net of an allowance for doubtful accounts.

 The Company evaluates the collectability of its accounts receivable based on a combination of factors. In circumstances where the Company is aware of a customer’s inability to meet its financial obligations, a specific allowance for bad debts against amounts due is recorded to reduce the receivable to the amount the Company reasonably expects will be collected. In addition, the Company recognizes a general allowance for bad debts based on estimates developed by using either standard quantitative measures incorporating historical write-offs, or a subjective percentage of remaining accounts receivable.  As of December 31, 2010, the majority of the Company’s accounts receivable were generated from sales to a single retail vendor.  The Company’s review of the outstanding balance as of December 31, 2010, indicated that a valuation allowance was required.  The gross accounts receivable balance was reduced by $13,549.

 Deferred Recording Production Costs:The Company is engaged in the production of recording-based entertainment, which is generally exploited in the DVD or broadcast format.  Deferred costs are contractually recouped first from initial sales.  The artist is not paid until deferred costs have been recouped in full by the Company.

 Record production costs are accounted for pursuant to ASC Topic 928 “Entertainment – Music” (“ASC 928”), and are stated at the lower of cost or net realizable value based on anticipated total revenue (ultimate revenue).  Recording production costs are capitalized and then recognized ratably based on the ratio of the current period’s revenue to estimated remaining ultimate revenue. Ultimate revenues are calculated in accordance with ASC 928 and require estimates and the exercise of judgment.  Accordingly, these estimates are periodically updated to include the actual results achieved or new information as to anticipated revenue performance of each title.  As of December 31, 2010, there were no revenues generated related to the recording production costs, and no production costs amortized and recognized to expense.

 Impairment of Long-Lived Assets:    The Company evaluates its long-lived assets for impairment.  If impairment indicators exist, the Company performs additional analysis to quantify the amount, if any, by which capitalized costs exceed recoverable value.  The periodic evaluation of capitalized costs is based upon expected future cash flows, including estimated salvage values.  As of December 31, 2010, there was no impairment of capitalized long-term assets.

 Property and Equipment:    All items of property and equipment are carried at cost not in excess of their estimated net realizable value.  Normal maintenance and repairs are charged to operations while expenditures for major maintenance and betterments are capitalized.  Gains or losses on disposition are recognized in operations.  Equipment and software are reviewed for impairment in accordance with ASC Topic 360 (“ASC 360”), “Property, Plant, and Equipment.”  In assessing the recoverability of its long-lived assets, the Company makes certain assumptions regarding the useful life and contribution to the estimated future cash flows.  If such assumptions change in the future, the Company is required to record impairment charges for these assets not previously recorded.

F-20

 Depreciation:   Depreciation of property and equipment is computed using straight-line methods over the estimated useful lives of the various assets.   The cost of computer equipment is depreciated over 3 to 5 years and software is amortized over 3 years.

 Intangible Assets/Website Application and Infrastructure Development Costs: The Company has a federally registered trademark on the term “Malemark” and owns multiple domain names including “LiquidSpins.com”, “Malemark.com” and “cavemangreetingcards.com”.  The Company also owns multiple social networking domains and groups on twitter.com, facebook.com, flickr.com, and myspace.com.  The domain’s value is based on the average number of users, demographics of these users, geography and number of advertisers and general sales it generates.

 Costs related to the domain name are capitalized and amortized over a 3-year period.  Periodic costs of maintaining the websites are expensed as operating costs as incurred.  In accordance with ASC Topic 350 (“ASC 350-50”), “Website Development Costs”, fees incurred for website hosting are expensed over the period of benefit, while costs incurred during the website application and infrastructure development stage are accounted for in accordance with ASC Topic (“ASC 350-40”) “Internal Use Software”, and capitalized.  This includes costs to purchase software tools, or costs incurred during the application development stage for internally developed tools, costs to maintain and register an internet domain.  Graphics are generally considered a component of software costs.  Modifications to graphics after the software is launched are evaluated to determine whether the modifications represent maintenance or enhancements to the website.

 The primary business of Liquid Spins is no longer greeting cards.  The Company decided to direct their resources towards digital media distribution and has therefore determined that the Malemark website’s value should be written off.

 Stock Based Compensation:   The Company follows ASC 718 “Compensation – Stock Compensation,” which requires it to provide compensation costs for its stock option plans determined in accordance with the fair value based method prescribed in ASC 718.  The fair value of each stock option is estimated at the grant date by using the Black-Scholes option-pricing model and provides for expense recognition over the service period, if any, of the stock option.  As of December 31, 2010 and December 31, 2009, there were no issued or outstanding stock options and no stock option activity for the year ended December 31, 2010 and the period June, 20, 2009 through December 31, 2009.

 Share-based Payment Transactions:  Share-based payments awarded to employees and consultants of the Company by a related party and other holder of an economic interest in the Company as compensation for services provided to the Company are accounted for under ASC Topic 718.  Under ASC Topic 718, the economic interest holder makes a capital contribution to the Company, and the Company makes a share-based payment to certain employee and contractors in exchange for services rendered.  Share-based payment transactions are recorded as the difference between the market value of the shares of stock, as determined by the price paid for shares of the Company stock by non-related parties on or about the date of the share-based payments, and the price originally paid for the stock by the related party and other holder of an economic interest in the company.

 Per Share Amounts:    The Company computes earnings per share under ASC subtopic 260-10, “Earnings Per Share” (“ASC 260-10”). Net earnings (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and dilutive common stock equivalents outstanding during the period. Dilutive common stock equivalents consist of shares issuable upon conversion of convertible preferred shares and the exercise of the Company’s stock options.   As of  December 31, 2010 and 2009  there were no dilutive common stock equivalents.

F-21

 Income Taxes:    Income taxes are computed using the liability method.  Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial and tax reporting purposes and the effect of net operating loss carry-forwards.  Deferred tax assets are evaluated to determine if it is more likely than not that they will be realized.  Valuation allowances have been established to reduce the carrying value of deferred tax assets in recognition of significant uncertainties regarding their ultimate realization.  Further, the evaluation has determined that there are no uncertain tax positions required to be disclosed.

 Sales Taxes: Sales taxes are not included in net sales as the Company is a conduit for collecting and remitting taxes to the appropriate taxing authorities.

 Revenue Recognition and Sales Returns: Revenue is recognized when all applicable recognition criteria have been met, which generally include (a) persuasive evidence of an existing arrangement; (b) fixed or determinable price; (c) delivery has occurred or service has been rendered; and (d) collectability of the sales price is reasonably assured.

Revenue will derived from downloads of digital music; sales of gift cards for the downloading of digital music, and from the licensing of copyrighted song rights.  The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collection is probable. Product is considered delivered to the customer once it has been downloaded or shipped and title and risk of loss have been transferred. For the Company’s online digital download sales, these criteria are met at the time the product is purchased and downloaded. The Company has implemented a no refund policy.

The Company currently has no customer incentive programs.  Future market conditions and product transitions may require the Company to add customer incentive programs and incur incremental price protection obligations that could result in additional reductions to revenue at the time such programs are offered. Additionally, certain customer incentive programs would require management to estimate the number of customers who will actually redeem the incentive. Management’s estimates would be based on the specific terms and conditions of particular incentive programs. If a greater than estimated proportion of customers redeem such incentives, the Company would be required to record additional reductions to revenue, which would have a negative impact on the Company’s results of operations.

The Company anticipates that a licensee will pay a minimum guarantee to the Company for the right to sell or distribute its music rights. The Company will then record any minimum guarantee payment received as unearned or deferred revenue and recognize earnings under its licensing agreement, absent a clear indication in the agreement, on a proportional basis over the life of the agreement. 

 The Company sells music downloads at its website utilizing third-party vendors such as PayPal to process payments.  Sales are recognized when title and the risk of loss have been transferred to the customer.  The Company’s music download business had no sales during 2009 and 2010.

 Concentration of Credit Risk:  As of December 31, 2010, approximately 97% of the Company’s total sales, representing Malemark, Inc. cards, were generated from sales to a single vendor, and accounted for 100% of its accounts receivable as of December 31, 2010.

 The Company has carefully considered and assessed the credit risk resulting from its concentrate sales arrangement with this vendor, has provided for a reserve for uncollectible accounts, and believes it is not exposed to significant credit risk in relation to the counterparty meeting its contractual obligations as it pertains to its trade receivables during the ordinary course of business.

 Operating Leases: Rent expense for operating leases is recorded on a straight-line basis over the initial lease term.  The difference between rent expense and rent paid is recorded as deferred rent.

 Fair Value of Financial Instruments:    ASC 825, “Disclosures About Fair Value of Financial Instruments,” requires disclosure of fair value information about financial instruments.  ASC 820, “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements.  Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2010.

 The respective carrying value of certain on-balance-sheet financial instruments approximate their fair values.  These financial instruments include cash, cash equivalents, restricted cash, accounts receivable, prepaid and refundable taxes, accounts payable and accrued expenses.  Fair values were assumed to approximate carrying values for these financial instruments due to their short term nature or they are receivable or payable on demand.

 Recently Adopted Accounting Standards:  The Company evaluates the pronouncements of various authoritative accounting organizations, primarily the FASB, the U.S. Securities and Exchange Commission (“SEC”), and the Emerging Issues Task Force (“EITF”), to determine the impact of new pronouncements on US GAAP and the impact on the Company.  The Company has adopted the following new accounting standards during 2009 and 2010.

F-22

 Subsequent Events: –ASU 2010-09 amends disclosure requirements within Subtopic 855-10. An entity that is a filer with the Securities and Exchange Commission is not required to disclose the date through which subsequent events have been evaluated. This change alleviates potential conflicts between Subtopic 855-10 and the SEC’s requirements. The standard sets forth: (i) the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, (ii) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet in its financial statements, and (iii) the disclosures that an entity should make about events or transactions occurring after the balance sheet date in its financial statements.  All of the amendments in ASU 2010-09 that are applicable to the Company are effective upon issuance and its adoption had no impact on the Company’s financial position, results of operations or cash flows.  The Company adoption of this update during the fourth quarter of 2010 did not have a material effect on its financial statements.

 Fair Value Measurements: – In January 2010, Accounting Standards Updates (“ASU”) No. 2010-06 amended existing disclosure requirements about fair value measurements by adding required disclosures about items transferring into and out of levels 1 and 2 in the fair value hierarchy; adding separate disclosures about purchase, sales, issuances, and settlements relative to level 3 measurements; and clarifying, among other things, the existing fair value disclosures about the level of disaggregation.  The ASU was adopted during the period ended March 31, 2010, and its adoption had no impact on the Company’s financial position, results of operations or cash flows.

 Recently Issued Accounting Standards Updates:   

 The following accounting standards updates were recently issued and have not yet been adopted by the Company.  These standards are currently under review to determine their impact on the Company’s financial position, results of operations, or cash flows.

 ASU No. 2010-11 was issued in March 2010, and clarifies that the transfer of credit risk that is only in the form of subordination of one financial instrument to another is an embedded derivative feature that should not be subject to potential bifurcation and separate accounting.  This ASU will be effective for the first fiscal quarter beginning after June 15, 2010, with early adoption permitted.

 ASU No. 2010-13 was issued in April 2010, and will clarify the classification of an employee share based payment award with an exercise price denominated in the currency of a market in which the underlying security trades.  This ASU will be effective for the first fiscal quarter beginning after December 15, 2010, with early adoption permitted.

 There were various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries.  None of the updates are expected to a have a material impact on the Company's financial position, results of operations or cash flows.  The following table summarizes the Company’s inventory as of December 31, 2010 and 2009.

2.     Inventories

	December 31, 2010			December 31,  2009
Finished products	$	10,724		$	-
Less reserve		(10,724	)		-
	$	-		$	-

 As of December 31, 2010, inventory consisted of pre-printed finished product purchased from a third-party vendor determined by management to have no future market value.  The reserve for obsolete or unsalable inventory is computed by reserving 100% of the inventory.  There was no inventory held on location with retailers as of December 31, 2010 and 2009.

 Unique displays for the Company’s cards which are manufactured by a third party are expensed as purchased.

3.     Record Master, Advance Royalty and Deferred Distribution Costs:

 Record Master and Advance Royalty Costs:- In accordance with the terms of a December 1, 2010 Master Recording Agreement under a twelve month "Recording Term", between the Company and a certain artist, the Company has agreed to fund a “Recording Fund” in the amount of $30,000.   The agreement ends November 30, 2011.  In accordance with this agreement, the Company shall pay for the recording costs for the Masters in an amount to be determined by the Company for each Master, in return for certain recording services and other copyright deliverables, a wave file or other current master and all multi-track master tapes for each Master.  Upon execution of specific terms by the Artist, the Company shall be reimbursed promptly for all monies advanced, and shall be paid a royalty in accordance with the terms of the agreement.

F-23

 As of December 31, 2010, $15,000 of the $30,000 commitment had been funded.  The costs are recognized ratably based on the ratio of the current period’s advances and royalty revenue to estimated remaining ultimate revenues.

4.     Equipment and Purchased Software

 Depreciation expense relating to computer equipment and software amounted to $975 for the period June 20, 2009 through December 31, 2009 and $3,772 for the year ended December 31, 2010, respectively.  Depreciation relating to computer equipment and software is included in Material, Labor and Other Production costs.

Computer equipment and software consist of the following:

	Year Ended December 31, 2010			June 20, 2009 through December 31, 2009
Computer equipment and purchased software	$	18,625		$	7,023
Less accumulated depreciation		(2,664	)		(975	)
	$	15,961		$	6,048

 The Company evaluates the recoverability of property and equipment when events and circumstances indicate that such assets might be impaired.

5.    Website Application and Infrastructure Development Costs:

 Amortization expense relating to website application and infrastructure costs amounted to $733 for the year ended December 31, 2010 and $2,433 for the period June 20, 2009 through December 31, 2009 respectively.   Amortization expense relating to website application and infrastructure costs are included in Operations and Development expense.

	Twelve Months Ended December 31, 2010			June 20, 2009 through December 31,  2009
Application and infrastructure costs	$	28,538		$	15,100
Less accumulated amortization		(24,871	)		(2,433	)
	$	3,667		$	12,667

6.    Long-term Leases and Prepaid Expenses

 The Company leases its office facilities under a non-cancelable lease agreement for a total sum of $8,000. The lease expired on May 31, 2011.  $6,667 is recorded as prepaid lease expense as of December 31, 2010.  On June 01, 2011 the Company entered into a non-cancelable prepaid lease agreement for $12,000 which expires on November 30, 2011.

7.    Deferred Income Taxes

 Since inception, the Company has accumulated substantial net operating loss carry forwards for tax purposes.  At December 31, 2010, the Company had deferred tax assets of approximately $618,407 attributable to tax loss carry forwards for U.S. tax purposes.  The principal difference between the net loss reported for financial reporting purposes and the taxable loss reported for tax purposes relates to stock based compensation, asset valuation and impairment, and depreciation and amortization expenditures differences for financial reporting purposes versus tax reporting purposes.

F-24

 Deferred income taxes are stated at tax rates expected to be in effect when taxes are actually paid or recovered. Deferred income tax assets represent amounts available to reduce income tax payments in future years.  Significant components of the Company’s deferred tax assets are as follows:

		December 31,  2010			December 31, 2009
Deferred tax Assets
	Net operating loss carry forwards	$	303,137		$	32,821
	Stock Compensation		299,603			-
	Other		15,667			-
Total deferred tax assets			618,407			32,281
Valuation allowance			(618,407	)		(32,281	)
Total net deferred taxes			-			-
Net deferred tax assets:
	Current portion:		-			-
	Deferred portion:		-			-
Total			-
Provision for income taxes:
	Federal		-			-
	State		-			-
Total			-			-
	Current portion:		-			-
	Deferred portion:		-			-
Total		$	-		$	-

 As of December 31, 2010, the Company had net operating loss carry forwards of approximates $682,099. There are statutory limitations on the Company ability to realize any future benefit from the related potential tax assets, including a requirement that losses be offset against future taxable income, if any.  If not used, the carry forward will expire through 2030 and 2032.   If the Company were to experience a change in ownership under Section 382, the Company may be limited in its ability to fully utilize its net operating losses.

 The Company is uncertain as to whether it will ever utilize the operating loss carry forwards.  Accordingly, the deferred tax asset of approximately $618,407 and $32,281 relating to the operating loss carry forward has been fully reserved as of December 31, 2010 and 2009, respectively.    The increase in the valuation allowance related to the deferred tax asset was approximately $586,126 during the year ended December 31, 2010.

 The Company’s provision for income taxes differs from applying the statutory United States federal income tax rate to income before income taxes.   The difference result from the Company’s net operating loss.  Deferred tax assets at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets are expected to be settled or realized.  A reconciliation of the U.S. federal tax rate and the effective tax rate is as follows:

Income tax provision at federal statutory rate:	35%
Effect of net operating loss	(35%)
Effective tax rate:	- %

  The Company is subject to examination by the IRS and various U.S. state and local jurisdictions for tax years 2009 to the present.

F-25

8.    Shareholders' Equity

 On July 18, 2009, the Company commenced the sale of its common shares under exemptions offered by federal and state securities regulations of those laws in what may be referred to as a private placement.  As a result, its securities were subject to restrictions on resale.  The sales were made pursuant to a subscription agreement between the Company and each subscriber.  

 During 2009, the Company sold 6,500,000 shares of common stock at par value of $0.001 (total $6,500).  8,100,000 shares were exchanged for the intellectual property of Malemark, Inc. valued $8,100, from an officer of the Company.

 On July 22, 2009, the Company sold 100,000 shares of common stock at $.025 or $2,500.

 On July 23, 2009, the Board approved a private offering of the Company’s common stock at a price of $0.10 per share on a best efforts basis for a period not to exceed 90 days. 550,000 shares were sold at $0.10 per share or $55,000.

 On September 9, 2009, the Board approved a private offering of the Company’s common stock at a price of $.25 per share on a best efforts basis for a period not to exceed 90 days.   During 2009, the Company sold 60,000 shares at $.25 per share or $15,000.  During 2010, the Company sold 1,390,000 shares at $0.25 per share or $347,500.

 During 2010, pursuant to a contract, the Company agreed to issue common stock to a consultant performing management consulting and investor relations work on its behalf.  The 60,000 shares issued in 2010 in exchange for the services were valued at $0.25 per share, or $15,000.  

 During 2010, pursuant to a contract effective September 15, 2010, the Board of Directors approved the issuance of 125,000 shares of common stock per month, (aggregating 437,500 shares valued at $0.40 per share, or $175,000 for the three and one-half month period ending December 31, 2010), as payment for financial management consulting.

 On August 16, 2010 the Board of Directors approved a private offering of 5,000,000 of the Company’s common stock at $.40 per share on a best efforts basis until November 30, 2010.  During 2010, 1,106,250 shares of common stock were issued for an aggregate of $442,500.

 In November, 2010, the Board of Directors considered the Company’s need for additional working capital and agreed to extend the Company’s non-public offerings until March 15, 2011 unless sooner terminated by the Company.

During the year ended December 31, 2010, an officer who is also the beneficial owner of more than 5% of our common stock transferred 900,000 shares of his stock at a discount to two employees of the Company and 1,000,000 shares of his shares to two consultants of the Company as compensation for services rendered.  Share-based compensation and share-based payment for consulting services amounted to $358,900 and $398,000, respectively, for the year ended December 31, 2010.  

9.    Stock Options

 The Company’s Equity Incentive Plan (“Plan”) was adopted effective August 1, 2009 and amended with the approval of the shareholders on April 21, 2011. The Plan terminates in accordance with its terms on April 5, 2021.  Under the Plan, a total of 5,000,000 shares of our common stock are reserved for issuance thereunder.

 Under the Plan, non-qualified stock options and/or grants of our common stock may be granted to key persons assisting in our development, including officers, directors, employees and consultants.  Incentive stock options may be granted to our employees.  The Plan gives our board of directors broad authority to grant options and make stock grants to key persons selected by the board, while considering criteria such as employment position or other relationship with the company, duties and responsibilities, ability, productivity, length of service or association, morale, interest in the company, recommendations by supervisors, and other matters, to set the option price, term of option, and other broad parameters.  Options may not be granted at a price less than the fair market value of our common stock at the date of grant and may not have a term in excess of 10 years.

F-26

 Options granted under the Plan do not generally give rise to taxable income to the recipient or any tax consequence to us, since the Plan requires that the options be issued at a price not less than the fair market value of the common stock on the date of grant. However, when a non-qualified option is exercised, the holder is subject to tax on the difference between the exercise price of the option and the fair market value of the stock on the date of exercise. We receive a corresponding deduction for income tax purposes. If the option is an incentive option, the holder is not subject to tax upon exercise of the option and we do not receive a corresponding deduction for tax purposes.  Incentive options are subject to additional holding period requirements.  Recipients of stock grants are subject to tax on the fair market value of the stock on the date of grant and we receive a corresponding deduction

 As of December 31, 2010, and 2009, there have been no options or shares awarded under the Plan.

10.    Commitments and Contingencies

 Consulting Agreement – MCM: -  Effective December 1, 2010, the Company entered into a consulting agreement (“Agreement”) with MCM Capital Management, Inc. (“MCM”) in the amount of $2,000 per month beginning on December 1, 2010 and effective for a period of one year.

Future minimum payments relating to the management services agreement are as follows at December 31, 2010:

2011 $22,000

 Management Services Agreement – AMHC: - Effective September 15, 2010, the Company entered into a management services agreement (“Agreement”) with Accredited Members Holding Corporation (“AMHC”) in the amount of $25,000 per month payable in common stock valued at $.40 per share, plus fees incurred for the first three months.  Per the agreement, effective the first day of the fourth month (January, 2011), the Company agrees to pay $25,000 per month in cash plus $25,000 per month in common stock valued at $.40 per share, plus fees incurred.   The Agreement ended on March 15, 2011.

Future minimum payments relating to the management services agreement are as follows at December 31, 2010:

2011 $62,500

Future common stock issued in lieu of services rendered is as follows at December 31, 2010:

	Par Value	Additional Paid-In Capital
137,500 shares at $.40	$137.50	$62,362.50

 Employment Agreement: - The Company entered into an employment agreement with a key employee for a three-year term commencing October 01, 2009 for $6,500 per month until July 1, 2010, and increasing to $8,167 per month thereafter and terminating September 30, 2012, to be renewed by the Company and the individuals upon mutual agreement

F-27

Future payments relating to the employment agreement are as follows at December 31, 2010:

2011	$88,000
2012	$73,500

Future payments relating to the Production Services Agreement are as follows at December 31, 2010:

2011 $15,000

 Consulting Agreement – Griffith:  Effective November 1, 2010, the Company entered into a consulting agreement with Jesse Griffith in the amount of $4,000 per month increasing to $5,000 per month on March 1, 2011.  The agreement continues on a month-to-month basis.

Future payments relating to the consulting agreement are as follows as of December 31, 2010:

2011 $8,000

Refer to subsequent events for an additional related agreement entered into March 1, 2011.

 Legal Proceedings: - Neither the Company nor any of its officers or directors in their capacity as such is a party to any pending legal proceeding and no such proceeding is contemplated to the best of their knowledge and belief.

11.    Related Party Transactions

 Initial Capitalization: - On July 20, 2009, the Company issued 9,000,000 shares of our common stock to Herman DeBoard III for a price of $9,000, including $800 cash and $8,100 of intellectual property, and 2,500,000 shares of common stock each to Raymond McElhaney and Bill Conrad for $2,500 cash each, or $0.001 per share.  Messrs. DeBoard, McElhaney and Conrad were the only members of our board of directors approving that transaction on the Company’s behalf.  Included in Malemark, Inc.

 Consulting Agreement with MCM Capital: Upon formation, the Company entered into an agreement with MCM Capital Management, Inc. (“MCM”) to provide consulting services to the company as needed. Fees for MCM Capital’s consulting services were calculated on an hourly basis.  On December 1, 2010 the Company entered into a formal agreement with MCM Capital in the amount of $2,000 per month for a period of one year.  The agreement is renewable upon mutual agreement of the parties.  Bill Conrad and Ray McElhaney, the shareholders, officers and directors of MCM Capital, are also members of the Company’s board of directors and shareholders of the Company.   MCM consulting fees included in General and Administrative expense amounted to $7,500 for the period June 20, 2009 through December 31, 2009, and $26,500 for the year ended December 31, 2010, including $2,000 incurred under the December 1, 2010 formal contract.

 Equipment Purchase: - On May 11, 2011, we purchased recording studio equipment from a shareholder of the Company in exchange for 200,000 shares of our common stock priced at $0.40 per share.

 Note Receivable: - On March 1, 2011, the Company loaned the Medina Group, dba The Music Group, the principal amount of $13,792.50.  The note was due and paid in full on April 30, 2011.  Christy DiNapoli, Chief Manager of the Medina Group and note holder, along with other members of the Medina Group became employees of Liquid Spins, Inc. as of March 1, 2011.  Christy DiNapoli was elected as a corporate director at the 2011 Annual Shareholder's meeting held on April 21, 2011.

F-28

 Related-party Accounts Payable: - Related party payables as of December 31 2009 and 2010 are as follows:

	Year Ended December 31, 2010		June 20, 2009 through December 31, 2009
Directors and Shareholders	$	8,401	$	49
Employee Officer and Shareholder		282		-
Employee and Shareholder		49		-
Vendor under common ownership
with certain directors and shareholders of the Company		2,000		-
Total	$	10,732	$	49

12.    Subsequent Events

 Consulting Services Agreement:  On January 15, 2011, the Company entered into a consulting services agreement with Timothy Ray Rushlow for certain corporate development services.  Under the terms of the agreement, the Company shall pay to consultant a total of $2,500 per month, and reimbursement of preapproved expenses consultant incurs in conjunction with performing the services outlined in the agreement.  The agreement is effective until February 28, 2011.

 Related-party Consulting Agreement:  On January 15, 2011, the Company entered into a consulting agreement with Christy DiNapoli for $3,125 per month and reimbursement of certain pre-approved expenses incurred in conjunction with performing the consulting services.  Christy DiNapoli was elected as a corporate director at the 2011 Annual Shareholder's meeting held on April 21, 2011.

 Related-party Promissory Note:  On March 1, 2011, the Company loaned the Medina Group, dba. The Music Group the principal amount of $13,792.50.  The note is due and payable in full by April 30, 2011.  Christy DiNapoli, Chief Manager of the Medina Group and note holder, along with other members of the Medina Group became employees of Liquid Spins, Inc. as of March 1, 2011.  Christy DiNapoli was elected as a corporate director at the 2011 Annual Shareholder's meeting held on April 21, 2011.

  Music Catalog: - The Company has entered into agreements in order to develop master recordings, and recorded its costs for those rights into its Music Catalog.  The Company will evaluate the fair market value of its Music Catalog on an on-going basis, and the Company’s Music Catalog will be valued at the lower of its costs or market valuation. As of June 30, 2011 $35,981was classified as Music Catalog, representing an increase of $20,981 for the period from December 31, 2010 to June 30, 2011.

 PublishingCatalog: - On March 1, 2011, the Company entered into an Exclusive Songwriting Agreement with a composer and the composer’s co publisher.  Under the terms of the agreement, in exchange for certain exclusive composer services and assignment of composer's entire interest in all related works and materials, along with other conditions imposed on the Composer and co publisher, the Company agrees to pay certain nonreturnable advances regard to each Composition, including, but not limited to $24,000 during the initial period of the term payable in equal monthly installments of $2,000 per month, and 50% of all sums expended by Publisher in connection with independent promotion.   The advances are recoupable from any and all royalties otherwise payable to Composer pursuant to the terms of the agreement, including, but not limited to, fifty percent (50%) of any and all gross receipts derived from uses of the Composition, with certain restrictions.  The term of the agreement consists of an initial period of one year ending February 29, 2012 with the mutual option to extend the term for two consecutive option periods of one year each.As of June 30, 2011, $10,000 had been paid to the Composer.In accordance with ASC 928, the Company as the owner of these original music compositions and music copyrights has the right to license the right to distribute records or music to others, but has not licensed any rights as of this date. The Company has recorded its payments as an asset and will amortize these costs to expense as these rights are sold.

 The Company has recorded its costs for developing these copyrights into its Publishing Catalog.  The Company will evaluate the fair market value of its Publishing Catalog on an on-going basis, and the Company’s Publishing Catalog will be valued at the lower of its costs or market valuation.

 Related-party Lease Agreement:  On March 01, 2011 the Company entered into a lease agreement for office space in Nashville, TN with DiAffari Properties.  The lease is on a month to month basis at a cost of $1,250 per month.  Christy DiNapoli, a director of the Company is a partial owner of DiAffari Properties.

F-29

 Deferred Distribution Costs: - Effective March 25, 2011, the Company entered into a certain “Digital Distribution Agreement” (“Agreement”) with EMI Music Marketing, a division of Capital Records LLC (“EMI”) the terms of which are contractually confidential.

 Change of Corporate Name: - On April 21, 2011, the Board of Directors, as per the Proxy Statement, ratified and approved an amendment to the Company’s Articles of Incorporation to change the Company’s name from Malemark, Inc. to Liquid Spins, Inc.

 Company’s Equity Incentive Plan: - On April 21, 2011, the shareholders of the Company ratified and approved an amendment to the Company’s Non-qualified Stock Option and Stock Grant Plan to (i) permit the issuance of incentive options and restricted stock, (ii) increase the number of shares of common stock reserved for issuance under the plan from 2,500,000 to 5,000,000, and (iii) change the name of the plan to Equity Incentive Plan.

 Purchase and Sale Agreement: - On April 30, 2011 the Company entered into a purchase agreement to purchase certain equipment for $80,000 payable in the form of 200,000 shares of Liquid Spins Inc's, restricted common stock, valued at $.40 per share, representing $80,000.  The 200,000 shares were issued May 2, 2011.  The equipment was purchased from a shareholder of the company.

 Private Placement Memorandum: - On May 10, 2011 the Board of Liquid Spins approved a Private Placement Memorandum, dated May 16, 2011, regarding the offering of up to 1,000,000 shares of common stock. $0.001 par value, at a purchase price of $.40 per share.  The Liquid Spins common stock is being offered by its officers and directors on a “best efforts” basis until May 31, 2011.  This period may be extended up to an additional 90 days.  There is no minimum amount of common stock that must be sold in this offering and no escrow of the proceeds of the sale of the shares.  The minimum investment by an investor is 100,000 shares of common stock or $40,000, unless the officers and directors agree otherwise.  This private placement was closed on July 08, 2011.  The Company sold 650,000 shares at $.40 per share or $260,000.

 Deferred Distribution Costs: - Effective May 15, 2011, the Company entered into a certain “MP3 Download Aggregator Agreement” (“Agreement”) with Warner Music Inc. the terms of which are contractually confidential.

 Distribution Agreement: - Effective May 26, 2011, the Company entered into a distribution agreement (“Agreement”) with Interactive Communications International, Inc. (“InComm”).  Headquartered in Atlanta, GA, InComm is the industry leading marketer, distributor and technology innovator of stored-value gift and prepaid products. The initial term of this agreement ends on January 1, 2013 and shall be automatically extended after this initial term for successive consecutive terms of one (1) year unless either party gives notice of termination.

 Effective June 30, 2011, the Company entered into a certain “Digital Download Sales Agreement” with RED Distribution, LLC, the terms of which are contractually confidential.

 Office Lease/Commitment: -  On June 01, 2011, the Company entered into a non-cancelable prepaid lease agreement for its Colorado Springs location.  The lease cost was $12,000 and expires on November 30, 2011.

 Recent Financing:  In July 2011, we completed a private placement of our common stock, selling 650,000 shares at a price of $0.40 per share for gross proceeds of $260,000.  We have used a portion of that amount to pay advance royalties related to our music catalog and for other operating expenses.  Prior to that, we conducted a private placement which extended from September 2010 until April 2011 and consisted of the sale of 4,668,750 shares at a price of $0.40 per share for gross proceeds of $1,867,500.  The proceeds from that offering have been used for expenses such as acquiring an inventory of paper greeting cards, creating prototype products, advance royalties on music, salaries, development expenses associated with our website and travel.

F-30

You should rely only on the information contained in this document or that we have referred you to. We have not authorized anyone to provide you with information that is different. This prospectus is not an offer to sell common stock and is not soliciting an offer to buy common stock in any state where the offer or sale is not permitted.		14,241,875 Shares LIQUID SPINS, INC.
Until  ●, 2011, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
		Common Stock
TABLE OF CONTENTS
Prospectus Summary	1
Risk Factors	5	___________________
Business	11
Use of Proceeds	17
Market for Common Stock and Related Stockholder Information	17
Determination of Offering Price	20
Management’s Discussion and Analysis of Financial Condition and Results of Operation	21	PROSPECTUS
Management	27	____________________
Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters	31
Selling Shareholders	31
Plan of Distribution	35
Description of Capital Stock	37	____________, 2011
Shares Eligible for Future Sale	38
Where You Can Find More Information	38
Legal Matters	38
Experts	F-1
Financial Statements
About This Prospectus	Back Cover

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

We will pay all expenses in connection with the issuance and distribution of the securities being registered except selling discounts and commissions of the selling shareholders. The following table sets forth expenses and costs related to this offering (other than underwriting discounts and commissions) expected to be incurred with the issuance and distribution of the securities described in this registration statement.

SEC registration fee	$	826.74
Legal fees		50,000.00
Accounting fees		_,___.__
Blue Sky filing fees and expenses		_,___.__
Printing and engraving expenses		_,___.__
Miscellaneous		_,___.__
Total	$	__,___.__

Item 14. Indemnification of Directors and Officers

Included in the prospectus.

Item 15.  Recent Sales of Unregistered Securities.

Since our inception in 2009, we have issued an aggregate of 22,903,750 shares of our common stock without registering those securities under the Securities Act.  The following information describes the transactions in which those securities were issued:

In June 2009, in connection with our initial organization, we issued a total of 14,600,000 shares of our common stock to six individuals at a price per share of $0.001 per share, for a total of $6,500 in cash and personal property valued at $8,100.  The common stock was issued pursuant to the exemption from registration contained in Section 4(2) of the Securities Act.

In July and August 2009, we issued an additional 650,000 shares of common stock to six individuals or entities, also in reliance on Section 4(2) of the Securities Act.  Of the total number of shares sold in that transaction, 100,000 were sold at a price of $0.025 per share and the remainder were sold for a price of $0.10 per share.

Between November 2009 and June 2010, we sold an additional 1,450,000 shares of common stock to a group consisting of 33 individuals or entities for a price of $0.25 per share, or total proceeds of $362,500.  In connection with these sales, we relied on the exemption provided by Rule 504 of the Securities Act.

In January 2010, we issued 60,000 shares of our common stock valued at $0.25 per share to Accredited Members Holding Corporation (“AMHC”).   These shares were issued for services provided by that entity.

In September 2010, we entered into a Management Services Agreement with AMHC pursuant to which we agreed to issue that entity 125,000 shares of common stock per month for the first three months of the term and issue 62,500 shares and pay a stipulated sum of cash for the remainder of the term in exchange for management services to be provided to us, including accounting and financial services.  The 625,000 shares issued in connection with this agreement were valued at $0.40 per share, or aggregate consideration of $250,000.  We relied on the exemption provided by Section 4(2) of the Securities Act in connection with the issuance of these shares.

II-1

Between September 2010 and April 2011, we issued an additional 4,668,750 shares of common stock at a price of $0.40 per share for aggregate proceeds of $1,867,750.  The shares were sold to a group of individuals and entities, each of which we reasonably believed was an “accredited investor” within the meaning of Rule 501 of the Securities Act.  In connection with the issuance of shares in these transactions, we relied on Rule 506 of the Securities Act.

Finally, between May and July 2011, we issued an additional 650,000 shares of common stock at a price of $0.40 per share, for aggregate proceeds of $260,000.  We reasonably believed that each of the investors in this transaction was an accredited investor within the meaning of Rule 501.  We relied on the exemption provided by Rule 506 in connection with the issuance of these shares.

In each transaction in which we relied on Section 4(2) of the Securities Act, we offered the securities to a limited number of persons with whom we had pre-existing relationships.  In each case, we endeavored to ensure that each of the offerees had access to the information that would have been included in a registration statement filed pursuant to the Securities Act.  In addition, certificates representing all of the shares issued in these transactions contained the restrictive legend required by Rule 144 of the Securities Act, and we placed stop transfer restrictions with our transfer agent.

In each transaction in which we relied on Rule 504 or 506, we did not engage in any general solicitation or advertising.  We exercised reasonable care to ensure that the purchasers of securities were not underwriters within the meaning of the Securities Act, including making reasonable inquiry prior to accepting any subscription, making written disclosure regarding the restricted nature of the securities and placing a legend on the certificates representing the shares.  In each case, the offerees were provided with a subscription agreement detailing the restrictions on transfer of the shares and eliciting their investment intent.  Further, stop transfer restrictions were placed with our transfer agent and a restrictive legend was placed on the certificate in connection with these offerings.

Item 16.  Exhibits and Financial Statement Schedules.

The following exhibits are filed with this registration statement:

3.1 Amended and Restated Articles of Incorporation of the Company as filed with the Colorado Secretary of State on April 26, 2011.

3.2 Bylaws of the Company dated June 20, 2009.

4 Specimen stock certificate.

*5 Opinion on Legality.

10.1 Equity Incentive Plan dated April 21, 2011.

10.2 Lease Agreement between the Company and Pointe West, Inc. dated December 1, 2010.

10.3 Lease Agreement between the Company and DiAffari dated March 1, 2011.

II-2

10.4 Consulting Agreement dated December 1, 2010 between the Company and MCM Capital Management, Inc.

10.5 Employment Agreement dated October 1, 2009 between the Company and Herman DeBoard.

10.6 Form of Subscription Agreement between the Company and investors in the 2009 private placement.

10.7 Form of Subscription Agreement between the Company and investors in the 2010 private placement.

10.8 Form of Subscription Agreement between the Company and investors in the 2011 private placement.

10.9 Consulting Services Agreement dated November 1, 2010 between the Company and Jesse Griffith.

*10.11 Recording Agreement between the Company and Timothy Rushlow dated December 1, 2010

*10.12 Songwriting Agreement between the Company and Timothy Rushlow dated March 1, 2011

**10.13 MP3 Download Aggregator Agreement dated May 15, 2011 between the Company and Warner Music Inc. 

**10.14 Music Distribution Agreement effective as of March 25, 2011 between the Company and EMI Music Marketing, a division of Capitol Records. 

*23.1 Consent of StarkSchenkein, LLP.

*23.2 Consent of Dufford & Brown, P.C. (included in Exhibit 5).

24 Power of Attorney (included on signature page).

_______________

* Filed herewith

** An application for confidential treatment for selected portions of this agreement has been filed with the Securities and Exchange Commission.

Item 17.    UNDERTAKINGS.

The undersigned registrant hereby undertakes that it will:

1. File, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to:

i. Include any prospectus required by section 10(a)(3) of the Securities Act;

ii. Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement; and notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in the volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.

iii. Include any additional or changed material information on the plan of distribution.

2. For determining liability under the Securities Act, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering.

3. File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering.

4. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.  In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question, whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

II-3

5. For determining liability of the undersigned registrant under the Securities Act to any purchaser:

 i. That each prospectus filed by the undersigned pursuant to Rule 424(b)(3) shall be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

ii. Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.

iii. Each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

II-5

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and authorize this amendment to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Colorado Springs, Colorado, on this 10th day of November, 2011.

LIQUID SPINS, INC.

(Registrant)

/s/ Herman C. DeBoard III

By:  Herman C. DeBoard III

Chairman of the Board and Chief Executive Officer

POWER OF ATTORNEY

We, the undersigned officers and directors of Liquid Spins, Inc., do hereby constitute and appoint Herman DeBoard to be our true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for each of us and in our name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith and about the premises, as fully to all intents and purposes as each of us might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or any of them or their or his substitute or substitutes, may lawfully do or cause to be done by virtue thereof.

In accordance with the requirements of the Securities Act of 1933, this amendment to the registration statement has been signed by the following persons in the capacity and on the dates stated.

/s/ Herman C. DeBoard III	Chairman of the Board and	November 10, 2011
Herman C. DeBoard III	Chief Executive Officer
/s/ James Poage	Principal Financial and	November 10, 2011
James Poage	Accounting Officer
/s/ Raymond McElhaney	Director	November 10, 2011
Raymond McElhaney

/s/ Bill Conrad	Director	November 10, 2011
Bill Conrad
/s/ Christy DiNapoli	Director	November 10, 2011
Christy DiNapoli

II-6

EXHIBIT INDEX

The following Exhibits are filed as part of this post-effective amendment to the registration statement on Form S-1.

3.1 Amended and Restated Articles of Incorporation of the Company as filed with the Colorado Secretary of State on April 26, 2011.

3.2 Bylaws of the Company dated June 20, 2009.

4 Specimen stock certificate.

*5 Opinion on Legality.

10.1 Equity Incentive Plan dated April 21, 2011.

10.2 Lease Agreement between the Company and Pointe West, Inc. dated December 1, 2010.

10.3 Lease Agreement between the Company and DiAffari dated March 1, 2011.

10.4 Consulting Agreement dated December 1, 2010 between the Company and MCM Capital Management, Inc.

10.5 Employment Agreement dated October 1, 2009 between the Company and Herman DeBoard.

10.6 Form of Subscription Agreement between the Company and investors in the 2009 private placement.

10.7 Form of Subscription Agreement between the Company and investors in the 2010 private placement.

10.8 Form of Subscription Agreement between the Company and investors in the 2011 private placement.

10.9 Consulting Services Agreement dated November 1, 2010 between the Company and Jesse Griffith.

*10.11 Recording Agreement between the Company and Timothy Rushlow dated December 1, 2010

*10.12 Songwriting Agreement between the Company and Timothy Rushlow dated March 1, 2011

**10.13 MP3 Download Aggregator Agreement dated May 15, 2011 between the Company and Warner Music Inc. 

**10.14 Music Distribution Agreement effective as of March 25, 2011 between the Company and EMI Music Marketing, a division of Capitol Records. 

*23.1 Consent of StarkSchenkein, LLP.

*23.2 Consent of Dufford & Brown, P.C. (included in Exhibit 5).

24 Power of Attorney (included on signature page).

_______________

* Filed herewith

** An application for confidential treatment for selected portions of this agreement has been filed with the Securities and Exchange Commission.

II-7

EX-5.1

Exhibit 5.1

November 10, 2011

Board of Directors

Liquid Spins, Inc.

5525 Erindale Drive, Suite 200

Colorado Springs, CO 80918

Re:           Registration Statement on Form S-1 Covering Resale of Common Stock

Gentlemen:

We have acted as counsel to Liquid Spins, Inc., a Colorado corporation (the “Company”), in connection with the registration by the Company of 14,241,875 shares of Common Stock which are presently outstanding and which may be sold from time to time and on a delayed or continuous basis by the selling shareholders (the “Reoffer Shares”) as more fully set forth in the prospectus forming a part of the Registration Statement on Form S-1, File No. 333-176123 (Registration Statement), filed by the Company with the Securities and Exchange Commission and as may subsequently be amended.  We are providing this opinion to you at your request pursuant to Item 601(b)(5) of Regulation S-K, C.F.R. Section 229.601(b)(5), in connection with the Registration Statement.

In such capacity, we have examined, among other documents, the Articles of Incorporation and Bylaws of the Company, each as amended to date, and minutes of meetings of its Board of Directors and shareholders, the Registration Statement filed by the Company, as the same is proposed to be amended by Amendment No. 1 and as may be further amended from time to time (“Registration Statement”) and such other documents as we have deemed appropriate.

In our examination of the foregoing documents, we have assumed the genuineness of all signatures, the legal capacity of all natural persons, the accuracy and completeness of all documents submitted to us, the authenticity of all original documents, and the conformity to originals of all documents submitted to us as copies.  As to matters of fact, we have relied on the representations and statements of fact made in the documents so reviewed, and we have not independently verified the facts so relied upon.

The attorneys of our firm are admitted to the Bar in the State of Colorado only.  Accordingly, our opinion covers Colorado law only, including the statutory provisions, all applicable provisions of the Colorado Constitution and reported judicial decisions interpreting those laws.

Based on the foregoing, and subject to such further examinations as we have deemed relevant and necessary, we are of the opinion that:

1.           The Company is a corporation, duly organized and validly existing under the laws of the State of Colorado.

2.           All of the Reoffer Shares have been legally and validly authorized and issued under the Articles of Incorporation of the Company and are fully paid and nonassessable shares of common stock of the Company.

We hereby consent to the reference to our firm in the Registration Statement and to the filing of a copy of this opinion as Exhibit No. 5 thereto.

Sincerely,

DUFFORD & BROWN, P.C.

/s/Dufford & Brown, P.C.

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the use in this Amendment No. 1 to Form S-1 Registration Statement under the Securities Act of 1933 of our report dated July 29, 2011 relating to the financial statements of Liquid Spins, Inc., which appear in such Registration Statement and related Prospectus for the registration of 14,241,875 shares of Liquid Spins, Inc. common stock.

We also consent to the references to us under the heading “Experts” in such Registration Statement.

/s/ StarkSchenkein, LLP

StarkSchenkein, LLP

Denver, Colorado

November 10, 2011

3600 South Yosemite Street | Suite 600 | Denver, CO  80237 | P: 303.694.6700 | TF: 888.766.3985 | F: 303.694.6761 | www.starkcpas.com

An Independent Member of BKR International

EX-10.11

Exhibit 10.11

Malemark, Inc.,

 d/b/a To Be Determined records

5525 Erindale Dr.

Suite 200

Colorado Springs, CO 80918

Date: December 1, 2010

Tim Rushlow

617 Sugar Tree Lane

Franklin, Tennessee 37064

Re:     Malemark, Inc., d/b/a To Be Determined Records ( "TBD Records," "Us" or "We")

-w-

Tim Rushlow ("Rushlow," "Artist" or "You")

Dear Tim:

 We hereby wish to secure Your exclusive services during the period commencing on the date hereof and ending twelve (12) months thereafter (such period is referred to hereinafter as the "Recording Term") to record for us Master Recordings (hereinafter referred to individually as a "Master" and collectively as the "Masters") embodying your performances. The number of Master Recordings to be produced shall be mutually determined by Yourself and Us, but shall be no fewer than five (5) Master Recordings and You hereby agree to record the Master Recordings in accordance with the following provisions:

 1.    You shall record the Masters, as We shall mutually agree, and deliver each of them to Us immediately upon completion.

 2.    The individual producer of each of the Masters, if any, and the selections to be recorded, and the recording studio(s) at which the Masters are to be recorded must be approved by Us prior to the commencement of recording of each of the Masters. You shall engage the individual producer and all musicians, recording studios, or other personnel of facilities for the recording sessions for the Masters. Notwithstanding the preceding sentence, we acknowledge and approve that You have engaged and secured the services of Ian Eskelin, dated September 29, 2010, to record the five (5) Masters to be recorded hereunder (the "Eskelin Agreement") and that the recording of the five Masters shall be recorded in conformity with the Eskelin Agreement and that our sole responsibility shall be to advance and furnish You the Recording Fund under the Eskelin Agreement which shall equal and not exceed the Recording Budget hereunder as defined herein..

 3.    We shall pay for the recording costs (as the term "recording costs" is defined below) for the Masters in an amount to be determined by Us for each Master (each such group of costs shall be referred to as the applicable "Recording Budget"). We acknowledge and approve

Mr. Tim Rushlow

December 1, 2010

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the Thirty Thousand Dollar ($30,000.00) recording fund, contained in the Eskelin Agreement (the "Recording Fund") and that We shall advance to You the Thirty Thousand ($30,000,00) Dollar Recording Fund, which will be the Recording Budget for the five (5) Masters to be recorded hereunder, which shall be paid to you as follows: (a) Fifty percent (50%), or Fifteen Thousand Dollars ($15,00.00) upon full execution of this Letter Agreement; (b) Twenty-five percent (25%) or Seven Thousand Five Hundred Dollars ($7,500.00) upon written notice from You that the recording of Your featured vocals have commenced; and (c) Twenty-five percent (25%) or Seven Thousand Five Hundred Dollars ($7,500.00) upon the satisfactory delivery to Us of the five (5) Masters. You shall deliver, or shall cause the individual producer to deliver, copies of substantiating invoices, receipts, Form B's, vouchers and similar satisfactory documentary evidence of such recording costs within twenty-four (24) hours after each recording session for the Masters so that We can timely make all required union payments, if any, and if You fail to do so, our obligation to pay further recording costs will be suspended until You deliver such documents to Us. If We incur late-payments penalties by reason of Your failure to deliver any such documents, You shall be solely responsible and You will reimburse us for such penalties upon demand and, without limiting our other rights and remedies, We may deduct such penalties from the Recording Fund or from any monies payable to You under any other agreement which You and We may enter into. You will be solely responsible for any payment of recording costs for the Masters in excess of the applicable Recording Budget, and will hold Us harmless in respect thereof.

 4.    You shall deliver to Us a Wave file or other current master and all multi-track master tapes for each Master. All original session tapes and any derivatives or reproductions thereof shall also be delivered to Us or maintained at a recording studio or other location designated or approved by Us, in our name and subject to our control.

 5.    (a)     All Masters, and Your performances embodied thereon, including, without limitation, the worldwide copyright embodied therein and any extensions and renewals of copyright throughout the world, are and shall be entirely Our property, in perpetuity, throughout the universe during and upon their creation. You agree that, upon our request, You and all other persons rendering services in connection with the Masters will execute and deliver to Us a written assignment (in a form satisfactory to Us) of all sound recording copyrights (including renewal and extension rights) which You or such persons may have.

          (b)    We shall have all of the exclusive rights of a copyright owner in the Masters including, without limitation, the right to reproduce in copies and embody the Masters in phonograph records, including promotional compact discs and compilations.

          (c)    Notwithstanding anything to the contrary contained in this agreement, and expressly excluding TBD Records' right as provided herein to the include the Masters, or any of them in a Promo CD or compilation as described above, We shall not commercially exploit the Masters without Your prior written consent, such consent not to be unreasonably withheld or delayed.

 6.(a)     We shall notify You within sixty (60) days following the expiration of this agreement whether We desire to enter into a recording contract with You for your recording services, and neither You nor any third party shall offer your recording services to any person,

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firm, corporation or entity other than Us or play the Masters for any person, firm, corporation or entity other than Us during the Recording Term or during such sixty (60) day period,

          (b)    If We notify You within said sixty (60) day period that We desire to enter into a recording contract with You, then You and We shall promptly begin good faith negotiations regarding the material terms and provisions of such recording contract, and during such negotiations neither You nor any third party shall offer your recording services to any person other than Us. If You and We are unable to agree on the material terms of a recording contract after such good faith negotiations, then You shall have the right to offer your recording services to third parties and to enter into a recording contract ("Third Party Recording Contract") with any such third party ("Third Party Recording Company"), but only if the terms and provisions of the Third Party Recording Contract are more favorable to You than the terms offered to You by Us. If the terms and provisions of the Third Party Recording Contract are more favorable than the terms offered by TBD Records, You shall promptly furnish us with a copy of any such Third Party Recording Company proposal and We shall have the right to "match" such Third Party Recording Company's more favorable terms and provisions (the "Matching Right") within ten (10) business days of our receipt from You of a copy of such more favorable Third Party Recording Company proposal. In the event that TBD Records agrees to exercise its Matching Right as contained herein and match the more favorable terms and provisions of the Third Party Recording Company proposal in order to engage You as TBD Records' exclusive recording artist, You shall promptly enter into an exclusive recording agreement with TBD Records on such more favorable terms. Notwithstanding the foregoing, in no event shall either You or any third party have the right to offer your recording services to any person, firm, corporation or entity other than Us or to play the Masters for any person, firm, corporation or entity other than Us prior to sixty (60) days after the commencement of negotiations regarding the terms of a recording contract between You and Us.

          (c)    If We should fail to notify You within the sixty (60) day period referred to in paragraph 6(a) above that We desire to enter into a recording contract with You (or if We notify You that We do not desire to enter into such an agreement with You), then You shall have the right to offer Your recording services to third parties for the purpose of entering into a Third Party Recording Contract and (subject to paragraph 8 below) to use the Masters for the purpose of attempting to induce any Third Party Record Company to enter into a Third Party Recording Contract, subject to the following which We shall be entitled to receive as part of the consideration for Our entering into this Letter Agreement with You in the event that you consummate and finalize the Third Party Record Contract:

(i)   Upon Your execution of the Third Party Recording Contract, We shall be reimbursed promptly for all monies advanced You in connection with the five (5) Masters recorded hereunder, including, without limitation, the Recording Budget referenced in paragraph 3 above;

(ii)   We shall be paid a royalty of (A) 2% of the suggested retail list price (or, if applicable, 4% of the "wholesale base price") on all records embodying master recordings contained on Your First Album ("Album Masters") under the Third Party Recording Contract (including any singles or other records derived therefrom) and (B) 1% of the suggested retail list price (or, if applicable, 2% of the "wholesale base price") on all records embodying the Album Masters comprising the Second album featuring Your performances released after the First Album under the Third Party Recording Contract;

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(iii)   Such royalties payable to Us pursuant to paragraph 6(c) (ii) above shall in all respects be calculated, reduced and paid in the same maner as Your royalty is calculated, reduced and paid under the applicable Third Party Recording Contract;

(iv)   In connection with any exploitation of the Album Masters for which you receive a percentage of the Record Company's receipts under the Third Party Recording Contract, then, in lieu of the royalty provided for in subparagraph 6(c)(ii) above, We shall receive an amount equal to a fraction of the aggregate amount earned by you under the Third Party Recording Contract as a result of such exploitation, the numerator of which fraction is Our royalty rate under subparagraph 6(c)(ii) above (i.e., 1% or 2%, as applicable), and the denominator of which fraction is the aggregate "all in" basic U.S. royalty rate payable to You by the Record Company under the Third Party Recording Contract for sales of the Album through normal retail distribution channels. We shall receive a similarly calculated royalty with respect to any exploitation of the Album Masters embodied on the Second Album;

(v)   Further, each such royalty shall be payable, retroactive to the first record sold, once all recording costs of the First Album (or the Second Album, as applicable) have been recouped at Your "artist's net rate" under the applicable Third party Recording Contract; and

(vi)   You shall use your best efforts to cause the Record Company to directly account to Us for each such royalty, on a semiannual basis, and provide us with direct audit rights of the applicable Record Company with respect to each such royalty. In the event you are unable to do so, You shall send statements to Us as to royalties payable to Us hereunder within fifteen (15) days after your receipt of accounting statements from the applicable Record Company under the Third Party Recording Contract. Such statements shall be accompanied by payment in full of all accrued royalties which we have earned during the preceding accounting period. You also agree to furnish us with a copy of any statement you receive pursuant to the applicable Third Party Recording Contract simultaneously with such accountings.

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 7.     If You and We enter into a recording contract, We shall have the right to recoup any and all sums paid by us pursuant to paragraph 3 hereof (and any other costs incurred by us in connection with the Masters) from any and all monies payable to You thereunder.

 8.     You represent, warrant and agree that:

 (a)You are free to enter into and perform this agreement and You are and will be free to enter and perform a recording contract in respect of your recoding services if You and We enter into same.

 (b)Each Master shall be free of all liens and encumbrances, and there will be no claims, demands or actions pending or threatened with respect thereto.

 (c)Other than as specifically set forth in this agreement, TBD Records shall not be liable for any costs, fees, advances or other charges for or in connection with the recording of the Masters. Without limiting the foregoing, except for the payment provided in paragraph 3 hereof, You shall be solely responsible for and shall pay to any and all persons participating in the production of the Masters, and to any third parties, any and all compensation that may be payable to them by reason of the production of the Masters hereunder. Notwithstanding the foregoing, if We elect to pay any costs in connection with the Masters that are over and above the mutually agreed Recording Budget described in paragraph 3 above, which We are under no obligation to do, then You shall promptly pay Us all such costs in excess of the mutually agreed Recording Budget, or, at our election, We may recoup subject to the provisions of paragraphs 6 and 7 hereof.

 (d)You are, and shall remain a member in good standing of any appropriate union(s), if any, with which We may at any time have an agreement lawfully requiring such union membership.

 (e)The Masters shall be produced under and in conformity with all union agreements, if any, to which the Masters may at any time be or become subject. All musicians and other persons rending services in the production of Masters will be paid the sums, if any, required to be paid to them under appropriate union agreements.

 9.     You agree to indemnify and hold Us harmless against any liability, damage, cost or expense (including reasonable attorney's fees) occasioned by or arising out of any claim, demand or action inconsistent with any agreement, representation, grant or warranty made or assumed by You hereunder. You agree to pay Us on demand any amounts for which You may be responsible under the foregoing indemnity. You, at our request, will cooperate fully with Us in any controversy that may arise with third parties or litigation that may be brought by third parties concerning this agreement or any of our rights hereunder.

 10.   Definitions: (a) "person" means a person, firm or corporation; (b) "Masters" means a fully-mixed, edited and equalized Wave file or other current master of original studio (as opposed to "live") recording, theretofore unreleased, which embodies a performance, featuring only You and which has been recorded by You in a recording studio; (c) "selection" or

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"composition" means a single musical composition, including a medley, and all components thereof (musical or otherwise), irrespective of length; (d) "recording costs" shall refer to all direct costs incurred in the production of Masters, including, without limitation, the sums paid to the individual producer(s), musicians, vocalists, conductors, arrangers, orchestraters, copyist, and for rental and cartage of instruments, music, and equipment; transportation costs, hotel and living expenses in connection with the preparation for the attendance of artist, the individual producer, musicians and other essential personnel at recording sessions; payments to a union or guild trustee or fund based on services at recording session; studio or rehearsal hall rental; payments to sound engineers, and for tape, editing, mixing and other similar functions; and all other costs and expenses incurred hereunder, which are now or hereafter recognized as recording costs in the phonograph record industry.

 11.     Nothing contained herein shall constitute a partnership between or a joint venture by the parties hereto, or constitute either party the agent or employee of the other. This agreement cannot be modified except by an instrument in writing executed by both parties hereto. This agreement shall be governed by the laws of the State of Tennessee applicable to contracts made and to be wholly performed in the State of Tennessee.

If the foregoing accurately reflects Your understanding of our agreement with respect to the subject matter contained herein, please so indicate by Your signature in the designated space below.

Sincerely,
Malemark, Inc. d/b/a TBD RECORDS
By:	/s/ Herman C. DeBoard
Its:	CEO

AGREED AND ACCEPTED:

/s/ Tim Rushlow

Tim Rushlow

Social Security # XX-XX-XXXX

EX-10.12

Exhibit 10.12

EXCLUSIVE SONGWRITING AGREEMENT

 THIS AGREEMENT made and entered into as of March 1, 2011 by and between Timothy Ray Rushlow ("Composer") and Rushin Music ("Copublisher"). whose address is 617 Sugar Tree Lane, Franklin, TN 37064, (Composer and Copublisher are sometimes referred to herein jointly as "Composer") on one hand, and Malemark Inc. d/b/a Liquid Spins, (Publisher"), whose address is 5525 Erindale Drive Suite 200, Colorado Springs, Co. 80918, on the other hand.

 IN CONSIDERATION of the mutual promises hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which each party acknowledges, the parties do hereby agree as follows:

 1.Engagement and Exclusivity.   Composer agrees to render Composer's exclusive services to Publisher as an author, composer, arranger and adaptor of musical compositions during the term hereof. Composer agrees not to write, compose, arrange or adapt musical compositions for anyone other than Publisher during the term of this agreement. Composer further agrees to devote the necessary time, attention, skill and energy to Composer's duties hereunder and to render Bothend that the intent and purposes of this agreement may be fully realized and achieved.

2.Grant of Rights.

 2.01     Composer hereby assigns to Publisher Composer's entire interest in and to all musical compositions and related works and materials written, composed, arranged, adapted or acquired in whole or in part by Composer (or by any person or entity owned or controlled by Composer in whole or in part) prior to the term hereof that has not been previously assigned to a third party publisher or during the term of this agreement (collectively the "Compositions") together with all copyrights therein and all renewals and extensions thereof throughout the world (the "Territory"), as well as all other rights of whatsoever nature therein, whether now in existence or hereafter coming into existence. The rights herein granted and assigned to Publisher in the Compositions shall include, without limitation, the right to reproduce the Compositions in copies or phonorecords, to prepare derivative works based upon the Compositions, to distribute copies or phonorecords of the Compositions, and to perform and display the Compositions publicly. All rights herein granted and assigned shall vest in Publisher immediately upon creation or acquisition of each Composition or any portion thereof. Composer warrants, represents and covenants that Exhibit A attached hereto accurately sets forth each Composition in existence as of the date hereof that has not been assigned to a third party publisher (the "Pre-existing Compositions").

 2.02     Publisher agrees to exert reasonable efforts to commercially exploit the Compositions in accordance with its customary business practices. Notwithstanding the foregoing, however, the method, manner and timing of any efforts to exploit any one or more of the Compositions, including the publication of sheet music or other printed editions, or the production of demonstration recordings thereof, or the decision to refrain therefrom, shall be determined by Publisher in its discretion.

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 2.03      Notwithstanding anything contained herein to the contrary, Publisher shall not do any of the following during the term of the agreement in the United States without Composer's prior consent in each instance (provided Composer is reasonably available personally to consent or withhold consent):

(a)authorize the issuance of a mechanical license at less than the then-applicable statutory mechanical copyright royalty rate, except in connection with those types of uses for which reduced-rate licenses are then customarily granted by music publishers generally;

(b)authorize the synchronization of any Composition in (1) a film or television program which, at the time of the license, Publisher had reason to know bore a rating of "NC-17" or the equivalent, or (2) any advertisement relating to political campaigns, social causes, tobacco products, intimate personal hygiene products, religious matters or firearms (Composer shall not be entitled to withhold consent to any such license for financial reasons [e.g., in order to obtain payment of a designated amount in respect of such use]); or

(c)authorize any substantial change in the English language title and/or lyrics or melody of a Composition (which shall not be deemed to prohibit changes related to a change of gender).

3.Delivery and Instruments of Transfer.    Composer shall prepare and deliver to Publisher completed manuscripts, lead sheets or sound recordings and typed lyric sheets of each Composition hereunder immediately after the creation or acquisition thereof. Upon delivery of each Composition, Composer shall execute a separate instrument of transfer (in the form of Exhibit B annexed hereto, the provisions of which are incorporated herein and made a part hereof) with respect thereto. Thereafter, Composer shall also execute and deliver to Publisher such other documents and instruments with respect to the Compositions as Publisher, in its judgment, may deem necessary or desirable to effectuate the intent and purposes of this agreement or to evidence the rights granted to Publisher herein. Notwithstanding the foregoing, Composer hereby grants to Publisher the power of attorney to execute on Composer s behalf, any such instrument of transfer or any other document or instrument required or desired to be executed by Composer hereunder which is consistent with the terms hereof, and such agreement, document or instrument thereupon shall be fully valid, effective and operative as if personally executed by Composer. Said power of attorney shall be irrevocable and coupled with an interest and shall survive the termination of this agreement. With the exception of short-form assignments, copyright registration applications and copyright renewal applications, Publisher shall not exercise the foregoing power unless and until Composer fails to execute the document in question within five (5) days after Publisher's request that Composer do so. Publisher may dispense with the foregoing waiting period when necessary in Publisher's judgment to protect or enforce Publisher's rights, which shall not be a breach of this agreement. Notwithstanding the foregoing, the power of attorney herein granted may not be exercised by Publisher to grant to itself rights in any Composition after the proper exercise by Composer of the right to terminate a prior grant of such Composition under the applicable provisions of the United States Copyright Laws.

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 4.Royalties.     Publisher shall pay Composer as royalties with regard to each Composition an amount equal to:

4.01    Fifty percent (50%) of any and all Gross Receipts derived from printed (including, without limitation, name and likeness print royalties attributable to Composer), mechanical, synchronization, performance and all other uses of the Compositions, provided that Composer shall not be entitled to share in Publisher's share of any sums received by Publisher with respect to public performances of the Compositions from any performing rights organization which pays a share of performance fees directly to writers or composers or any sums payable pursuant to the Audio Home Recording Act 17 U.S.C. §1001. et seq. ("AHRA").

4.02    Publisher shall not be required to pay royalties on professional or complimentary copies or any copies or derivative works which are distributed or sold at or below Publisher's cost or for promotional or similar purposes. In the event any Composition is cowritten by Composer and another person or persons, Publisher shall pay to Composer a share of the foregoing sums corresponding to Composer's authorship interest in the Composition.

4.03    The term "Gross Receipts" shall mean the gross sums actually received by Publisher or its agent in the United States (or credited against an outstanding advance previously paid Publisher to the extent Composer did not receive his share of said advance pursuant hereto), reduced by collection fees actually charged by any collection agent, subpublisher or organization (including, without limitation, subpublishers affiliated with Publisher) or legal fees, court costs, accounting fees or other direct costs incurred by Publisher in the collection of such sums. Gross Receipts shall not be deemed to include any portion of any advance payments, guarantee payments or minimum royalty payments which Publisher may receive in connection with any subpublishing agreement, collection agreement, licensing agreement or other agreement with respect to the Compositions unless such payments are made solely for the use of specific and separately identifiable Composition(s) and no other musical compositions or other works of authorship, in which event such sums shall be deemed Gross Receipts actually received by Publisher for such uses.

4.04    During the term hereof and thereafter until the end of the first accounting period in which all advances and other recoupable sums hereunder ("advances") are fully recouped (the "Recoupment Period"), Publisher shall have the right to collect (or authorize others to collect) the so-called "writer's share" of all monies payable with regard to the Compositions pursuant to the Audio Home Recording, Act, 17 U.S.C. §1001 et seq. ("AHRA Monies"), and Composer hereby assigns said AHRA Monies to Publisher. Publisher shall recoup all advances from the AHRA Monies and account for and pay to Composer 100% of the balance thereof in accordance with paragraph 5 below. At the end of the Recoupment Period, Publisher shall re-assign to Composer ail rights in and to AHRA Monies payable thereafter.

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5.   Accountings.      Publisher shall render to Composer within ninety (90) days after the last days of Publisher's regular semiannual accounting periods of each year in which royalties are accrued hereunder a statement showing all royalties earned by Composer during such accounting period and specifying, the source and type of such income received, and will pay at the same time all sums shown thereon to be due to Composer less any advances and other recoupable charges hereunder. All royalty statements and other accounts rendered to Composer hereunder will be binding upon Composer unless specific objection, in writing, stating the basis thereof is received by Publisher within two (2) years from the date rendered, in which event such statement shall be binding in all respects except for those specifically stated in such written objection. A certified public accountant designated by Composer who is not then engaged in an audit of Publisher's books and records shall have the right to examine and inspect Publisher's books and records with respect to the Compositions at the place where they are normally maintained upon thirty (30) days' prior written notice during normal business hours, but in no event more than once with respect to any given accounting period nor more than once in any given calendar year. Legal action with respect to a specific accounting and/or the accounting period to which the same relates shall be forever barred if not commenced in a court of competent jurisdiction within three (3) years after such statement is rendered.

6.     Collaboration.     Composer shall consult with Publisher prior to collaborating with any other person as a writer, composer, arranger or adaptor of any Composition. Promptly after collaborating as a writer, composer, arranger or adaptor of a Composition with any other person, Composer shall execute and cause Composer's collaborator to execute a document in a form provided by Publisher confirming, among other things, of the identity of the collaborator; the respective shares of authorship of the Composition attributable to Composer and the collaborator in question; the names, addresses and phone numbers of the respective copublishers; and the date the Composition was created.

 7.      Name and Likeness.      Publisher shall have the exclusive right to use and to allow others to use Composer's legal and professional name and likeness, biographical material and facsimile signature in connection with the use, promotion and exploitation of the Compositions in particular, including, without limitation, personality folios, and in connection with institutional advertisements concerning Publisher, provided that nothing herein shall be deemed to grant Publisher any so-called "merchandising rights" in Composer's name, likeness, biographical material or facsimile signature. Publisher shall have the further sole and exclusive right to refer to Composer during the term hereof as Publisher's "exclusive writer" or words to that effect.

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 8.    Term.       The term of this agreement shall consist of an initial period of one (1) year(s) from and after the date hereof (the "Initial Period") and the additional option periods provided below. Both Publisher and Composer shall have the irrevocable option to extend the term hereof upon all the terms and conditions hereof for two (2) separate, consecutive option periods of one (1) year each (respectively, the "first and second option periods"), each of which, if exercised, shall commence upon the expiration of the immediately preceding contract period. Each such option shall be deemed exercised automatically by the passage of time unless Publisher notifies Composer or Composer notifies Publisher to the contrary prior to the expiration of the then-current contract period. The initial period and each of the option periods are sometimes referred to herein as "Contract Period(s)".

 9.     Minimum Writing Requirement.        During each year of the term, Composer shall compose and deliver to Publisher hereunder not less than twelve (12) new and original musical compositions of marketable commercial quality (as determined by Publisher in its sole discretion) written by Composer in their entirety during the year in question at the rate of not less than one (1) such musical composition each month ("Composer's minimum writing requirement"). Compositions which are arrangements of works in the public domain shall be subject to all the terms and conditions hereof but shall not apply towards Composer's minimum writing requirement. For the purposes hereof any Composition in which Composer's authorship interest is less than one hundred percent (100%) of the entire copyright shall be credited against Composer's minimum writing requirement in the same proportion as Composer's fractional authorship interest in the Composition in question. [For example, a Composition cowritten by Composer and two (2) other writers in equal shares would count as one- third (1/3) Composition for the purposes of determining Composer's compliance with his minimum writing requirement.] Composer shall not be deemed to have complied with Composer's minimum writing requirement until Publisher's actual receipt with regard to each Composition in question of the materials required to be delivered pursuant to the first sentence of paragraph 3 hereof.

 10.    Unique Services.       Composer acknowledges and agrees that Composer's services hereunder and the products thereof are unique and extraordinary, the loss of which would cause Publisher irreparable harm for which no adequate remedy at law exists. Composer acknowledges that Publisher, in addition to all other available rights and remedies, shall be entitled to equitable relief to enforce this agreement in the event of Composer's breach or threatened breach hereof.

 11.    Suspension.          If, for any reason, Composer fails or refuses to render Composer's services as provided in this agreement, (including, without limitation, failure to comply with Composer's minimum writing requirement) Publisher, without limiting any other rights it may have, shall have the right, by written notice to Composer, in its discretion, to terminate this agreement, to suspend its term for a period of time equal to the period(s) during which such failure or refusal continues plus thirty (30) days, or to terminate the term hereof during any such period of suspension and the 30-day period thereafter. No sums otherwise payable to Composer pursuant to this agreement shall accrue during any such period of suspension, and Composer shall receive no such sums for the suspension period regardless of its length.

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 12.     Termination.        The termination or expiration of the term hereof shall in no way affect the respective rights and obligations of Composer and Publisher with respect to the Compositions. In such event, the relevant provisions of this agreement (including without limitation the warranties, covenants and representations by Composer) shall continue in full force and effect with respect thereto.

 13.     Warranties, Covenants and Representations.      Composer warrants, covenants and represents:

13.01  The Compositions are or will be new and original and will not infringe upon or unfairly compete with any other works, compositions, arrangements or material, and will not violate, invade, infringe upon or interfere with the rights of any third party.

13.02  Composer has the full right, power and authority to make this agreement, perform its terms and conditions, grant the rights herein granted to Publisher and furnish Composer's services hereunder, and to vest in Publisher all the rights as provided in this agreement free and clear of all other claims, rights, obligations and encumbrances whatsoever.

13.03  The exercise of Publisher's rights in and to each of the Compositions, including the copyright therein, will not violate, conflict with or unfairly compete with the rights of any third party, and there does not now and will not hereafter exist any claim by a third party in or to any of the Compositions and no third party has or will have any conflicting rights in and to any of the Compositions.

13.04   Composer has heretofore executed an agreement with the performing rights organization with which Publisher is affiliated. During the term of said agreement, said organization shall have rights of public performance of the Compositions. Composer agrees to give written notification to Publisher of any termination, modification or extension of said agreement within sixty (60) days of any such event.

 14.      Indemnification.

14.01  Composer shall and does hereby indemnify save and hold Publisher harmless from any loss or damage, including reasonable attorneys' fees, arising out of or in connection with any breach or default by Composer hereunder or any claim against Publisher by a third party which is inconsistent with any of the warranties, representations and covenants or agreements made by Composer in this agreement. In the event of the assertion of any claim against Publisher by a third party which is inconsistent with any of the warranties, representations, covenants or agreements made by Composer in this agreement, including, without limitation, a claim that any Composition infringes upon any other musical composition. Publisher shall promptly serve notice of such claim upon Composer, and Composer may, at Composer's sole cost and expense, participate in the defense of any such claim, provided that Publisher shall have the right to control the defense thereof subject to the foregoing. Publisher shall be entitled to settle any such claim and shall be entitled to indemnification in respect of any such settlement, unless Composer shall demonstrate in writing, within five (5) days after Composer's receipt of notice that Publisher intends to settle such claim, a good faith and reasonable basis for objecting to such settlement, which basis is not inconsistent with the terms of this agreement and the consummation of the transactions contemplated hereby; provided, however, that if such basis is so demonstrated, Publisher shall, nonetheless, be entitled, at its election:

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(a)   to settle the claim, but in such event Publisher shall not be entitled to indemnification in respect of any such settlement; or,

(b)   require that Composer within ten (10} days after Publisher's request, at Composer's sole cost and expense, take over the defense of such claim, reimburse Publisher for all attorneys' fees and costs incurred to date, pay as and when due all costs incurred with regard thereto, including, without limitation, all attorneys' fees and costs thereafter incurred and provide Publisher with a bond, with surety and in an amount reasonably acceptable to Publisher, in the full amount of the claim and anticipated legal fees and costs. If, however, after taking over said defense and providing said bond, Composer shall fail to comply with the foregoing obligation, Publisher shall have the right to settle the claim in question in its sole discretion without the necessity of obtaining Composer's consent, and Composer shall be liable for indemnification with regard thereto.

14.02 In the event of such breach, default or claim, Publisher may, until the same has been adjudicated or settled, hold in trust for Composer in a regular passbook savings account any and all monies due and payable to Composer hereunder in an amount reasonably necessary to indemnify Publisher fully hereunder with regard to such breach, default or claim (including anticipated reasonable attorneys' fees and costs), provided that upon final adjudication or settlement thereof, such monies may, at Publisher's option and to the extent necessary, be applied in satisfaction of such judgment or settlement. Notwithstanding the foregoing, however, Publisher shall release said monies to Composer and commence payments hereunder in the event: (1) Composer furnishes Publisher with a bond, in form and with surety acceptable to Publisher, in the full amount of the claim and Publisher's anticipated attorneys' fees and costs; or (2) no suit is filed against Publisher with regard to said claim within one (1) year after Publisher's most recent receipt of written notice of or other communication concerning the claim in question (without prejudice to Publisher's right to withhold said sums in the event the claim is presented again). In the event of the rendition of a final, nonappealable judgment by a court of competent jurisdiction in Composer's favor, such sums and any accrued interest, less reasonable attorney's fees and costs incurred by Publisher, shall be promptly released to Composer.

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 15.     Legal Actions and Claims.     Any legal action or proceeding brought against an alleged infringer of any Composition shall be initiated in Publisher's sole discretion and prosecuted at its sole expense. After deduction of the expense of said litigation (including, without limitation, reasonable attorneys' fees and court costs), any recovery resulting from such action or litigation which is attributable to Composer's authorship share of the Composition shall be deemed "Gross Receipts" hereunder.

 16.     Demonstration Recordings.

16.1.Composer shall not be entitled to any compensation of any nature with respect to any services rendered by Composer in any capacity in connection with recordings of the Compositions for demonstration purposes ("Demos"). Composer shall incur no costs in connection with Demos for which Publisher shall be responsible (including, without limitation, any costs associated with any recording studio or facility owned by Composer in whole or in part) without Publisher's prior written consent in each instance. Subject to the foregoing, Publisher will not disapprove a budget for Demo recording costs with regard to any Composition which is otherwise acceptable to Publisher and which does not exceed Six Hundred Dollars ($600.00), prorated in the event that Composer's authorship of the Composition in question is less than one hundred percent (100%). All Demos, Master Productions, and all other recordings and reproductions made at Demo sessions or otherwise hereunder shall be the sole and exclusive property of Publisher. Fifty percent (50%) of the costs of the production of Demos shall be deemed advances to Composer, recoupable from any sums otherwise payable to Composer pursuant hereto. Nothing herein, however, shall obligate Publisher to produce or allow the production of a Demo of any one or more Compositions.

16.2.Publisher shall not exploit commercially any Demo containing Composer's featured vocal performances without obtaining Composer's prior consent in each instance, which Composer shall not unreasonably withhold. In the event, however, Publisher commercially exploits any Demo with Composer's consent the income actually received by Publisher with regard to such exploitation (after deduction of all expenses associated therewith) shall be deemed to be Gross Receipts hereunder.

 17.     Approvals.     With regard to any right granted Composer herein to consent to or approve any designated thing or action:

17.1Composer agrees not to withhold Composer's consent or approval unreasonably; and,

17.2Composer shall be deemed to have rendered Composer's consent or approval in any given instance in which Composer, or someone on Composer's behalf, fails to respond to Publisher's request for same within five (5) business days after Publisher's request therefore.

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 18.      Assignment.     Neither this agreement nor any of Composer's rights or obligations hereunder shall be assignable by Composer. Publisher shall have the right to assign this agreement to any parent, subsidiary or affiliate, any entity into which it may merge or any purchaser of a substantial portion of its music publishing assets. Nothing herein, however, shall restrict Publisher's right to assign any Composition or rights therein in Publisher's sole discretion in the ordinary course of business.

 19.     Cure of Defaults.     As a condition precedent to the assertion by either party hereto that the other party is in default in performing any obligation contained herein (with the exception of Composer's obligations of exclusivity to Publisher and alleged breaches of the provisions of paragraph 9 hereof), the asserting party shall advise the other party in writing specifying any such alleged default, and such party shall be allowed a period of thirty (30) days after such written notice within which to cure such alleged default. For the purposes hereof, no alleged breach of this agreement by either party shall be deemed incurable, provided that nothing shall prohibit a party from seeking equitable relief to prevent or restrain any alleged breach hereof.

 20.     Advances.

20.01Provided Composer has fully complied with all the terms and conditions hereof. Publisher shall pay the following advances to Composer during the term of this agreement which shall be deemed nonreturnable advances recoupable from any and all royalties otherwise payable to Composer pursuant hereto:

(a)     Twenty Four Thousand Dollars ($24,000) during the initial period of the term payable in equal monthly installments of Two Thousand Dollars ($2,000) per month of the Initial Period.

(b)     The amount of the first option period of the term payable to Composer will be negotiated between Publisher and Composer in good faith and set forth in writing on or before the date of the termination of the previous option period set forth in this agreement,

(c)     The amount of the second option period of the term payable to Composer will be negotiated between Publisher and Composer in good faith and set forth in writing on or before the date of the termination of the previous option period set forth in this agreement.

20.02 From time to time during the term hereof, Composer may travel in connection with the rendition of his services hereunder. If Publisher, in its sole discretion, agrees in writing to advance additional sums to Composer in connection with such travel, the sums so advanced shall be recoupable from any royalties otherwise payable to Composer hereunder.

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20.03  Fifty percent (50%) of ail sums expended by Publisher in connection with the independent promotion of records embodying any Composition which are incurred with Composer's prior approval shall be deemed advances to Composer hereunder, recoupable from any royalties otherwise payable to Composer hereunder.

 21.     Notices.     All notices given hereunder by either party to the other (excluding accounting statements) shall be transmitted in writing by United States registered or certified mail, return receipt requested and postage prepaid, or by telegraph to the parties' addresses set forth above or to such other address as a party shall designate by notice to the other. All notices and accountings shall be deemed given upon the date of deposit thereof in the United States Mail with the exception of notices of change of address which shall be deemed given only upon actual receipt by the intended recipient. Courtesy copies of all notices shall be provided as follows:

Publisher and Copublisher

Timothy Ray Rushlow

Rushin Music

617 Sugar Tree Lane,

Franklin, TN 37064

Telephone: (615) 975-3224

Email: timrushin@gmail.com

provided that no failure to send any such courtesy copy shall neither be a breach of this agreement nor shall it affect the validity of the notice in question.

22.     Legal Counsel.     COMPOSER STIPULATES AND ACKNOWLEDGES THAT COMPOSER HAS BEEN REPRESENTED BY AND HAS RELIED UPON INDEPENDENT LEGAL COUNSEL OF COMPOSER'S OWN CHOOSING IN THE NEGOTIATION AND EXECUTION OF THIS AGREEMENT. IN THE EVENT THAT COMPOSER HAS NOT HAD COMPOSER'S LEGAL COUNSEL REVIEW THIS AGREEMENT, COMPOSER HAS KNOWINGLY AND VOLUNTARILY WAIVED THIS RIGHT AND COMPOSER AGREES THAT HE SHALL BE DEEMED TO HAVE WAIVED ANY AND ALL CLAIMS ARISING OUT OF HIS FAILURE TO HAVE LEGAL COUNSEL REVIEW THIS AGREEMENT.

 23.     Miscellaneous.     This agreement shall be governed by and construed and enforced in accordance with the laws of the State of Tennessee applicable to agreements made and to be wholly performed therein. The state and federal courts located in Davidson County, Tennessee, shall have exclusive jurisdiction over any and all disputes and litigation arising with regard to this agreement, and the parties irrevocably submit themselves to the personal jurisdiction of such courts. If any provision of this agreement shall for any reason be held invalid or unenforceable by a court of competent jurisdiction, all other provisions shall continue in full force and effect. The paragraph headings are included solely for the convenience of the parties and shall not be deemed to describe, limit, modify or in any way affect the scope or interpretation of the paragraph themselves. This agreement sets forth the entire agreement between the parties, and no modification, amendment, waiver, termination or discharge of this agreement or any provisions thereof shall be binding unless confirmed by a written instrument signed by both parties. No waiver of any provision of or default under this agreement shall affect Publisher's right thereafter to enforce such provision or to exercise any right or remedy in the event of any other similar or dissimilar default.

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 24.     Co-ownership and Administration.

24.01.As used herein the term "Copublished Compositions" refers to each Composition hereunder.

24.02.Notwithstanding any provision to the contrary herein contained, the Copublished Compositions shall be owned fifty percent (50%) by Publisher and fifty percent (50%) by Copublisher. Subject to paragraph 24.03 below, all rights in the Copublished Compositions shall be exclusively administered by Publisher for the life of copyright protection therein, including all extensions and renewals of copyright throughout the world, all in accordance with the following terms and conditions:

(a)   The Copublished Compositions shall be registered for copyright by Publisher in the names of Publisher and Copublisher in the office of the Register of Copyrights of the United States of America as and when Publisher deems necessary in its sole business judgment.

(b)   Publisher shall have the sole and exclusive right to administer and exploit the Copublished Compositions, to print, publish, sell, dramatize, use and license any and all uses of the Copublished Compositions, to execute in its own name any and all licenses and agreements whatsoever affecting or respecting the Copublished Compositions, including, but not limited to, licenses for mechanical reproduction, public performance, dramatic uses, synchronization uses and subpublication, and to assign or license such rights to others throughout the world. Without limiting the foregoing, Publisher is entitled to receive and collect and shall receive and collect all Gross Receipts derived from the Copublished Compositions throughout the world, and Publisher shall pay to Copublisher fifty percent (50%) of Net Receipts (as defined below). All payments to Copublisher shall be made in accordance with the same accounting provisions of this agreement as with respect to payments to Composer and shall be subject to all of the same provisions concerning royalties payable to Composer, including, without limitation, those concerning recoupment, deductions, offsets and indemnifications.

(c)   "Net Receipts" is defined as Gross Receipts less the following:

(1)      Royalties which shall be paid by Publisher to Composer pursuant to this agreement and royalties which shall be paid by Publisher to any other publishers or writers of the Copublished Compositions;

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(2)      Direct, reasonable, out-of-pocket, administrative and exploitation expenses of Publisher with respect to the Copublished Compositions, including, without limitation, registration fees, advertising and non-in-house promotion expenses directly related to the Copublished Compositions, Demo production costs related to the Copublished Compositions (to the extent not recouped from royalties otherwise payable to Composer), and the costs of transcribing for lead sheets.

(3)      Attorneys' fees, if any, actually paid by Publisher for any agreements (other than the within agreement) affecting solely the Copublished Compositions.

(d)     To the extent permitted by law, small performing rights in the Copublished Compositions for the United States and Canada shall be assigned to and licensed by the performing rights society to which both parties belong. Said society shall be and is hereby authorized to collect and receive all monies earned from the public performance of the Copublished Compositions in the United States and Canada and shall be and is hereby directed to pay directly to Publisher the entire amount allocated by said society as the so-called "publisher's share" of public performance fees for the Copublished Compositions for the United States and Canada. Annexed hereto as Exhibit C is the form of letter of direction from Copublisher to BMI, ASCAP or SESAC (as the case may be), which shall effectuate the foregoing provisions. Copublisher shall sign and deliver to Publisher copies of said letter simultaneously herewith, and in default thereof Publisher is hereby authorized and empowered by Copublisher to sign copies of said letter for and on behalf of Copublisher and submit same to the appropriate society.

(e)     Copublisher hereby ratifies and shall be subject to the same warranties, representations and covenants as set forth herein with respect to Composer.

 24.03  Notwithstanding the foregoing, at any time after the Reversion Date, Copublisher shall have the right to notify Publisher of its election that Copublisher administer its ownership interest in the copyrights in the Copublished Compositions and the right to administer the royalties payable to Composer hereunder (collectively, "Copublisher's Interest"), subject to any existing licenses and agreements. "Reversion Date" refers to the later of (a) three (3) years following the date of the expiration of the term hereof and (b) the date Publisher renders an accounting statement hereunder to Composer/Copublisher reflecting Publisher's recoupment or receipt of repayment from Copublisher of all unrecouped advances and other recoupable charges hereunder. Any such reversion shall be effective as of the end of the first full calendar semi-annual period after Publisher's receipt of such notice. Thereafter, Copublisher shall have the right to administer Copublisher's Interest in the

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EXHIBIT A

Pre-existing Compositions

Title Creation Composer(s)/Publisher/ Authorship Share/Ownership Shares Date of

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

	Malemark, Inc D/B/A Liquid Spins
By:	/s/ Herman C. DeBoard,  CEO

ACCEPTED and AGREED:

By:	/s/ Timothy Ray Rushlow
	“Timothy Ray Rushlow”

Soc. Sec. No. XXX-XX-XXXX

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EX-10.13

Exhibit 10.13          

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

MP3 DOWNLOAD AGGREGATOR AGREEMENT

This MP3 DOWNLOAD AGGREGATOR AGREEMENT (“Agreement”) is made and entered into effective as of May 15, 2011 (the “Effective Date”) by and between Liquid Spins, Inc., a Colorado Corporation with offices located at 5525 Erindale Drive, Suite 200, Colorado Springs, CO 80918 (“Vendor”), and Warner Music Inc., a Delaware corporation with offices located at 75 Rockefeller Plaza, New York, NY 10019 (“Warner”).

WHEREAS, Vendor desires to sell permanent downloads of eMasters to End Users both directly through its Online Store and indirectly through Approved Accounts (as such terms are defined below); and

WHEREAS, Warner is willing to allow such sale of eMasters, subject to the terms and conditions herein and in exchange for Vendor’s obligations as set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereby agree as follows:

1.  Definitions.

(a)  “Approved Account” means a third-party website or service (i) for whom Vendor may provide Fulfillment Activities, and (ii) that is set forth on Exhibit D (as amended from time to time by Vendor with Warner’s prior written approval).  For new Approved Accounts not set forth on Exhibit D, Vendor shall submit requests for Warner’s approval by emailing ***** (as such contact may be updated by Warner from time to time upon notice to Vendor).

(b)  “Authorized Contractor” means a third party who (i) provides services for or on behalf of Vendor or an Approved Account in connection with the exercise of Vendor’s rights hereunder, including without limitation Fulfillment Activities, (ii) is set forth on Exhibit E (as amended from time to time by Vendor with Warner’s prior written consent), and (iii) is recognized in the industry as capable of competently performing services of the nature in question.

(c)  “Clip” means a thirty (30) second audio clip of an eMaster, which eMaster is offered for sale hereunder, as approved in each instance by Warner in writing in advance, that is in MP3 Format, and that is contained in a Formatted File delivered by or on behalf of Warner to Vendor or its Authorized Contractor.

(d)  “eMaster” means a complete digital copy of one or more individual master sound recordings of Warner Content designated by or on behalf of Warner, it being understood that such designation may include requirements as to how Warner Content is to be presented and offered for sale (e.g., as an album-only download, or bundled with related products provided by Warner to Vendor, specifying the sequence of sound recordings of Warner Content on a particular album and/or inclusion of Other Materials with a particular album), which is encoded in MP3 Format ***** and is consistent with the requirements set forth on Exhibit B.

(e)  “End User” means a purchaser of eMasters from Vendor or an Approved Account via the Online Store who has a billing address in the Territory.

(f)  “Formatted File” means a file delivered by or on behalf of Warner to Vendor in the manner designated by Warner containing all elements required to create an eMaster.

(g)  “Fulfillment Activities” means all activities conducted by or on behalf of Vendor associated with the use, sale and distribution of Warner Content, including without limitation, hosting, serving, transmitting, promoting and streaming of Clips, eMasters and Other Materials in the file formats set forth on Exhibit B, and processing of Formatted Files.

(h)  “Internet” means the wide area cooperative network of university, corporate, government and private computer networks communicating predominately through Transmission Control Protocol/Internet Protocol which network is commonly referred to as “the Internet” (but which specifically excludes wireless transmissions other than IEEE 802.11x transmissions).

(i)  “Law” means any, local, state, or federal law, statute, ordinance, rule, regulation, code, order, judgment or decree.

(j)  “MP3 Format” means Moving Picture Experts Group (MPEG) audio layer 3 standard technology and format for compression of a sound sequence into a file that is approximately one-twelfth the size of the original file while preserving the original level of sound quality when it is played, and used for digitally transmitting music over the Internet.

(k)  “Online Store” means the electronic store(s) and associated user interfaces owned and/or controlled by Vendor or an Approved Account on the Internet at the URL http://www.liquidspins.com (or such URL(s) as set forth in Exhibit D for each Approved Account), solely marketed and branded using a name approved by Warner in writing, and operated in the Territory, that allows End Users to purchase and digitally download recorded music to Personal Computers via the Vendor’s Servers.

(l)  “Other Materials” means Clips, artwork, graphic images (e.g., album artwork), artists’ names, images and likenesses and other information or materials relating to eMasters that, in each case, Warner elects to provide hereunder for Vendor’s use in accordance with the terms and conditions hereunder and any additional terms and conditions of which Warner notifies Vendor.

(m)  “Personal Computer” means (i) a traditional-sized laptop or desktop personal computer designed for an individual user that would not replicate the portable device experience; (ii) any so called traditional set-top box; or (iii) any other non-Portable Device that is approved by Warner in writing, in each case for subsections (i) through (iii) above, (y) through which an End User may access the Online Store through the Internet, and (z) that runs on a traditional personal computer operating system (i.e., Windows 2000, XP or Mac OS X version 10.2.8 or later).

(n)  “Portable Device” means a portable consumer electronic device that plays digital music files exported from another hardware device or network connection or an electronic device approved by Warner in writing in advance, in each instance for use by End Users in connection with utilizing eMasters in the manner set forth on Exhibit A.  Except as expressly approved by Warner in writing, no cellular telephone or other device capable of cellular or WAP communication is a Portable Device, regardless of the device's other functionality or the proposed method of content delivery thereto.

(o)  “Territory” means the United States and its respective territories and possessions, (including, without limitation, Puerto Rico).

(p)  “Vendor’s Servers” means computer servers that at all times:  (i) are located in the United States; (ii) remain under the physical or legal control of Vendor; (iii) incorporate security measures that meet or exceed prevailing best practices in the industry; and (iv) to the extent owned or controlled by Authorized Contractors, are covered by agreements between Vendor and its Authorized Contractors ensuring Vendor’s right to control the applicable hosting services.

(q)  “Viral Applications” means virally-embedded, Web 2.0-styled, HTML-based widgets and other software code or applications that facilitate the referral of End Users to purchase content (including Warner Content) from the Online Store and which comply with the requirements set forth in Exhibit F.

(r)  “Warner Content” means sound recordings (other than sound recordings made part of exclusive marketing arrangements) for which Warner has the right to permit sales hereunder and that are designated by or on behalf of Warner, in its sole discretion, for Vendor’s use hereunder and are delivered by or on behalf of Warner to Vendor in a Formatted File for conversion into eMasters at Vendor’ sole option and expense.  For purposes of clarity, notwithstanding anything in this Agreement to the contrary, Warner Content does not include any recorded music content that would otherwise be considered Warner Content due to the fact that Warner owns an interest in such content due to a joint venture, strategic alliance, merger, sale or other major transaction with another recorded music business, including without limitation Sony Music Entertainment, EMI Group plc and/or Universal Music Group (or their respective successors).

(s)  “White Paper” means that document describing the features, functionality, specifications and other details of or relating to the Online Store as set forth on Exhibit A.

2.  Vendor’s Rights and Appointment.

(a)  Subject to all the terms and conditions herein, Warner hereby appoints Vendor as a non-exclusive reseller of eMasters on its own and via Approved Accounts to sell to End Users located in the Territory via the Online Store, and authorizes Vendor on a non-exclusive, non-assignable, non-transferable basis in the Territory to:

(i) encode Formatted Files, which are delivered by or behalf of Warner to Vendor hereunder, into eMasters, and allow End Users to purchase and then digitally download such eMasters from the Online Store via the Internet to Personal Computers in the Territory;

(ii) stream Clips from the Online Store via the Internet to End Users solely on a promotional basis to such End Users’ Personal Computers in the Territory for Warner Content that is available for purchase through the Online Store;

(iii) subject to Warner’s prior written consent in each case, display Other Materials (and provide Other Materials to Approved Accounts for display) to promote sales of eMasters (A) on the Online Store, or (B) in other promotional communications to End Users (either directly from Vendor or from Approved Accounts) who have consented to such receipt, in each case, in the same size and prominence as all other similar content in each such location or communication;

(iv) allow End Users to download from the Online Store front-cover album artwork relating to the album associated with a purchased eMaster for display on the End User’s Personal Computer or Portable Device when such eMaster is played; and

(v) sell eMasters to End Users (including via Approved Accounts) solely from the Online Store to such End Users’ Personal Computers in the Territory, solely in the manner set forth herein and in the format and structure designated by Warner (e.g., as a single track download, full album bundle, five track bundle, designated track bundle with artwork), and solely during the time(s) specified by Warner (i.e., subject to windowing).  Without limiting the foregoing, individual sound recordings and full albums embodied in Warner Content may not be coupled or bundled together with other sound recordings (including other Warner Content), content, products or services as part of a single offering without Warner’s prior written consent.

(b)  Vendor will not edit, change or alter (and shall not assist any of its Approved Account or End Users in editing, changing, or altering) in any way any of the Warner Content or Other Materials (including, without limitation, covering, impairing or altering in any way any watermark (or similar item) in Warner Content or Other Materials) without Warner’s prior written consent.

(c)  Without Warner’s prior written consent, Vendor may not take any action, directly or indirectly, so as to imply an artist or Warner endorsement, sponsorship or commercial tie-in of any product or service, including without limitation, the Online Store or Approved Accounts.  Vendor shall comply with any usage guidelines pertaining to the Warner Content or Other Materials that are set forth on Exhibit A or such other guidelines as provided by Warner.

(d)  Vendor and Approved Accounts may advertise the Online Store and the availability of Warner Content generally as a part of the Online Store, provided that (i) any advertising which includes or references any Warner Content or Other Materials shall be subject to Warner’s prior written consent, (ii) no such advertising could be reasonably interpreted as an endorsement or sponsorship (of the Online Store or otherwise) by Warner or by one or more Warner artists, and (iii) Warner shall retain the right upon request to require Vendor to promptly remove or discontinue any advertising that includes any Warner Content or Other Materials.  The foregoing shall not prevent Vendor from using any artist name or likeness embodied in any Warner Content in any manner that does not require consent from Warner or any other person.

(e)  All rights not expressly conferred to Vendor are expressly reserved to Warner.  Notwithstanding anything in this Agreement to the contrary, Warner is not restricted from sales (either its own or via third parties) of Warner Content in any format or channel in the Territory.  Except as expressly set forth herein, Vendor shall not use or offer for sale any Warner Content, Other Materials or other property of Warner (including the names and/or likenesses of any artist whose performances are embodied in Warner Content), provided that the foregoing shall not prevent Vendor from using any artist name or likeness embodied in any Warner Content or Other Materials in any manner that does not require consent from Warner or any other person.

(f)  Except as may be embodied in the Warner Content and Other Materials as provided to Vendor hereunder, the Online Store shall not contain content or engage in activities (and shall not frame, link to, advertise or otherwise endorse any other website or media that contains content or engages in activities) that:  (i) is or are unlawful, harmful, threatening, defamatory, obscene, harassing or discriminatory; (ii) violate(s) or infringe(s) the rights of any third party (including intellectual property, name and likeness and privacy/publicity rights); (iii) depict(s) sexually explicit images; (iv) promote(s) violence, discrimination, illegal activities; (v) advertise(s) alcohol, tobacco, firearms, feminine hygiene products (or other objectionable products with which artists typically do not wish to be associated); (vi) endorse(s) any religious or political cause or candidate; (vii) is or are intentionally derogatory or denigrating with respect to Warner, its affiliates, any Warner artist, the RIAA or the music industry; or (viii) is or are objectionable to Warner based upon reasonable grounds of which Warner may notify Vendor from time to time.

(g)  Warner acknowledges that Vendor may use Authorized Contractors and Approved Accounts to perform its obligations hereunder in accordance with the provisions of this Agreement, provided that Vendor must maintain control over, and retains liability hereunder for all such obligations, including, without limitation, all Fulfillment Activities.  Vendor shall cause each Authorized Contractor and Approved Account to abide by the terms and conditions of this Agreement applicable to Vendor (regardless of whether Authorized Contractors or Approved Accounts are expressly covered by such obligation).  If any Authorized Contractor or Approved Account takes any action or omits to take any action that would breach this Agreement if it were Vendor, (i) Vendor shall promptly notify Warner of same; (ii) upon notice to Vendor from Warner, Vendor shall immediately cease providing any Warner Content or Other Materials to such Authorized Contractor or Approved Account and permitting such Authorized Contractor or Approved Account to perform Vendor’s obligations hereunder, and such entity shall cease to be, as applicable, an “Authorized Contractor” or “Approved Account” hereunder; and (iii) Vendor shall be deemed to be in breach of this Agreement as if such action or omission were or were not taken by Vendor.

3.  Warner’s Rights and Obligations.

(a)  Warner shall provide Warner Content, Other Materials and Formatter Files to Vendor in a manner designated by Warner (as such method may be updated by Warner from time to time), or as the parties may otherwise agree, including the form and format of such Formatted Files, any other content associated therewith and all specifications related thereto.

(b)  Warner may terminate Vendor’s and/or any Approved Account’s rights to use any or all Warner Content and/or Other Materials at any time by notifying Vendor in writing, including via email, xml feed, or other electronic communication.  Vendor and all Approved Accounts shall cease to offer such materials on a prospective basis as soon as reasonably practicable, but no later than within two (2) days following receipt of notice.

(c)  As between Warner and Vendor, Warner shall be responsible for paying:  *****.

(d)  Each party will designate a single contact person to address all technical, marketing or other business issues (other than accounting as contemplated by Exhibit C) relating to this Agreement.

4.  Vendor’s Obligations.

(a)  Vendor shall comply with the policies and procedures set forth in the White Paper and offer all eMasters for sale via the Online Store.  If Warner, in its sole discretion, provides a parental advisory warning due to explicit lyrics or otherwise, Vendor shall promptly and clearly disclose such warning to End Users prior to their playing or purchase of the applicable Clip or eMaster.

(b)  Vendor will comply with all applicable Laws in its performance of its obligations and exercise of its rights under this Agreement and the operation of its business relating thereto.  Vendor shall (and shall cause each Approved Account to) require all End Users, prior to delivery of any eMasters or Other Materials hereunder, to agree to “Terms of Use” that:  (i) require End Users to comply with all applicable Laws in their use of the Warner Content and Other Materials and to protect the applicable content owners’ (including Warner’s) rights therein; (ii) state that End Users are not granted any commercial, sale, resale, reproduction, distribution or promotional use rights for the Warner Content and Other Materials, including any rights for uses that require a synchronization or public performance license with respect to the underlying musical composition; (iii) state that eMasters are for the personal, non-commercial entertainment use of End Users; (iv) state that unauthorized reproduction or distribution of eMasters violates applicable Law; (v) state that End Users are not permitted to share or transfer eMasters purchased via the Online Store; (vi) state that End Users are not permitted to modify or edit eMasters purchased via the Online Store; (vii) state that End Users are not permitted to infringe the rights of the copyright owner(s) of eMasters purchased via the Online Store; and (viii) contain a reservation of rights on the part of Warner in all Warner Content and Other Materials, as prescribed by Warner from time to time.  Vendor shall provide Warner with its End User “Terms of Use” agreement in advance, which shall be at least as protective as the terms and conditions on Exhibit A and shall allow Warner to revise provisions pertaining to Warner’s rights and interests.  Vendor shall not (and shall not enable any third party to) provide any means of access to any item of Warner Content from or through any service or website, other than the Online Store as expressly set forth in this Agreement.  Vendor shall, on a regular basis, monitor End User activity to ensure compliance with such “Terms of Use.”  Vendor shall ensure that any advertising and press releases it engages in with respect to the availability of Warner Content in MP3 Format on the Online Store are consistent with these End User content use limitations.

(c)  Vendor shall notify Warner of any proposed changes to its privacy policy at least thirty (30) days in advance of implementing any such changes.  To the extent that any proposed changes would, in Warner’s reasonable opinion, affect Vendor’s ability to perform its obligations under this Agreement, all such proposed changes to Vendor’s privacy policy shall be subject to Warner’s prior written approval.

(d)  Except as expressly assumed by Warner in Section 3(c), *****

(e)  Vendor shall operate the Online Store with functionality and features consistent with the description set forth in Exhibit B.  During reasonable business hours and upon reasonable notice to Vendor, Warner may, on its own or through an independent firm, conduct a technical audit of the Online Store (including related technical systems, servers, content preparation and functionality) one (1) time per year (or more often, if justified under the circumstances) ensure Vendor’s compliance with this Agreement.  It shall be Vendor’s responsibility to promptly procure any and all rights and permissions, documentation and availability of personnel of Vendor or any Authorized Contractor or Approved Account necessary for Warner to exercise its audit rights hereunder.

(f)  If Warner, in its sole discretion, provides a copyright notice for Warner Content or Other Materials, Vendor shall include such notice so it can be readily viewed by End Users.  Vendor shall not cover, impair or alter in any way any watermark (or similar item) in Warner Content or Other Materials.  The Online Store will display the track title and name of the artist for each eMaster prior to the purchase of the eMaster by an End User.

(g)  Vendor shall not distribute any eMasters to any End User prior to the first promotional exhibition date designated by Warner.

(h)  Vendor will not (and will cause all Approved Accounts not to) utilize or leverage any Warner Content or Other Materials furnished hereunder in connection with any offer other than a digital music download offer, and all Warner Content shall only be made available from areas of the Online Store, as permitted hereunder, dedicated to the sale of digital music in MP3 Format.  Vendor shall market the availability of Clips hereunder solely to promote sales of full-length Warner Content and not in any other manner (including, without limitation, as part of a stand alone promotion or as “free” content).

(i)  During the Term of this Agreement and for one (1) year thereafter, Vendor shall maintain *****.

(j)  For the avoidance of doubt, (i) all terms set forth herein regarding restrictions on the use of Warner Content, including without limitation the content usage rules set forth herein and (ii) the economic terms, shall be applicable to all end users of the Online Store, regardless of whether such end user is considered an “End User” under this Agreement.  Payment for such use of Warner Content shall not relieve Vendor of its obligations hereunder or constitute a waiver by Warner of any rights and remedies it may have under law or equity.

(k)  Without expanding or altering the scope of the appointment and authorization set forth in Section 2(a) above, Vendor shall ensure, through all commercially available, robust industry-standard technological means, including without limitation by its financial and clearinghouse process (including credit card address verification and reverse IP address lookup), that all End Users reside in the Territory.

5.  Partnership Initiatives.

(a)  Viral Applications.  Vendor shall have the right to develop and offer, or make available to third parties, the ability to offer Viral Applications that are suitable for online social networks.  In the event that Vendor is unable to comply with the widget parameters set forth in Exhibit F, Vendor shall not have the right to offer or make Clips or eMasters available via Viral Applications.

(b)  Premium Bundle Configurations.  *****

(c)  Audio Quality.  Warner intends to offer its audio products in multiple tiers, based on higher levels of bit-rate/resolution quality and, in connection therewith, Vendor will (and will cause each Approved Account to) implement functionality as soon as practicable to support such higher-quality product offerings.

(d)   *****

(e)  One-Click Playlist Purchase.  Vendor shall (and shall cause each Approved Account to) implement functionality that enables End Users to simplify the purchase of multiple tracks with minimal steps by permitting End Users to group sound recordings together for one-click purchase; provided that the foregoing is not intended to require or authorize Vendor to bundle or couple Warner Content together with other sound recordings, but rather as a means of simplifying the purchase of individual tracks.  Once implemented, the foregoing functionality should be readily available via the Online Store and Vendor will (and will cause each Approved Account to) use good faith efforts to make such functionality available via any Viral Applications permitted hereunder.

(f)  Pre-Orders.  Within thirty (30) days after the Effective Date, Vendor shall (and shall cause each Approved Account to) develop and offer pre-order functionality via the Online Store that supports the offering of an advance single to pre-order purchasers, and which functionality includes (at a minimum):  (i) purchasers of tracks from an album that has not yet been released will be prompted to pre-order the album (i.e., in digital format), and/or to opt in for an email alert when the album is released; and (ii) for albums not yet released but available for pre-order, thirty (30)-second clips will be made available (for streaming on the product detail pages of the Online Store) in conjunction with the launch by Vendor or the Approved Account of the digital pre-order functionality.

(g)  Promotional Opportunities.  Vendor shall (and shall cause each Approved Account to) present to Warner for its consent promotional opportunities as reasonably requested by Warner and shall send mutually-agreed promotional messages via email to all End Users who have opted-in to receive artist-related information.  Each such email campaign shall contain a Warner approved song clip or link to a stream and/or artist-related information (e.g., tour dates, album release information).  *****

(h)   *****

(i)  Affiliate Sales Reporting.  In the event that Vendor or an Approved Account provides Viral Applications for purchase of items of Warner Content on third party websites or similar deep links on third party sites to purchase Warner Content via the Online Store:  (i) any such sales of Warner Content must comply with the terms and conditions of this Agreement; (ii) any affiliate fee offered by Vendor or an Approved Account to third parties for such sales shall be borne solely by Vendor or such Approved Account and shall not affect wholesale prices owed to Warner hereunder; and (iii) Vendor shall report to Warner on such sales on a third party site-by-third party site basis, including number of “clicks” through to purchase, Successful Purchases (as defined below) and similar detailed reporting in respect of sales and traffic.

(j)  Nielsen SoundScan.  Vendor shall (i) cause Nielsen SoundScan to count all versions of a particular album/single toward Nielsen SoundScan’s calculation of top-selling albums/singles, and (ii) count all versions of a particular album/single towards Vendor’s calculations of top-selling albums/singles.

(k)   *****

(l)  Infringing Applications.  Vendor shall (and shall cause each Approved Account to) remove or disable infringing applications available on, through, or in connection with the Online Store or on any device offered by Vendor.

(m)   *****

6.  Sales Proceeds.

(a)  Vendor shall remit to Warner (i) a non-refundable payment of ***** as a minimum guarantee of sales proceeds hereunder, to be applied against future sales proceeds under Section 6(b) during the Initial Term only, payable as follows: *****. Upon commencement of a Renewal Term, if any, pursuant to Section 8(a), Vendor shall remit to Warner an additional non-refundable payment of ***** as a minimum guarantee of sales proceeds hereunder, to be applied against future sales proceeds under Section 6(b) during such Renewal Term only.

(b)  The retail price of eMasters will be determined by Vendor in its sole discretion.  For the avoidance of doubt, Vendor is free to advertise, promote and offer for sale any eMasters hereunder at any retail price it determines.  For each successful download of an eMaster by an End User from the Online Store (including any download that is deemed successfully delivered by Vendor or for which Vendor has retained any applicable payment) (“Successful Purchase”), Vendor shall pay Warner *****.   All calculations with respect to amounts payable to Warner hereunder shall be made by carrying out all fractional amounts to the fourth digit following the decimal point, completing the necessary additions, and then rounding to the nearest penny (i.e., no number should be rounded to the nearest penny prior to the completion of all necessary additions).

(c)  Within ten (10) days after each calendar month after the Effective Date, Vendor will furnish to Warner, together with the related payments, statements showing (on a separate basis for Vendor and each Approved Account):  (i) the total number of Successful Purchases in the applicable month and year-to-date, identified by each individual eMaster, including by using a code or other designation assigned by Warner (e.g., POID, ISRC, UPC or Grid #), the date of sale and the retail price, distinguishing among whole album, two- and three-track and single-recording eMasters, and the corresponding wholesale price thereof; (ii) total number of eMasters sold during the applicable period and the corresponding proceeds; (iii) the same types of data provided to any other provider of digital sound recordings to Vendor; (vi) any information relating to Approved Accounts of a type that Vendor or an Approved Account provides to any other record labels, on at least the same terms and conditions; (v) all of the foregoing as to all record companies on an anonymous, aggregate basis (e.g., no sound recordings or labels other than those of Warner will be identified); and (vi) any additional information that Warner requires to calculate the amounts payable to Warner hereunder and/or to fulfill any third-party reporting or auditing obligations.  Such statements shall be provided to Warner in Warner’s standard reporting format (which may be modified from time to time upon notice to Vendor).  The current version of such format is set forth on Exhibit C.  Notwithstanding anything herein to the contrary, Vendor (and the applicable Approved Account) shall not be permitted to make any deductions (i.e., from amounts that are otherwise owed to Warner hereunder) related to refunds, chargebacks or credits by Vendor (or the applicable Approved Account) to its customers.

(d)  Vendor shall provide to Warner, by 12 PM ET on each Tuesday following Vendor’s first sale of Warner Content, or if a holiday, by 12 PM ET on the next business day thereafter, unofficial “flash” reports setting forth for the previous week from the Online Store, all information set forth on Exhibit C.

(e)  Vendor shall notify and seek Warner’s written approval prior to Vendor or any Approved Account running, displaying or otherwise including any advertisements or sponsorships on the Online Store (including the related website) or the Viral Applications.  Subject to the foregoing approval, Vendor shall pay Warner, *****.

(f)  Vendor or an Approved Account shall collect, bear and pay any and all taxes, duties and customs of any kind, however designated, levied or based in any way anywhere in the Territory upon the sale or resale of any products or provision of services by Vendor, including, for the avoidance of doubt and without limitation, all sales, use, excise, purchase, value added or similar taxes (other than U.S. federal, U.S. state or U.S. local income taxes payable by Warner on monies earned by Warner hereunder).  Vendor shall (and shall cause each Approved Account to) execute any documents Warner may deem necessary or desirable to evidence Vendor’s liability for such taxes.  If any claim is made against Warner for such taxes, Vendor shall indemnify and hold Warner harmless for any liability for such sums and shall promptly remit to Warner such sums together with any penalties and interest assessed.

(g)  All payments hereunder made by Vendor to Warner shall be made free and clear of, and without deduction or withholding for or on account of any and all taxes, levies, imposts, duties, charges, fees, deductions or withholdings now or hereafter imposed, levied, collected, withheld or assessed by any governmental authorities.  If any taxes, levies, imposts, duties, charges, fees, deductions or withholdings are required to be withheld or deducted from any amounts payable to Warner hereunder, the amounts so payable shall be increased to the extent necessary to yield to Warner the full amount specified hereunder.

(h)  All payments hereunder shall be in U.S. dollars in immediately available funds, and made by wire or ACH, as Warner may direct, and sent to *****.

(i)  Vendor will, and if applicable, will cause its Authorized Contractors and Approved Accounts to, maintain and preserve in its principal place of business, during the Term and for at least three (3) years thereafter, complete and accurate records relating to its obligations hereunder.  Warner may, on its own or via an independent firm, audit such records and any software or systems used to create or maintain such records once a year (or more often, if justified under the circumstances) during reasonable business hours and upon reasonable notice.  Upon request, Vendor shall make available to Warner and/or its auditor, the foregoing books and records in electronic, searchable and analyzable format (e.g., in Microsoft Excel or another database format).  Warner shall pay the cost of such audit, unless it reveals an underpayment of five percent (5%) or more of any payment obligations during the audited period, in which case Vendor shall, without limitation of other rights and remedies, promptly pay such underpayment, together with specified interest thereon, and reimburse Warner for all reasonable costs of the audit, including without limitation, accountants’ fees and attorneys’ fees, in accordance with Section 6(h).

7.  Ownership.  As between Warner and Vendor, Vendor acknowledges that all right, title and interest (including intellectual property rights) in and to the Warner content (including all Warner Content and Other Materials) are the sole property of Warner.  Vendor shall not contest, or assist others in contesting the validity of, or Warner’s rights or interests in, the same.  Vendor shall take possession of the Warner Content only for the purpose of facilitating the sale of eMasters to third parties, and shall not be deemed to have taken ownership of or title to the Warner Content, either alone or as embodied in eMasters, or Other Materials.  Vendor’s possession of the Warner Content and Other Materials shall be in the nature of a consignment from Warner, and Vendor shall not, and shall cause each Approved Account not to, make any representations to any other third party, including End Users, in contradiction to this.

8.  Term and Termination.

(a)  The initial term of this Agreement shall commence on the Effective Date and end one (1) year thereafter, unless sooner terminated pursuant to the terms of this Agreement (the “Initial Term”).  This Agreement shall renew automatically on the expiration of the Initial Term for additional periods of one (1) month (each, a “Renewal Term”), unless either party gives notice of non-renewal to the other party at least thirty (30) days prior to the expiration of the applicable Initial Term or Renewal Term or unless sooner terminated pursuant to the terms of this Agreement (the Initial Term and any Renewal Terms, collectively, the “Term”).

(b)  Warner may terminate this Agreement, effective upon written notice to Vendor, in the event of:  (i) a failure to comply with the payment obligations set forth in Section 6 herein and failure to cure same within ten (10) days after written (including via email) notice from Warner’s accounting department; (ii) Vendor’s breach of Section 12(f); (iii) repeated failure to takedown Warner Content or Other Materials pursuant to Section 3(b), notwithstanding cure; (iv) Vendor’s use or allowing the use (other than in bad faith) of the Warner Content other than as expressly authorized herein and failure to cure same within ten (10) days after written notice; (v) Vendor’s bad-faith use or bad-faith allowing the use of the Warner Content other than as expressly authorized herein, notwithstanding cure; or (vi) the termination of any other agreement between Vendor and Warner by Warner prior to the expiration of the term thereof due to a breach of such agreement by Vendor.  Notwithstanding anything in this Agreement to the contrary, Vendor acknowledges and agrees that Warner may suspend deliveries of new Warner Content in the event that Vendor fails to comply with its payment obligations as set forth in Section 6.

(c)  Each party may terminate this Agreement, effective upon written notice to the other party, if the other party:  (i) materially breaches any of the provisions of this Agreement and fails to cure same within thirty (30) days after written notice; or (ii) is unable to pay its debts when due, makes any assignment for the benefit of creditors, files any petition under the bankruptcy or insolvency Laws, has a receiver or trustee to be appointed for its business or property, or is adjudicated bankrupt or insolvent.

(d)  Upon any expiration or termination of this Agreement, (i) Vendor shall, and shall cause all Approved Accounts to, immediately cease exercise of its rights under Section 2(a) and shall, at Warner’s option, promptly destroy or return all materials pertaining to eMasters or Other Materials, including all copies thereof, that are in Vendor’s possession or subject to its control (including materials in possession or control of Authorized Contractors and Approved Accounts) and, if requested by Warner, shall certify such destruction or return by a duly-appointed officer of Vendor; and (ii) Sections 1, 3(c), 4(d), 4(i), 5, 6, 7, 8(d), 10, 11, and 12 shall survive any such event.

9.  Representations and Warranties.  EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN,WARNER MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THIS AGREEMENT, THE WARNER CONTENT, EMASTERS OR OTHER MATERIALS, AND EXPRESSLY DISCLAIMS ALL SUCH REPRESENTATIONS AND WARRANTIES, INCLUDING ANY WITH RESPECT TO TITLE, NON-INFRINGEMENT, MERCHANTABILITY, VALUE, RELIABILITY OR FITNESS FOR USE.EXCEPT AS EXPRESSLY SET FORTH HEREIN,VENDOR’S USE OF THE WARNER CONTENT, EMASTERS AND OTHER MATERIALS IS AT ITS OWN RISK ON AN “ASIS” BASIS.

10.  Indemnification.

(a)  Warner will, to the extent permitted by Law, defend at its expense, indemnify and hold harmless Vendor and its affiliates and their respective directors, officers, employees, agents and representatives (“Related Parties”) from any loss, liability, damage, award, settlement, judgment, fee, cost or expense (including reasonable attorneys’ fees and costs of suit) (“Losses”) arising out of or relating to any third-party (other than Authorized Contractors, Approved Accounts, Vendor’s Related Parties or other parties acting on behalf of Vendor or an Approved Account) claim, allegation, action, demand, proceeding or suit (“Claim”) against any of them that arises out of:  (i) any breach by Warner of this Agreement or its warranties, representations, covenants and undertakings hereunder; or (ii) any claim that the Warner Content, as used by Vendor in the manner explicitly authorized by this Agreement, violates the intellectual property rights of a third party.

(b)  Vendor will, to the extent permitted by Law, defend at its expense, indemnify and hold harmless Warner and its affiliates and their respective Related Parties from any Losses arising out of or relating to any third-party (other than Warner’s Related Parties) Claim against any of them that arises out of:  (i) any breach by Vendor of this Agreement or its warranties, representations, covenants and undertakings hereunder; (ii) Vendor’s operation of its business; or (iii) any claim that Vendor’s use of the Warner Content or Other Materials, other than as explicitly authorized by this Agreement, infringes the rights of a third party.

(c)  The indemnified party will promptly notify the indemnifying party in writing of any indemnifiable claim and promptly tender its defense to the indemnifying party.  Any delay in such notice will not relieve the indemnifying party from its obligations to the extent it is not prejudiced thereby.  The indemnified party will cooperate with the indemnifying party at the indemnifying party’s expense in such party’s defense of any Claim.  The indemnifying party may not settle any Claim in a manner that adversely affects the indemnified party without such party’s consent (which shall not be unreasonably withheld or delayed).  The indemnified party may participate in its defense with counsel of its own choice at its own expense.

(d)   *****.

11.  Confidentiality and Security.

(a)  Vendor shall use reasonable best efforts to prevent any unauthorized copying of the Warner Content, Other Materials or any eMaster, including without limitation, by implementation of the policies and procedures set forth in the White Paper.  If Vendor becomes aware of any infringement or misuse of Warner Content or Other Materials, it shall promptly notify Warner and fully cooperate with Warner to remedy same, at Vendor’s expense.  An End User may only download eMasters when such End User is logged onto his or her Online Store account, using a unique user name and password.  Vendor agrees that any digital computer file copy of eMasters, Warner Content or Other Materials shall:  (i) reside only on Vendor’s Servers; and (ii) be encrypted (or otherwise stored in a secure manner that is equivalent to the protections afforded by encryption).  Vendor shall restrict access to all copies of Warner Content, Other Materials or eMasters solely to essential personnel who are informed of and accept the terms of this Agreement and shall store such items or any hardware or media embodying them in a secure location.  If any security breaches occur in connection with this Agreement, the parties shall promptly consult with each other and all applicable third parties and shall cooperate in all appropriate remedial actions.  If a security breach that is system-wide, material or otherwise adverse to Warner occurs, Warner may suspend Vendor’s rights under Section 2(a) until such breach is remedied.  Vendor shall not through its business practices or otherwise take any action that would compromise the policies and procedures set forth in the White Paper, or the Warner Content, Other Materials or eMasters distributed hereunder.

(b)  Neither party shall disclose any non-public, confidential or proprietary information of the other party (including the terms of this Agreement and any confidential information concerning the other party’s business, finances, plans, customers, technology and products) that it learns in connection with

this Agreement (“Confidential Information”) to anyone other than its employees (or Authorized Contractors or professional advisors) bound by confidentiality obligations who need to know same to perform hereunder or as may be necessary to support third party reporting, royalty or audit obligations (e.g., imposed by Warner artists, publishers or otherwise).  Neither party shall use the other party’s Confidential Information, except (i) as required to perform hereunder, or (ii) as explicitly permitted hereunder.  Confidential Information shall not include any information that (A) is or becomes publicly known other than from a breach of this Agreement, (B) is independently developed or obtained by the receiving party from another legitimate source or (C) is required to be disclosed by Law or the rules of any nationally recognized stock exchange, provided that the receiving party shall promptly inform the disclosing party of any such requirement and cooperate with any attempt to procure a protective order or similar treatment.  Neither party shall make or issue any public statement or press release regarding this Agreement or its subject matter without the prior written approval of the other party.

(c)  For purposes of this Agreement, “Warner Information” means information collected by or on behalf of Vendor in connection with or otherwise concerning Warner Content or Warner artists (whether or not such information personally identifies any End User(s)), including without limitation any End User Data.  If Vendor, an affiliate of Vendor, an Authorized Contractor or any Approved Account wishes to disclose Warner Information to or use Warner Information for the benefit of any third party (including without limitation any affiliate of Vendor), or commercially exploit the Warner Information, Vendor must seek Warner’s prior written approval, which Warner may provide or withhold in its sole discretion.  In the event that any such use or disclosure is approved by Warner, Vendor shall provide to Warner at no charge any copy of Warner Information provided to third parties or otherwise used by Vendor, to the extent that such Warner Information has not already been provided to Warner hereunder.  End User Data and Warner Information shall be deemed solely to be Warner’s Confidential Information.

(d)  Except as otherwise required by Law, upon the termination or expiration of this Agreement, Vendor shall, at its option, (i) provide all Warner Information to Warner, or (ii) maintain a copy of all Warner Information for a minimum of three (3) years following such termination or expiration of this Agreement (or such longer period as reasonably requested by Warner).

12.  General Provisions.

(a)  Independent Contractors.  Warner and Vendor are independent contractors, and shall not be deemed partners, franchisees, agents or joint venturers of each other.  Neither party will have any right or authority to obligate or bind the other party in any manner whatsoever.

(b)  No Third-Party Beneficiaries.  Nothing in this Agreement shall confer upon any person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement, and no person (including Approved Accounts or End Users) shall be deemed a third party beneficiary under or by reason of this Agreement.

(c)  Entire Agreement; Amendment.  This Agreement, including all Exhibits attached hereto (hereby incorporated herein by this reference), constitutes the entire agreement between the parties concerning the subject matter hereof and supersedes any prior understandings and agreements among the parties hereto with respect thereto, including any current or future Terms of Use related to the Online Store.  There are no terms, conditions, undertakings or collateral agreements, expressed, implied or statutory, between the parties related to the subject matter hereto other than as expressly set forth herein.  No amendment of this Agreement, including this Section 12(c) shall be effective unless in writing, executed by both parties, and expressly identifying the provision(s) to be amended and the changes to be made to such provision(s).

(d)  Waiver.  No waiver of any term of this Agreement will be effective unless executed in writing

by the party charged therewith or will excuse the performance of any acts other than those specifically referred to therein.

(e)  Severability.  If any term of this Agreement is held to be invalid or unenforceable, such holding will not affect the validity or enforceability of any other term hereto, and this Agreement will be interpreted and construed as if such term, to the extent the same will have been held to be invalid or unenforceable, had never been contained herein.

(f)  Assignment.  Vendor may not assign, confer any right in, assume in bankruptcy, pledge, mortgage or otherwise encumber this Agreement (or as applicable, the Warner Content, Other Materials or eMasters), in whole or in part, without the prior written consent of Warner in its sole discretion.  For the avoidance of doubt, a merger, change of control, reorganization (in bankruptcy or otherwise) or stock sale of a controlling interest in Vendor shall be deemed an “assignment” requiring such consent, regardless of whether Vendor is the surviving entity.  Vendor acknowledges that this Agreement is a contract for personal services and that its identity is a material condition that induced Warner to enter into this Agreement.  Any attempted action in violation of the foregoing shall be null and void ab initio and of no force or effect.

(g)  Notices.  Except to the extent otherwise expressly provided herein, all notices required hereunder shall be given by hand, overnight delivery service, or facsimile transmission (confirmed by letter sent by overnight delivery service, or registered or certified mail) to the address below.  Either party may amend its address set forth above at any time by written notice to the other party.  All such notices will be deemed given when the same will be delivered, so addressed, by hand, facsimile or overnight delivery service.

To Warner: Warner Music Inc. 75 Rockefeller Plaza New York, New York 10019 Attn: EVP & General Counsel ***** To Vendor: Liquid Spins, Inc. 5525 Erindale Drive, Suite 200 Colorado Springs, CO 80918 Attn: General Counsel *****

(h)  Governing Law;Consent to Jurisdiction.  This Agreement will be construed in accordance with the laws of the State of New York as applied to contracts made and performed entirely therein.  All disputes relating to this Agreement shall be brought solely in the state or federal courts located in the borough of Manhattan, New York, New York.  Vendor hereby consents to the exclusive jurisdiction of the State of New York and waives any defense of forum inconveniens.  EACH PARTY HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BROUGHT BY OR AGAINST EITHER PARTY IN CONNECTION WITH THIS AGREEMENT.

(i)  Equitable Relief.  The parties hereto agree that:  (i) Warner’s rights to exercise and enforce the restrictions, limitations and qualifications imposed herein upon such rights, are of a special, unique, extraordinary and intellectual character, giving them a peculiar value the loss of which by Warner (A) cannot be readily estimated, or adequately compensated for, in monetary damages and (B) would cause Warner substantial and irreparable harm for which it would not have an adequate remedy at law, and (ii) Warner accordingly will be entitled to equitable relief against Vendor (including temporary restraining orders, preliminary and permanent injunctive relief, and specific performance), in addition to all other remedies that Warner may have, to enforce the Agreement and protect its rights hereunder.

(j)  Order of Precedence.  In the event of any otherwise irreconcilable conflict between the terms and conditions set forth in the body of this Agreement and any Exhibit, the terms and conditions set forth in the body of this Agreement shall control.

(k)  Counterparts.  This Agreement may be executed in counterparts, including by way of signatures transmitted by facsimile or pdf, each of which shall be deemed an original and both of which together shall constitute one and the same document.

(l)  Remedies.  Except as otherwise provided herein, the rights and remedies of the parties provided under this Agreement are cumulative and in addition to any other rights and remedies of the parties at law or equity.

(m)  Headings.  The titles used in this Agreement are for convenience only and are not to be considered in construing or interpreting this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the Effective Date by their respective officers thereunto duly authorized.

WARNER MUSIC INC.	Liquid Spins, Inc.
/s/	/s/ Herman DeBoard
Name	Name:  Herman DeBoard
Title	Title:  CEO

EXHIBIT A

CONTENT USAGE RULES

End Users obtaining eMasters from Vendor pursuant to the terms of this Agreement may use the eMasters solely for such End Users’ personal and non-commercial use.  End Users are not granted any commercial sale, resale, reproduction, distribution or promotional use rights for the eMasters or Other Materials, including any rights for uses that require a synchronization or public performance license with respect to the underlying musical composition.

*****.

WHITE PAPER

Liquid Spins Security

Server Protection

Liquid Spins servers are hosted in the cloud using Amazon's Elastic Compute Cloud (EC2) service. All access to the server is via the Secure Shell protocol (SSH). Furthermore, SSH authentication only uses ssh keys which requires the private key and public key to be stored on the user's machine, and the public key to be stored on the server. This strongly protects the server against brute force attacks.

Customer Authentication

All customers of the Liquid Spins Music Store are required to register an account. Once registered, the customer will be able to login using our authentication measures by providing the email address and password they entered upon registration. The password for each customer is not stored in clear text. Rather, the password is encrypted using the BCrypt hashing algorithm. In the event of a security breach, all passwords are encrypted and therefore will not useful when viewing the passwords in the database. BCrypt is especially useful in preventing brute force attacks on a site due to it's slow encryption speed.

Asset Protection

All digital assets purchased from the Liquid Spins Music Store are stored in the cloud using Amazon's Simple Storage Service (S3). The permissions on those digital files are set with authenticated-read permissions. With those permissions no file stored will be accessible to anyone without proper authentication using a query string. The signature in the query string secures the request. Query string authentication requests require an expiration date. When a customer has authenticated with liquidspins.com and has made a purchase they are allowed to download the purchased product one time. The query string is generated using Amazon's S3 API and is valid for 3 seconds. After which time, the url expires preventing it from being shared.

Credit Card Security

Liquid Spins uses Authorize.Net as the credit card payment gateway.  All customer credit card payment information is transmitted through the website using 2048 bit SSL encryption.  The payment data is never stored on the Liquid Spins website, rather it is passed directly to Authorize.Net where it is transacted and stored in Authorize.Net’s PCI compliant, secure

systems.   In compliance with PCI standards, only the last 4 digits of the customer’s credit card number is stored on Liquid Spins as a transaction reference.

Web Platform

LiquidSpins.com uses Ruby on Rails as its application framework.  Ruby on Rails is a state of the art object oriented development platform used by some of the largest and successful websites.  Twitter, Groupon, Basecamp, Shopify and others.  The security measures built into Rails are too numerous for a summary document.  An up-to-date description can be found here: http://guides.rubyonrails.org/security.html

EXHIBIT B

FEATURES AND FUNCTIONALITY OF ONLINE STORE

ONLINE Our online store, in its basic form is a Pay-Per-Download site. It is organized by ARTIST – ALBUM – SONG respectively. UNIQUE PLAYER One unique aspect of our online store is “My Music” Player. This player allows the user to build in real-time a playlist consisting of Clips (as defined in Section 1 of this Agreement) that they can listen to while they are browsing the site. If they like the playlist they have built, they can use our one-click technology to “Purchase My Music”- allowing them to purchase the eMasters  (as defined in Section 1 of this Agreement) corresponding to the playlist they have created. This player also allows the user to send their friends links to their playlist. Creating a viral music experience, these playlist links will allow the user’s friends to listen to the corresponding Clips by directing them to our online store.    

UNIQUE PRODUCTS

Each label will also have the opportunity to approve various products related to each song in the catalog that we will sell through our site. No products will be sold for a label or artist unless we have express written consent and an addendum to the distribution agreement with the label. One such product that we have a Patent Pending on is the Paper Record. This product is a very unique pre-paid gift card that allows a customer to purchase a paper gift card that has a pre-paid song inside. The gift card uses approved CD Art on the inside and the title and other credits on the inside of the card.

MOBILE GATEWAYS

The single most unique aspect of Liquid Spins pertains to our use of QR codes and Mobile Gateways. For each artist, album and song in our system, we create a branded QR code called Liquid Clix. These QR codes will be saturated throughout the US and approved territories through partnerships with media outlets such as magazines, newspapers, television, campus posters, billboard signage and much more. Each QR can be scanned using a bar code enabled smart phone. When scanned, the smart phone will open a mini mobile web page we call Mobile Gateways. These Mobile Gateways allow a user to preview and purchase songs using the browser in their smart phone.

NOTE: Some smart phones allow a user to download directly to their phone. If this function is not available, the user will receive a message prompting them to download their purchase the next time they log into their Liquid Spins account.

BRANDING AND OTHER KEY FEATURES

Name of Service:Liquid Spins

Registered Logo

Branding

The branding of Liquid Spins is centered around the drop of water that represents the liquid nature of our music store and the water ripples that represent the social nature of our service. Our QR codes (Liquid Clix) are branded with a diamond format layout along with our ripples.

     

EXHIBIT C

ACCOUNTING FORMAT

PLEASE SEE ATTACHED.  [NOTE:  IN ORDER TO DETERMINE YOUR ABILITY TO COMPLY WITH THE ATTACHED DIGITAL ACCOUNTING FORMAT, A TEST FILE MUST BE PROVIDED TO AND APPROVED BY ***** PRIOR TO EXECUTION.  PLEASE CONTACT ***** DIRECTLY REGARDING THIS MATTER AT *****]

The current contact for accounting matters is ***** Warner-Elektra-Atlantic *****).  Warner may update such contact from time to time.

EXHIBIT D

APPROVED ACCOUNTS

Will be submitted potential accounts at a later date

EXHIBIT E

AUTHORIZED CONTRACTORS

None

EXHIBIT F

VIRAL APPLICATION PARAMETERS

1.Definitions.  “Warner Viral App Content” means Clips that are designated by Warner in its sole discretion for Vendor’s delivery via the Internet to Personal Computers as authorized hereunder via Viral Applications, in each case, solely in accordance with the terms and conditions of the Agreement (including, without limitation, this Exhibit F).  As of the Effective Date, all Clips shall be deemed to be Warner Viral App Content, and Vendor shall make available all such Clips via Viral Applications in the manner expressly authorized herein.

2.Blocked List for Viral Applications.  Vendor may not permit end users (or other third parties) to stream Warner Viral App Content hereunder via Viral Applications that have been embedded on those sites prohibited by Warner (such prohibited websites, as designated from time to time by Warner in Warner’s sole discretion, the “Blocked List Sites”).

3.Takedown Rights.  At any time in Warner’s sole discretion, Warner may (a) withdraw the designation of any or all Clips as Warner Viral App Content, or (b) require Vendor to disable any or all embedding rights with respect to any particular websites (or group of websites), in each case, by notifying Vendor via email, xml feed, or other electronic means.  Vendor shall (i) cease making such Clips available via Viral Applications, and/or (ii) cease making Clips available via such websites, in each case, as promptly as practicable and no later than within two (2) days following such notice.

4. *****.

5.No Optimization for Mobile.  No Warner Viral App Content shall be distributed via any Viral Application or other interface, in each case, that is optimized for access via Portable Devices, cellular mobile access (including, without limitation, Mobile Devices), or delivery to Personal Computers via any privately managed network (e.g., a mobile phone carrier network or any wireless network (including Wireless Networks) other than via WiFi connections (i.e., IEEE 802.11x transmissions)).

6.Reporting.  Within ten (10) days after each calendar month after the Effective Date (in addition to the reporting required pursuant to Section 5 of the Agreement), Vendor shall deliver to Warner detailed statements showing, in a clearly understandable manner, and on a separate basis for Vendor and the Viral Applications (provided that information for all Viral Applications may be provided in the aggregate):

*****

*****

*****

*****

A copy of such reporting shall be provided to ***** and  *****.

7.No Other Syndication or White Labeling Permitted.  Unless Warner agrees otherwise in writing, neither Vendor nor any Authorized Contractor shall, directly or indirectly:  (a) license or otherwise authorize or encourage a third party to “deep link” (providing a direct means to download or stream the source audio file outside of the Vendor service offering or widgets) from a non-Vendor service for the purpose of Streaming Warner Content or Warner Viral App Content; (b) launch a white label offering; (c) permit, authorize or encourage any end user to make downloads of any items of Warner Content or Warner Viral App Content, or otherwise provide other technology or simple interfaces to facilitate the same; or (d) frame or otherwise superimpose Warner Content or Warner Viral App Content into any other Internet web site, or sublicense, “syndicate” (as that term is commonly understood to mean in the Internet marketing industry), integrate, or co-brand the Warner Content or Warner Viral App Content to or with any third party.

8.No Public Statements.  Without limiting any other provision of the Agreement, Vendor shall not make any public statement or press release concerning the availability of Warner Content via the Viral Applications without Warner’s prior written consent.  In addition, Vendor shall provide in any Terms of Use applicable to the Online Store and the Viral Applications that no such public statements are permitted.

EX-10.14

Exhibit 10.14 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY ASTERISKS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

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Contract No. ______________

DIGITAL DISTRIBUTION AGREEMENT

This Digital Distribution Agreement, effective as of March 25, 2011 (the “Effective Date”), is made by and between EMI Music Marketing, a division of Capitol Records, LLC, a Delaware limited liability company with offices at c/o EMI Music North America, 150 Fifth Avenue, New York, New York 10011(“EMI”) and Liquid Spins, a division of Malemark, Inc., a Colorado corporation with offices at 5525 Erindale Drive, Suite 200, Colorado Springs, CO 80918 (“Distributor”). “Agreement” means the terms and conditions set out in this agreement, including Exhibit 1 (Definitions), Exhibit 2 (Reporting and Audit Guidelines), Exhibit 3 (Sales File Formats), Exhibit 4 (Content Supply Specifications), Exhibit 5 (Parental Advisory Guidelines), Exhibit 6 (Retail Channels/Distributors), and each Schedule executed by the parties.  The Agreement, including all Exhibits and Schedules but excluding the Product Schedules, shall be referred to herein as the “Basic Agreement.”  Other capitalized terms shall have the meanings set out herein or given to them in Exhibit 1 (Definitions).

1.INITIAL SCHEDULES

1.1The parties have entered into the following Schedule(s) concurrently with the Basic Agreement.  No Schedule(s) shall be valid unless it has been executed by the parties.

SCHEDULE(S)

Product Schedule A.2 – Full-Track Audio Downloads:  Fixed-Line Only

1.2 This Agreement may contain references to Products for which Distributor has not entered into a Schedule to Distribute.  For the avoidance of doubt, Distributor shall not be entitled to Distribute any EMI Content in any form except as specifically authorized in a Schedule.

2.CONSTRUCTION

2.1General.  If there is any conflict or inconsistency between a term in the Basic Agreement and a term in any of the Product Schedules, the term in the Product Schedules shall take precedence.  To the extent the parties enter into any additional Schedules during the Term subsequent to the Effective Date, each such Schedule will take effect as of the “effective date” set out in such Schedule and have its own duration (each such term, a “Schedule Term”).  Accordingly, the Basic Agreement shall be co-terminus with respect to each Product Schedule on a Schedule-by-Schedule basis.

2.2Interpretation.  The headings of this Agreement are for convenience only and shall not affect its interpretation.

3.TERM

This Agreement shall take effect on the Effective Date and, unless terminated earlier, shall expire on the later of (a) twelve  (12) months thereafter (the “Initial Term”), or (b) the last expiration date of any Schedule Term (collectively, the “Term”).  For the avoidance of doubt, the Basic Agreement shall be in effect after the Initial Term solely in respect of any Schedule with a Schedule Term extending beyond the Initial Term.

4.AUTHORIZED CONTENT

4.1Authorized Items.  This Agreement applies only to each Authorized Track, Authorized Video and Authorized Graphic made available to Distributor by EMI hereunder and only to the extent authorized by the applicable Product Schedule and only within the limits identified in the associated Product Data.  EMI makes no representation regarding a minimum quantity of Master Recordings or Master Copies that EMI shall make available to Distributor for Distribution pursuant to this Agreement.

4.2Content Supply and Updates.  At Distributor’s expense, EMI shall supply, or procure the supply, to Distributor of copies of Authorized Items and associated Product Data from EMI or a source approved by EMI in writing (an “Approved Source”), in accordance with the applicable Product Schedule and otherwise in accordance with this Agreement, including but not limited to the provisions of Section 8.1(c) below and Exhibit 4 attached hereto (the “Content Supply”).  The terms and conditions for Content Supply may be modified at any time by EMI in its sole discretion by written notice to Distributor.  Distributor shall implement any required changes to such terms and conditions within thirty (30) days after written notice from EMI.  Use of EMI Content obtained from any entity other than EMI or an Approved Source is a material breach of this Agreement.  From time to time, EMI (or its Approved Source) may deliver to Distributor additional Authorized Items and associated or revised Product Data and Distributor shall promptly (but no later than three (3) days after EMI (or the Approved Source) furnishes Distributor with such updated Product Data) implement any new Authorized Items (subject to Section 5.2(f) below and all other relevant terms of this Agreement) or substitute the same for any pre-existing metadata files.  To the extent Product Data contains any information regarding composers or lyricists of the musical composition embodied in a Master Recording, Distributor acknowledges that the information is supplied on an “as is” basis and EMI makes no representation or warranty as to its completeness or accuracy.

 

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4.3Withdrawal of Authorized Items.  EMI may modify or remove, from time to time and for any reason (including without limitation, as a result of issues relating to artist relations, contractual restrictions or legal claims), any or all Authorized Items, on a per Product basis or otherwise, by furnishing Distributor with revised Product Data or by otherwise notifying Distributor (including via e-mail).  If EMI withdraws any Authorized Items, Distributor shall, and shall cause all Distributor Affiliates (as defined in Section 14.1(a) of this Agreement), to cease any further Distribution of the affected Authorized Items in their entirety or in the manner indicated by EMI as promptly as practicable, but not later than three (3) days after EMI furnishes Distributor with such updated Product Data or other notification.

4.4Availability of Content.  Without limiting the foregoing, and without prejudice to EMI’s rights at law or in equity, or under Section 13 (Termination), EMI may immediately, upon notice to Distributor, withdraw any or all Authorized Items if Distributor:  (a) is overdue on any payments owed to EMI until no such overdue payments remain; or (b) is in breach of Section 7.1 (Rights of EMI) until Distributor cures such breach; and, in each case, Distributor and all Distributor Affiliates shall cease any further Distribution in the Territory as promptly as practicable, but in no event later than forty-eight (48) hours after EMI furnishes Distributor with such notice.

5.DISTRIBUTION OF AUTHORIZED ITEMS

5.1Authorizations.  All authorization(s) for Distribution of Authorized Items are set forth in each fully-executed Product Schedule.  Distributor shall comply with all applicable laws, regulations, orders and applicable business codes of conduct in the operation of the Service and Distribution of EMI Content.  References in this Agreement to the Distribution of Authorized Items shall be limited to the Authorized Items for the relevant Product expressly set forth in the attached Product Schedule(s), and references to the Distribution of Authorized Items shall be interpreted accordingly.

5.2Limitations and Restrictions.

(a)   Except as expressly and specifically authorized in the Product Schedule(s), no other use, copying, sale, distribution, communication, transmission or other exploitation, in any form, of the EMI Content, in whole or in part, by or on behalf of Distributor is permitted. In particular, Distributor shall not provide Master Recordings, Master Copies or copies thereof to any third parties and Distributor may only make such copies of Master Recordings and Master Copies as are necessary to perform its obligations and exercise its rights under this Agreement.

(b)   Each Authorized Item Distributed shall comprise an unmodified digital reproduction of a single Master Recording or Master Copy.  Nothing in this Agreement shall be construed to convey any right to:  (i) transmit or otherwise exploit the audio portion of audio-visual Authorized Items separately from the visual portion or vice versa; or (ii) extract, display or transmit any still image derived from any audio-visual Authorized Item.  EMI may amend the Specifications and Usage Rules for Authorized Items from time to time by written notice to Distributor effective thirty (30) days after such notice is given.

(c)   Except for applying the digital rights management (“DRM”) and other technology solely as necessary to comply with the Specifications, Usage Rules or other requirements of this Agreement, Distributor shall not modify, edit, re-mix, re-sequence, translate or otherwise alter in any way the Authorized Items, Product Data or other EMI Content.  Without limiting the foregoing, Distributor shall not remove any metadata, security device (e.g., digital watermark) or technological protection measure included within the EMI Content.

(d)   Except as expressly authorized in the case of Ringtunes and Video Tunes (if applicable), Distributor shall use its best efforts to prevent any Authorized Items from being loaded on a Terminal Device, an Approved Handset or other mobile wireless device, in each case in such a manner that it may be used as a musical “ringer” (i.e., a so-called audio or audio-visual ringtone, ringtune, master tone, or similar product).

(e)   Except as specifically authorized in a Product Schedule, Distributor may not combine any Authorized Items as pre-selected so-called “bundles,” or with any other content (e.g., audio, video, graphics), product or service (e.g., videos, TV programs, or games) from any source, including, without limitation, other content received from EMI or any of its affiliates.  The foregoing sentence is not intended to prohibit Distributor from advertising a playlist of individual Authorized Items, provided that each Authorized Item in the playlist is made available in accordance with the applicable Product Schedule and is Distributed as an individual Authorized Item.

 

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(f)   Unless expressly authorized as described in Section 5.2(g), Distributor shall not Distribute or make available to End Users by any means or media any Authorized Item prior to the designated digital release date for that Authorized Item, which date shall be included in the Product Data for the Authorized Item concerned or otherwise provided to Distributor by EMI in writing (including via e-mail).  For the avoidance of doubt, any Distribution or other exercise of the authorizations under any Product Schedule prior to the applicable release date, shall be a material breach of this Agreement.

(g)   Distributor shall neither offer Authorized Items to potential End Users to pre-order nor Distribute Audio Clips or Video Clips prior to the applicable release date, unless expressly authorized to do so in the ‘Pre-Order Sales Start Date’ field in the relevant Product Data.  For the avoidance of doubt, if the ‘Pre-Order Sales Start Date’ field is blank then Distributor is not authorized to make Authorized Items available prior to the applicable release date.

(h)   Unless specifically authorized in a Product Schedule, Distributor may not make EMI Content available as part of a subscription arrangement and Authorized Items shall be offered on an a la carte basis only.

(i)   If Distributor chooses to offer re-installs of any Product to End Users on a free, reduced-price or other basis, Distributor shall pay to EMI the PPD for each such Product.

(j)   Distributor shall ensure that Digital Downloads are distributed only to End Users.  Distributor shall use all commercially reasonable means to authenticate each potential recipient is an End User prior to distributing the Authorized Items to an Approved Device.

5.3Territory Controls.  All servers and storage media used by or on behalf of Distributor to process, store Master Recordings or Master Copies or store and/or Distribute Authorized Items shall be owned and/or controlled by Distributor and located in the Territory.  During the Term, Distributor shall at its sole expense ensure its location verification procedures are in accordance with best industry practice for managing territorial limitations in the context of similar transactions to ensure that EMI Content is only Distributed hereunder in those countries of the Territory in which that item of EMI Content is authorized for Distribution and to record the country of sale information in order to comply, inter alia, with its reporting obligations under this Agreement.  At EMI’s request from time to time during the Term, Distributor shall inform EMI of the then-current procedures employed by Distributor to comply with this Section 5.3.

5.4Distributor’s Facilities, Security.  Distributor shall be solely responsible for providing, at its expense, all systems and communications means necessary to Distribute Authorized Items as permitted hereunder and to otherwise operate the Service. Distributor acknowledges that protecting EMI Content in its custody against any unauthorized access, modification, distribution or use is of high importance and Distributor shall employ then-current best industry practices to protect it.  Upon becoming aware of any breach in security, Distributor shall immediately (a) provide EMI with details regarding such breach. take all necessary actions to secure and protect the EMI Content, and take all necessary actions to remedy such breach, and (b) at EMI’s request, cease all Distribution of any Authorized Items affected by such breach until such breach is cured.

5.5No Framing or Embedding.  Except as expressly authorized in a Product Schedule, Distributor shall not, and shall not permit third parties, to (including but not limited to End Users), embed, frame or otherwise superimpose any EMI Content into any other Internet site, or sublicense or “syndicate” (as that term is understood in the Internet marketing industry)the EMI Content to any third party (including, but not limited to, so-called "embedding").

6.NOTICES, CREDITS, ADVERTISING, USER DATA AND PUBLICITY

6.1Notices.  To the extent permitted under applicable law, Distributor shall ensure that the terms of use of the Service through which Authorized Items are Distributed shall at all times be conspicuous, easily accessible to and binding on End Users and include the following:  (a) a statement that all content provided through the Service embodies the intellectual property of a third party, is protected by law and is provided solely for the End User’s personal and non-commercial use; (b) except in the case of Ringtunes and Video Tunes, a prohibition on the use of the applicable Authorized Item as a musical "ringer" in connection with phone calls; (c) a statement that the End User may only make such copies of a Product as are permitted in the applicable Usage Rules or, in the case of a DRM-Free Download, such copies as are reasonably necessary for such End User’s personal and non-commercial use, and that any other copying is expressly prohibited; (d) a prohibition on any redistribution, reproduction, transmission, communication, sale, use, broadcast, public performance, rental or lending, adaptation, sub-license or other use of the content provided through the Service without the prior written consent of the copyright owner; (e) a reservation of the content owners’ rights in law and in equity; and (f) the same restrictions for End Users that apply to Distributor’s use of EMI Content in Section 6.5(b).  Either as part of the terms of use of such Service or otherwise, Distributor shall include a clear statement of the audio quality at which Digital Downloads and DRM-Free Downloads are being Distributed to End Users.  Distributor shall display a standard copyright notice in a legible size in close proximity to each Authorized Item at the point of transmission with at least the same prominence as Distributor displays or otherwise provides access to the equivalent notices of any other provider of similar content.  Distributor shall use commercially reasonable efforts to enforce the terms of use for End Users to the extent permitted under applicable law.

 

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6.2Parental Advisory Label Guidelines.  Distributor shall comply with the labeling guidelines set forth in Exhibit 5 attached hereto entitled “Parental Advisory Guidelines.”

6.3Use of Titles, Artist Names.  Solely within the Service, Distributor shall identify each Authorized Item made available on the Service by the title of the applicable Master Recording or Master Copy, if applicable, and associated artist(s) as provided in the Product Data (or otherwise made available to Distributor), and, other than as set forth in Section 6.5(a) below, this identification shall be Distributor’s sole use of this information, together with any other information and credits that are required to be displayed under applicable law or that EMI may request.  Any other use of this information, including for the purposes of promoting the Service, Distributor’s products or services generally or any other specific product or service of Distributor, is not authorized under this Agreement.

6.4Use of EMI Marks.  Distributor shall clearly display the EMI name, logo or such other EMI trademark (e.g., marks of EMI’s label affiliates) in the form provided by EMI adjacent to Authorized Items designated by EMI (individually and collectively, “EMI Marks”) if and to the same extent Distributor displays the identifiers of other creators or distributors of similar content.  Except as specifically authorized pursuant to this Section 6.4, Distributor shall not use any of the EMI Marks without EMI’s prior written consent.  Any goodwill generated through the use of the EMI Marks shall inure solely to the benefit of EMI.  EMI reserves the right to terminate the license to the EMI Marks granted in this Section 6.4 upon five (5) days’ written notice to Distributor if it determines, in its sole discretion, that the Service is not of appropriate quality or is otherwise likely to damage the goodwill associated with the EMI Marks.

6.5Advertising and Marketing.

(a)   Promoting EMI Content.  During the Term, Distributor shall allocate a minimum of fifteen percent (15%) of its total advertising and marketing budget for products and services of the same or similar type as the Authorized Items in each Product Schedule  to advertise and promote the Authorized Items to prospective End Users (the “EMI Advertising Share”).  The EMI Advertising Share shall be assessed on a per-Product-type basis.  If Distributor fails to allocate its advertising and promotional budget as specified, without limiting any other remedies available to EMI, EMI shall be entitled to immediately terminate this Agreement.  If Distributor offers barter or other in-kind consideration in exchange for advertising or promotional services, the parties shall mutually agree to a fair market value of such consideration and EMI shall be entitled to a corresponding allocation of such fair market value as a portion of the EMI Advertising Share.  The Distributor must obtain the prior written consent of EMI for each advertisement or promotion for or containing the Authorized Items.

(b)   No Endorsements.  Except as specifically set out in a Product Schedule, Distributor shall not display any advertising or promotion (on the Service or otherwise) in any form or manner relating to the EMI Content or any artist associated with it.  In all cases, whether advertising is permitted by EMI or not, Distributor shall: (i) comply with all applicable laws and codes of practice in respect of advertising; (ii) not position any advertising, promotion or sponsorship so as to imply an "endorsement" as between the advertiser or sponsor and EMI or its artists; and  (iii) not, in connection with or in proximity with the EMI Content, advertise or promote with any entity, product or service associated with (A) copying, distributing or facilitating, or of knowingly enabling the copying or distribution of, copyrighted material without authorization; (B) political organizations or (C) products or services for tobacco, pornography, firearms and alcohol and (D) any other product, service or website that is objectionable in the reasonable judgment of EMI, as communicated to Distributor in writing, including via email.  Without prejudice to the generality of the foregoing and without prejudice to EMI’s rights at law or in equity, if EMI requests cessation of a particular advertisement or class of advertisement, Distributor shall cease use of that advertisement or class of advertisement in connection with EMI Content as soon as reasonably practicable and in any event within five (5) business days.  Promptly on EMI’s request, Distributor shall disclose to EMI all actions that it has taken to ensure that the Service complies with this paragraph.  Further, if EMI requests the take down of a Master Recording or Master Copy in its entirety or as Authorized Items Distributed as a particular Product or Products as a result of artist relations issues in connection with advertising activity on the Service (as determined by EMI in its sole discretion), then Distributor shall as soon as reasonably practicable and in any event within twenty-four (24) hours of receipt of such request (x) cease making the Master Recording or Master Copy available as Authorized Item(s) in their entirety or as Authorized Items Distributed as a particular Product or Products or (y) cease the relevant advertising activity on the Service in relation to the artist(s).

(c)   Artist Sign-Up.  Distributor shall include a link from each point on the Service where an EMI recording artist is referenced to EMI’s sign up functionality for newsletters from that artist and/or to the artist website designated by EMI in writing to Distributor (which may be communicated by email).

 

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6.6   Information and Statistics.

(a) Distributor shall provide to EMI, in a manner as mutually agreed between the parties, the following daily updated usage data (the “Usage Data”):

(i)   For each End-User action on the Service, a transaction-level report including at least the following information, as applicable: User Identifier (as defined in (ii) below), date and time stamp, type of action (e.g., artist search, track title search, album title search, track stream, album stream, recommended stream, personal stream, trial stream, quasi-upload, playlist-add, artist-page visit, etc.), time-played (for partial streams), artist name, track title, album title, ISRC code, genre, and host-site URL (e.g., Distributor domain name, or third-party URL where the Service is accessed through a “widget”);

(ii) For each End User (i) a unique masked (i.e., anonymous) user code identifying the End User (“User Identifier”), registered ZIP code; and (ii) to the extent Distributor is reasonably able to obtain the following: birth year, sex, home ZIP code or home town, self-reported listening preferences (e.g., at work, at home, etc.), self-reported favorite artists/songs/genres, and, on an anonymous basis and in accordance with privacy laws, regulations and good business standards, any other information provided by End Users to Distributor;

(iii) At EMI’s option, such additional categories of data (including, without limitation, demographic data) that Distributor provides to any other provider of sound recordings, provided that EMI pays to Distributor additional consideration, if any, in exchange for which Distributor has provided such other data with similar frequency to such other provider of sound recordings; and

(iv) Such additional data regarding End Users and/or the Service as EMI reasonably requests and as Distributor reasonably is able to obtain and provide to EMI.

(b)   In the event that Distributor discovers an error or inaccuracy in any Usage Data that has been previously provided to EMI pursuant to this Section 6.6, Distributor shall (i) immediately notify EMI of such error or inaccuracy; (ii) use reasonable efforts to ensure that Distributor’s future delivery of Usage Data to EMI does not contain similar errors or inaccuracies; and (iii) promptly provide EMI with corrected Usage Data.

6.7 Publicity.  Neither party shall make any statement (whether oral or in writing) in any press release, external advertising, marketing or promotion materials regarding the other party or its services unless:  (a) it has received the express written consent of the other party; or (b) it is required to do so by law or under the rules of any stock exchange to which it is subject.

7. INTELLECTUAL PROPERTY

7.1 Rights of EMI.  As between EMI and Distributor, all intellectual property and personality rights in and to the EMI Marks, Authorized Items and other EMI Content (“EMI Intellectual Property”) shall be exclusively the property of EMI.  Except as expressly provided, nothing in this Agreement shall be construed to convey any right, title or interest in any EMI Intellectual Property to Distributor or any End User.  Distributor shall not contest, nor assist others in contesting, the validity, enforceability, ownership or title of any EMI Intellectual Property.

7.2 Enforcement.  Distributor shall promptly notify EMI of any infringement or threatened infringement of any EMI Intellectual Property of which Distributor becomes aware, and shall provide reasonable assistance to EMI, at EMI’s expense, in connection therewith (unless such infringement or threatened infringement is related to Distributor’s failure to meet its obligations under Section 5.4 with respect to securing the EMI Content, in which case, in addition to any other remedies that EMI may have hereunder, such assistance shall be provided at Distributor’s expense).

8.PRICING AND PAYMENT

8.1 Payments.

(a)   PPD and Prepayments.  In consideration of the authorizations granted to Distributor in this Agreement, Distributor shall comply with the provisions of the Reporting and Audit Guidelines, and shall pay EMI the relevant PPD and any Prepayment(s) (as defined in Exhibit 1) provided in the applicable Product Schedule plus any applicable sales, excise or value added taxes.  In all cases, amounts due under this Agreement shall be paid by Distributor to EMI in full without any right of set-off or deduction.  Distributor shall bear all risk of collection.  All payments of the PPD shall be paid to EMI on a monthly basis, within ten (10) days of the end of the month, for all Authorized Items Distributed during that month.  All Prepayments shall be paid to EMI as set forth in each Product Schedule.  Unless otherwise set forth in a Product Schedule, all payments (other than as set forth in Section 8.1(c) below or in a Product Schedule) shall be made in United States dollars and shall be made by wire transfer directed to:  Mellon Bank, One Mellon Bank Center, Pittsburgh, Pennsylvania, 15258;  Phone:  (412) 234-6200 or (412) 234-5614 (customer service); ABA #: 043000261; Bank Account #:  143-7407; Beneficiary:  EMI Music Distribution; Reference:  Pym in advance, or such other account as directed by EMI in writing.

 

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(b)   Prepayment Recoupment.  Once the Prepayment has been recouped by Distributor from PPDs due to EMI in connection with a particular Product, Distributor shall pay to EMI the PPD due as calculated in accordance with the Product Schedule for such Product.  Unless otherwise expressly included in a Product Schedule, Prepayments set forth in a Product Schedule may not be recouped from PPDs due in respect of any Product other than the Product(s) specified in such Product Schedule which are Distributed during the Product Schedule Term to which the Prepayment applies.  For avoidance of doubt, the foregoing Prepayment shall not be credited against any other payments that may be due under any other agreement between Distributor and EMI or any of EMI’s affiliates.

(c)   Content Supply.  All invoices sent to Distributor for Content Supply shall be paid by Distributor within thirty (30) days of date of invoice.  If payment has not been made by or on behalf of Distributor for undisputed amounts within sixty (60) days of the date of the invoice, EMI reserves the right to suspend deliveries of EMI Content to Distributor.  All payments relating to the supply of EMI Content shall be made in U.S. Dollars ($US) by check or wire transfer.  Wire transfers will be directed to: JP Morgan Chase, One Chase Manhattan Plaza, New York, NY 10005, ABA#    021000021, Account Name    EMI Capitol Records Group, Account # 323-662374.  Payments by check are payable to EMI Music and will be directed to: The Bank of New York Mellon, Dept LA21038, Pasadena, CA 91185-1038.    

8.2Late Payments.  All amounts not paid when due and payable shall bear interest at an annual rate equal to at the lesser of: (a) *****, calculated, compounded and payable on a monthly basis; and (b) the maximum rate of interest allowable by law for transactions between sophisticated commercial entities.

8.3Taxes.

(a)   Distributor shall be solely responsible for paying to all applicable taxing authorities any applicable sales, use, goods and services or other taxes due by reason of Distributor’s activities under this Agreement and which relate to the Content Supply (other than income taxes levied or imposed on EMI’s income).

(b)   If sales, excise or value added taxes are exigible on any amount to be paid under this Agreement, the Distributor shall pay to EMI such taxes in addition to the PPD and Prepayment otherwise payable.

8.4PPD Modifications.

(a)   EMI reserves the right, in its sole discretion, to change from time to time the PPD designated for any Authorized Item from one wholesale price tier to another applicable to such Authorized Item (a “Price Tier Change”) included within EMI’s standard rate card (the “Rate Card”).  Distributor hereby agrees to make such Price Tier Change effective as soon as commercially practicable, but no later than fourteen (14) days after the date that EMI notifies Distributor of such Price Tier Change, such notice to be made in writing (including by email, U.S. mail, priority/overnight mail or courier, facsimile or an update to the Product Data).

(b)   In addition to the right set forth in Section 8.4 (a), EMI also reserves the right, in its sole discretion, to establish a new wholesale price or additional price tiers as part of the Rate Card from time to time by written notice to Distributor (including by email, U.S. mail, priority/overnight mail or courier or facsimile). Such new wholesale price(s) or additional price tiers shall become part of the Rate Card thirty (30) days after the date EMI notifies Distributor of such new wholesale price.

(c) In the event EMI notifies Distributor that any PPD sent to Distributor by EMI was in error, Distributor shall modify such prices at EMI’s direction as soon as possible but no later than ten (10) days from any such notice.  As between the parties, Distributor shall be solely responsible at all times for determining the price at which EMI Content is made available to End Users.

 

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CONFIDENTIAL

9.CONFIDENTIALITY

9.1Definition.  “Confidential Information” means any information regarding the terms of this Agreement (other than the fact of its existence and the name and address of each party), any information pertaining to the Distribution of the Authorized Items and any information, in whatever form, regarding the business or operations of EMI or its affiliates (in the case of EMI) or Distributor (in the case of Distributor), provided that Confidential Information shall not include information that:  (a) at or prior to the time of disclosure by the disclosing party was known to the receiving party through lawful means; (b) at or after the time of disclosure by the disclosing party becomes generally available to the public through no act or omission on the receiving party’s part; (c) is developed by the receiving party independent of any Confidential Information it receives from the disclosing party; or (d) the receiving party receives from a third party free to make such disclosure without breach of any legal obligation.  Distributor understands that EMI may currently or in the future be developing information internally, or receiving information from other parties, that may be similar to Distributor’s information.  Accordingly, nothing in this Agreement will be construed as a representation or inference that EMI will not develop products or business models, or have products or business models developed for it that compete with Distributor’s products or business models.  Furthermore, this Agreement is not intended to and does not prevent EMI from using “Residual Knowledge,” subject to any valid patents or copyrights of Distributor.  “Residual Knowledge” means ideas, concepts, know-how or techniques that are retained in the unaided memories of EMI’s employees or contractors who have had access to Confidential Information.  Any employee’s or contractor’s memory will be considered to be unaided if the employee or contractor has not intentionally memorized Confidential Information for the purpose of retaining and subsequently using or disclosing it.

9.2Obligations.  The receiving party shall not disclose the disclosing party's Confidential Information to any other person or use any Confidential Information for any purpose other than as necessary for the performance of this Agreement, without the prior written consent of the disclosing party.  Each party shall take reasonable precautions (no less rigorous than the receiving party takes with respect to its own comparable Confidential Information) to prevent unauthorized or inadvertent use or disclosure of the other party’s Confidential Information.  Notwithstanding the foregoing, a receiving party may disclose Confidential Information of a disclosing party:  (a) as necessary to enforce the terms of this Agreement; (b) on a need-to-know basis to employees, attorneys, advisors and representatives of the receiving party or its affiliates who are obligated by agreement, law or other policy that requires them to maintain the confidentiality of third-party confidential information obtained in the course of their employment or engagement; (c) as required to comply with and perform its obligations hereunder; and (d) pursuant to any statute, regulation, order, subpoena or document discovery request or binding court proceeding, provided that prior written notice of such disclosure pursuant to this Subsection (d) is furnished to the disclosing party (except where such notice is prohibited by law, regulation or order) as soon as practicable in order to afford the disclosing party an opportunity to seek, at its own expense, a protective order (it being agreed that if the disclosing party is unable to obtain or does not seek a protective order and the receiving party is legally compelled to disclose such information, disclosure of such information may be made without liability).

9.3EMI Royaltors.  If a third party to whom EMI or one of its affiliates is required to pay royalties or other fees in respect of the Authorized Items, including without limitation an artist, record label, publisher, administrator or collecting society (each, a “royaltor”), requests a direct right of access to any of Distributor’s books and records respecting any sales or other figures reported in any report or statement required hereunder, upon EMI’s written request, Distributor shall provide such royaltor’s third-party auditor with such books and records (subject to the auditor agreeing to reasonable terms and conditions of confidentiality) in order to verify such figures.  Distributor shall cooperate, consult and coordinate with EMI with respect to any such audit by a royaltor.

10.IMITATION OF LIABILITY

10.1Force Majeure.  Each party shall be excused from performing its obligations under this Agreement (other than payment obligations hereunder) by reason of conditions beyond its reasonable control that such party could not have reasonably planned for or avoided, including war, acts of terror, fire, flood, accident, earthquakes, telecommunications line failures, electrical outages, network failures or other failure of technical facilities, act of God, lockout, strike or other labor dispute, riot or civil commotion, enactment, rule, order or act of any government or governmental instrumentality (whether federal, state, local or foreign) or failure or delay of transportation facilities  (each, a “Force Majeure Event”), provided that the party subject to the Force Majeure Event promptly notifies the other party and uses all reasonable efforts to perform its obligations and to limit the effect of its non-performance on the other party.

10.2Indirect Damages Waiver.  Except with respect to:  (a) the parties’ respective indemnification obligations pursuant to Section 12 (Indemnification); (b) any unauthorized use, reproduction, distribution or other unauthorized exploitation by Distributor of any EMI Content or any other breach of Section 5 (Distribution of Authorized Items) or the authorizations contained in a Product Schedule (including, without limitation, by any third parties permitted under Section 14.1 (Third-Party Contractors)); (c) any breach by either party of Section 9 (Confidentiality) and (d) any breach by Distributor of any of its payment obligations under this Agreement; under no circumstances shall either party be liable for any indirect, incidental, consequential or special damages arising out of or related to this Agreement, for loss of profits whether direct or indirect, or loss of data, in all cases, regardless of whether such damages or losses could have been foreseen or prevented by either party.  For the avoidance of doubt, nothing in this Section 10.2 shall be interpreted to: (i) prevent EMI from bringing an infringement action against Distributor in respect of any exploitation of the EMI Content that is not authorized hereunder; or (ii) limit any of EMI's available remedies or damages against Distributor in respect of any action described in the foregoing clause 10.2(i).

 

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10.3Exceptions to Damages Exclusions.  Nothing in this Agreement limits or excludes either party’s liability to the other for:  (a) fraudulent misrepresentation; or (b) death or personal injury caused by the negligence of such party or its affiliates, employees, agents or sub-contractors.

11.REPRESENTATIONS AND WARRANTIES

11.1General.  Each party represents, warrants and agreesthat:  (a) it has the full right and power to enter into and fully perform this Agreement in accordance with its terms; and (b) its execution, delivery and performance of this Agreement shall not violate rights granted by such party to any third party or violate the provisions of any agreement to which it is a party or, in the case of Distributor, violate any applicable law or regulation, including those related to personal data protection.

11.2EMI.  EMI further represents, warrants and agrees that (a) in respect of the Authorized Items but expressly excluding (other than as set forth in clause (b) immediately below) the musical compositions embodied therein, EMI has or shall obtain all necessary licenses and consents and shall pay all associated fees, royalties and other amounts due to any interested third parties (e.g., artists, unions) with respect to the Distribution, in accordance with the terms of this Agreement, of the Authorized Items, and (b) in respect of musical compositions embodied in Authorized Items, EMI has or shall obtain and pay for all Publishing Licenses.

11.3Distributor.  Distributor further represents, warrants and agrees that (a) except for the licenses, consents and fees for which EMI assumes responsibility as described in Section 11.2, Distributor has or shall obtain all necessary licenses and consents and shall pay all associated fees, royalties, tariffs, levies and other amounts due any third parties in connection with Distributor’s activities under this Agreement, including, without limitation, any licenses, approvals and fees in respect of the reproduction, public performance or communication of any copyrighted musical composition that may be embodied in Authorized Items, and (b) the Distributor is a resident of the Territory for taxation purposes.

11.4EXCLUSION OF WARRANTIES.  EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, THE EMI CONTENT IS MADE AVAILABLE TO DISTRIBUTOR HEREUNDER “AS IS.”  TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, AND EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, EMI MAKES NO REPRESENTATIONS, WARRANTIES, CONDITIONS OR GUARANTEES (AS USED IN THIS SECTION, “WARRANTIES”) WITH RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, AS TO MERCHANTABILITY, SATISFACTORY QUALITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT OR OTHER WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY, IN LAW OR IN FACT, ORAL OR IN WRITING.  DISTRIBUTOR ACKNOWLEDGES THAT IT HAS NOT RELIED UPON ANY WARRANTY MADE BY EMI EXCEPT AS SPECIFICALLY PROVIDED IN THIS AGREEMENT.

12.INDEMNIFICATION

12.1General.  Each party (“Indemnifying Party”) shall indemnify, defend and hold the other party (which in the case of EMI shall include its affiliates) and its (and in the case of EMI, its affiliates’) officers, directors, employees and representatives (each, an “Indemnified Party”) harmless from and against any and all Losses due to any claim by a third party relating to or arising out of a breach by the Indemnifying Party of any of its representations, warranties or agreements under this Agreement.  In addition, Distributor shall indemnify, defend and hold the EMI Indemnified Parties harmless from and against any and all Losses due to any claim by a third party relating to or arising out of Distributor’s operation of the Service.

12.2Notice and Participation.  A party seeking indemnification pursuant to this Section 12 (Indemnification) from or against the assertion of any claim by a third party shall give prompt notice of such claim to the Indemnifying Party; provided, however, that failure to give prompt notice shall not relieve the Indemnifying Party of any liability hereunder (except to the extent the Indemnifying Party has suffered actual material prejudice by such failure).  The Indemnifying Party shall have the right to control the defense of the applicable claim, and the Indemnified Party shall cooperate, at the Indemnifying Party’s expense, in such defense.  Notwithstanding the previous sentence, and without limiting any right of the Indemnified Party hereunder, the Indemnifying Party shall not settle any claim which imposes an obligation or liability on the Indemnified Party without the prior written consent of the Indemnified Party, which consent shall not be unreasonably withheld or delayed.

13.TERMINATION

13.1Termination For Material Breach.  Subject to Section 13.3 below, in addition to any other remedy available at law or in equity or otherwise provided in this Agreement, either party may terminate this Agreement immediately on written notice to the other party, without further obligation to the other party, if the other party materially breaches this Agreement and (i) with respect to Distributor’s failure to pay its debts as they become due, fails to cure such breach within ten (10) days’ after written notice of such breach, or (ii) fails to cure such other breaches within thirty (30) days’ after written notice of such breach; provided that EMI may terminate this Agreement immediately upon written notice to Distributor, in whole or in part, for any breach by Distributor of Sections 4 (Authorized Content) or 5 (Distribution of Authorized Items).

 

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13.2Additional Termination Rights.  In addition to the rights provided in Section 13.1, EMI shall have the right to terminate this Agreement immediately upon written notice to Distributor in the event:  (a) of any sale, lease or other transfer of all or substantially all of the assets of Distributor to any entity; (b) of any change in Control of Distributor (whether by merger, stock transfer or otherwise); (c) Distributor ceases to carry on business in the ordinary course; (d) Distributor is unable to pay its debts as they become due, becomes insolvent, proposes or enters into a composition or arrangement with its creditors, an order or application is made for the administration, winding up or dissolution of the Distributor or the appointment of or submission of petition for the appointment of an administrator, liquidator, receiver, receiver-manager or trustee or any equivalent over all or any assets of Distributor; (e) of the occurrence of any analogous event to those described in Subsections (c) or (d) above occurs in any jurisdiction; or (f) Distributor directly or indirectly operates or supports a company or service that, in EMI’s reasonable business judgment, endorses, promotes, facilitates or engages in copyright infringement.

13.3Obligations Upon Termination.  Promptly upon the expiration or termination of this Agreement for any reason, Distributor shall:  (a) immediately cease any exploitation of EMI Content, provide EMI with a copy of all EMI Confidential Information (including without limitation all Sales Reports) and destroy all EMI Content and EMI Confidential Information in its possession or control and certify the same to EMI in writing; and (b) pay all amounts due under this Agreement.  EMI’s acceptance of such amounts shall not constitute a waiver of any right or remedy to which EMI may otherwise be entitled under this Agreement or at law or equity.  Further, EMI may, upon notice to Distributor, access any premises on which EMI Content or EMI Confidential Information has been stored to verify Distributor’s compliance with clause (a) immediately above and, if such destruction has not been completed, arrange for the removal or destruction of or may procure the removal or destruction of any remaining EMI Content and EMI Confidential Information at Distributor’s sole risk and expense.

14. GENERAL

14.1Third-Party Contractors.

(a)   Distributor Affiliates.  Without EMI’s prior written approval, which EMI may withhold in its sole discretion, Distributor shall not partner or affiliate with any wireless carrier or otherwise engage any third party (each a “Distributor Affiliate”)  to assist it in retailing Authorized Items (e.g., or to encode, host, distribute Authorized Items on such third party’s own behalf(e.g., by wholesaling Authorized Items to a third party for resale to end users or by providing space on a website, WAP site or other retail channel through which Distributor sells Authorized Items).  Distributor shall seek the prior written approval of EMI (each an “Approval”) for each potential Distributor Affiliate by submitting a completed version of the form attached hereto as Exhibit 6 (the “Retail Channels/Distributor Affiliate Approval Form”) and providing same to EMI. EMI may withdraw any granted Approval upon six (6) months’ notice with respect to approved Distributor Affiliates that are wireless carriers and on three (3) months’ prior notice with respect to approved Distributor Affiliates that operate websites from which Authorized Items are sold.  The schedule attached hereto entitled “Distributor Affiliates” lists each Distributor Affiliate which has received an Approval as of the Effective Date.

(b)   Third Party Contractors.  With prior notice to EMI, Distributor shall be permitted to use the services of a third party contractor to assist it in creating, encoding, hosting, and/or delivering Authorized Items, in each instance solely for the benefit of Distributor and on Distributor’s behalf (each a “Third Party Contractor”). Without limiting the generality of the foregoing or any other right of EMI under this Agreement, EMI reserves the right, at any time, to reject Distributor’s use of any third party contractor that EMI determines, in its reasonable judgment, does not employ best industry practices in regards to maintaining any EMI Content in its custody in a secure manner.  In any event, Distributor shall provide EMI with a complete list of all permitted third party contractors under this Section 14.1, updated as necessary, during the Term.

(c)   Conditional Approval.  Distributor acknowledges that each approval that is granted with respect to Distributor Affiliates and Third Party Contractors is conditioned upon the following: (i) Distributor shall be responsible for the performance of such third party to the same extent as if such third party’s activities were performed directly by Distributor; (ii) Distributor shall ensure that each such third party is in compliance with all of the terms and conditions of this Agreement and Distributor agrees that any violation of such terms and conditions by each such third party shall be treated as a breach by Distributor; and (iii) Distributor shall enter into a written agreement, to which EMI is expressly made a third party beneficiary (to the extent permitted by law), with each such third party that enforces all applicable provisions of this Agreement.

 

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14.2Insurance.  At all times during the Term and for one (1) year thereafter, Distributor shall maintain general liability insurance and errors and omissions insurance coverage sufficient to cover any losses or damages arising out of Distributor’s activities hereunder.  If requested by EMI, Distributor shall provide EMI with certificates of insurance and copies of the policies of insurance reflecting the coverage and amounts required by this Section.

14.3Governing Law.  This Agreement and any claims directly or indirectly arising out of, under or relating to this Agreement will be governed by and construed in accordance with the laws of the State of New York (except for its conflicts of law principles) and each party consents to the exclusive jurisdiction of the state and federal courts located in New York County, New York for the adjudication of any disputes arising out of or related to this Agreement.

14.4Notices.  Except as otherwise provided, whenever any notice shall be given by one party to the other, such notice shall be in writing and shall be delivered by personal delivery, express courier or certified mail, return receipt requested, addressed as follows:

To EMI:	Copy to EMI:
EMI Music North America 150 Fifth Avenue New York, NY 10011	EMI Music North America 150 Fifth Avenue New York, NY 10011
Attn: Vice President, Business Development	Attn: General Counsel
To Distributor: 1	Copy to:
Name/Title: Street Address: City and Postal Code: Country:	Name/Title: Street Address: City and Postal Code: Country:

Notices shall be deemed effective when delivered in accordance with the notice provisions of this Agreement.

14.5Assignment.  The Agreement shall be binding upon and inure to the benefit of the parties, their permitted successors and assigns.  The rights granted to Distributor hereunder are personal, and except as expressly set out in Section 14.1, Distributor may not assign or otherwise transfer any of its rights or delegate any of its duties under this Agreement without the prior written consent of EMI.  Any change of Control of Distributor or any assignment by operation of law shall be deemed an assignment requiring EMI’s prior written consent.  EMI reserves the right, at its sole discretion, to assign or transfer any of its rights or delegate any of its obligations under this Agreement, in whole or in part, to any entity.

14.6Relationship between the Parties.  There is no joint venture, partnership, agency or fiduciary relationship existing between the parties, and the parties do not intend to create any such relationship by this Agreement.

14.7Amendments, Waivers.  Except as otherwise permitted by EMI hereunder, this Agreement may not be amended, modified or superseded, unless expressly agreed to in writing by both parties.  No provision of this Agreement may be waived except by an instrument in writing executed by the party against whom the waiver is to be effective.  The failure of either party at any time or times to require full performance of any provision of this Agreement shall in no manner affect the right of such party at a later time to enforce the same.

14.8Further Assurance.  Each party shall, at the request and expense of the other, sign any documents and do all other things which the other party considers reasonably necessary to give effect to this Agreement.

14.9Severability.  If any provision or term of this Agreement, not being of a fundamental nature, is held to be invalid, illegal or unenforceable:  (a) the validity, legality and enforceability of the remainder of this Agreement shall not be affected; and (b) with respect to a particular jurisdiction, the applicable provision shall not be affected in any other jurisdiction.  Each provision of this Agreement is hereby declared to be separate, severable and distinct.

1 Liquid Spins: please provide notice and copy-of-notice contact information.

 

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14.10Entire Agreement.  This Agreement contains the entire agreement between the parties relating to the transactions contemplated in it and supersedes all previous agreements between the parties relating to such transactions.  Each party acknowledges that, in entering into this Agreement, it has not otherwise relied on any representation, warranty or other collateral contract or arrangements made by or on behalf of the other party except as provided in this Agreement.  Each party waives all rights and remedies which, but for this Section 14.10, might otherwise be available to it with respect to any such representation, warranty, collateral contract or arrangement.

14.11No Third Party Beneficiaries.  Except as expressly stated to the contrary (including without limitation in Section 9.3), nothing in this Agreement is intended to give nor gives any person (whether natural or legal) who is not a party to it, any rights to enforce any of its provisions.  The consent of any third party not specifically identified is not necessary for any variation (including any release or compromise in whole or in part of any liability) or termination of this Agreement.

14.12Equitable Relief.  Distributor agrees that any unauthorized exploitation of the EMI Content or other EMI Intellectual Property constitutes an infringement and would result in injury to EMI for which there would be no adequate remedy at law and, accordingly, Distributor agrees that, in addition to any other available legal or equitable remedies, EMI shall be entitled to injunctive relief against such unauthorized exploitation.

14.13Survival.  The provisions of Sections 5.3 (Territory), 7 (Intellectual Property), 8.1 (Payments), 8.2 (Late Payments), 8.3 (Taxes), 9 (Confidentiality), 10.2 (Indirect Damages Waiver), 10.3 (Exceptions to Damages Exclusions), 11 (Representations and Warranties), 12 (Indemnification), 13.3 (Obligations upon Termination), 14 (General) and Section 2 (Audit Rights) of Exhibit 2 of this Agreement shall survive the expiration or termination of this Agreement.

14.14Counterparts.  This Agreement, including the Schedules, may be executed in one or more counterparts each of which, when executed, shall be deemed an original, and all of which shall be taken together and deemed to be one instrument.

By signing below, EMI and Distributor agree to be bound by all terms and conditions contained in this Agreement.

EMI MUSIC MARKETING, a division of CAPITOL RECORDS, LLC		LIQUID SPINS, a division of MALEMARK, INC.
By:	/s/ Paul Kahn	By:	/s/ Herman Deboard
Name:	Paul Kahn	Name:	Herman Deboard
Title:	CFO EMI NA	Title:	CEO

 

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EXHIBIT 1

DEFINITIONS

1.   “Approved Device” means an Approved Handset, Terminal Device, Portable Device or such other device as may be authorized by EMI in writing.

2.   “Approved Format” means the encoding formats, encoding rates and (except with respect to DRM-Free Downloads) DRM described in the applicable Specifications.

3.   “Approved Handset” means a mobile wireless handset, the primary function of which is to provide wireless telephony and messaging services over public cellular networks and which is capable of enforcing the applicable Usage Rules.

4.   “Artwork” means any front cover artwork associated with Authorized Tracks provided to Distributor by EMI in its discretion.

5.   “Audio Clip” means a contiguous sound recording excerpt of up to thirty (30) seconds in length taken from a single Authorized Track.

6.   “Audio Digital Download” means an Authorized Track encoded in an Approved Format at a bit rate less than or equal to 128kbps, that has been “wrapped” in an approved DRM, for sale to and use by End Users solely in connection with Approved Devices.

7.   “Audio DRM-Free Download” means an Authorized Track encoded in an Approved Format at a bit rate greater than 128kbps but less than or equal to 512 kbps, that has not been “wrapped” in any DRM or had any DRM technology applied to it, for sale to and use by End Users solely in connection with Approved Devices.

8.   “Authorized Graphic” means a reproduction of a Master Copy of an item of non-audio or non-audiovisual material (a) digitally encoded in accordance with the agreed Specifications, (b) identified in the Product Data as being authorized for Distribution in the Territory, and (c) specified under the heading ”Authorized Items” on the applicable Product Schedule.

9.   “Authorized Item” means an Authorized Track, Authorized Video and/or an Authorized Graphic.

10.   “Authorized Track” means a reproduction of an audio-only Master Recording (a) digitally encoded in accordance with the agreed Specifications, (b) identified in the Product Data as being authorized for Distribution in the Territory, and (c) specified under the heading ”Authorized Items” on the applicable Product Schedule.

11.   “Authorized Video” means a reproduction of an audiovisual Master Recording (a) digitally encoded in accordance with the agreed Specifications, (b) identified in the Product Data as being authorized for Distribution in the Territory, and (c) specified under the heading “Authorized Items” on the applicable Product Schedule.

12.   “Canadian Master Schedule” means a schedule signed on behalf of each of the parties which sets forth the terms and conditions of Distributor’s use of Authorized Items in Canada and may be attached hereto.

13.   “Canadian Product Schedule” means a schedule signed on behalf of each of the parties which sets forth the Products authorized for Distribution in Canada, the corresponding PPD for each such Product and any other terms or provisions relating solely to the Distribution of a particular Product in Canada.

14.   “Control” means that a person or entity possesses directly or indirectly the power to direct or cause the direction of the management and policies of another person, whether through the ownership of voting shares, by contract or otherwise.

15.   “Digital Download” means an Audio Digital Download or a Video Digital Download, as appropriate.

16.   “Distribution” (in any of its forms, e.g., “Distribute,” “Distributed,” etc.) means, as applicable, the distribution, sale or other authorized exploitation through the Service of any EMI Content to an End User, by the means specified in and in accordance with the applicable Product Schedule.

17.   “Distributor Affiliate” has the meaning given to that term in Section 14.1(a) (Distributor Affiliates).

18.   “DRM-Free Download” means an Audio DRM-Free Download or a Video DRM-Free Download, as appropriate.

19.   “EMI Content” means individually and collectively, as appropriate, Products, Authorized Items, Master Recordings, Audio Clips, Video Clips, Artwork, Images, Product Data and any other materials containing any content made available by EMI to Distributor owned or controlled by EMI (it being understood that specific references to individual Authorized Items, shall be construed to refer solely to that specific type of EMI Content).

 

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20.   “End User” means an individual, natural person who is an end user of an Approved Device located in the Territory and who purchases or is otherwise authorized to receive a Product from Distributor through the Service in accordance with this Agreement.

21.   “Image” means any artistic work owned or controlled by EMI or any of its label affiliates (regardless of whether it is actually classified as a “work” under applicable copyright laws in the Territory or not) depicted visually, by whatever means, including but not limited to, graphic works, photographs, collages, logotypes and designs irrespective of artistic quality, whether of merit or in the work’s nature, but excluding Artwork.

22.   “Internet” means the wide area cooperative network of computer networks communicating predominately through Transmission Control Protocol/Internet Protocol commonly referred to as "the Internet" (but which specifically excludes wireless transmissions other than IEEE 802.11x transmissions).

23.   “Losses” means any and all liabilities, damages, awards, settlements, losses, claims and expenses including, without limitation, reasonable legal fees and costs of investigation.

24.   “Master Recording” means an audio-only master sound recording or audiovisual master recording owned or controlled by EMI or one of its label affiliates provided to Distributor hereunder from which an audio and/or audiovisual Authorized Item is derived.

25.   “Master Copy” means the non-audio or non-audiovisual master materials owned or controlled by EMI or one of its label affiliates provided to Distributor hereunder from which an Authorized Item other than an audio and/or audiovisual Authorized Item is derived.

26.   “Mobile Image” means a reproduction of an Image that has been digitally encoded in an Approved Format by EMI or its designee for Distribution and use solely as authorized by EMI in the Product Data and solely in connection with Approved Handsets of End Users.

27.   “Portable Device” means a consumer electronics device owned by End User that (except with respect to use in connection with Distributions of DRM-Free Downloads):  (i) provides at least the same level of content security as the Microsoft Windows WMA 1000 format; and (ii) does not permit a Digital Download or any Artwork, Images or other EMI Content loaded onto the storage medium of such device to be duplicated or transferred to any other device or medium in a renderable form via any means, including without limitation by transfer of the DRM license key that is required to play it.

28.   “PPD” means, with respect to a Product, the “Published Price to Dealer,” i.e., the wholesale price applicable to such Product as provided in the applicable Product Schedule.

29.   “Prepayment” has the meaning set out in the applicable Product Schedule(s).

30.   “Product” means a Digital Download, DRM-Free Download, Ringtune, Ringback Tune, Mobile Image, SMS Alert Tune, Video Tune, and any Authorized Items Distributed as Streams or Tethered Downloads in accordance with a Product Schedule.

31.   “Product Data” means the metadata and/or other information associated with each Authorized Item and provided by or on behalf of EMI which data sets out product information associated with that Authorized Item including, without limitation: (i) which Products are authorized, (ii) the manner in which the Authorized Items may be Distributed, and (iii) the release date.

32.   “Product Schedule” means (i) a schedule signed on behalf of each of the parties and describing EMI Content authorized for Distribution in accordance with the terms of this Agreement and (ii) if the parties are subject to a Canadian Master Schedule, the Canadian Product Schedule.

33.   “Publishing Licenses” means (a) so-called “mechanical licenses” from, and so-called “mechanical royalties” due to, and (b) in the case of item (iv) below, so-called mechanical/synchronization licenses from, and so-called mechanical/synchronization royalties due to, the owners/administrators of any copyrighted musical compositions embodied in the Authorized Items that are required for the Distribution, in accordance with the terms of this Agreement, of:

(i)              Digital Downloads and DRM-Free Downloads  in the Territory;

(ii)              Ringtunes in the Territory;

(iii)              Ringback Tunes in the Territory; and

(iv)              Video Digital Downloads, Video DRM-Free Downloads, Mobile Video Products and Video Streaming in the Territory.

 

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34.   “Ringback Tune” means an Audio Clip digitally encoded in an Approved Format transmitted to a caller of the End User’s Approved Handset in place of the conventional intermittent audio tone a calling party hears after dialing a number when the distant circuit is receiving a ringing signal.

35.   “Ringtune” means an Audio Clip digitally encoded in an Approved Format for use solely as the “ringer” audio file that resides on, and is rendered by, a called End User’s Approved Handset to signal the presence of an incoming call or message.

36.   “Sales Report” has the meaning provided in the Reporting and Audit Guidelines.

37.   “Schedules” means individually and collectively, the Product Schedules, the Canadian Master Schedule and/or the Canadian Product Schedule, depending on its context and whether or not the parties are subject to a Canadian Master Schedule or Canadian Product Schedule.

38.   “Service” means the content delivery service through which Distributor Distributes Products to End Users through the Internet store currently located at www.[_________], and, if applicable, the WAP store currently located at www.[_______], in each case, owned or controlled by Distributor and solely marketed and branded with the name _________ or otherwise branded in accordance with Section 14.1(a) (Distributor Affiliates) of this Agreement and as more particularly described in the relevant Product Schedule.

39.   “SMS Alert Tune” means an Audio Clip digitally encoded in an Approved Format for use solely as the “alert” audio file that resides on, and is rendered by, a messaged End User’s Approved Handset to signal the presence of an incoming message.

40.   “Specifications” means the specifications detailing the format for Distribution of Authorized Items as described in the applicable Product Schedule, as the same may be amended from time to time in EMI’s sole discretion upon written notice to Distributor.

41.   “Stream” means the digital transmission of an Authorized Item in an Approved Format to the Approved Device of an End User in accordance with the applicable Usage Rules (if applicable) in such a manner that:  (i) the audio or visual aspect of the Authorized Item, as the case may be, is rendered simultaneously with its transmission; and (ii) such transmission does not result in the creation of a residual or fixed copy of the Authorized Item so transmitted and so that the Authorized Item so transmitted is not able to be captured, saved, copied, stored or otherwise reproduced, distributed or retransmitted in any manner by any means whatsoever.

42.   “Term” has the meaning given to it in Section 3;

43.   “Terminal Device” means a personal computer (Windows, Mac or Linux OS), as that term is commonly understood, which is able to access the Internet through a fixed line network, that (except in relation to DRM-Free Downloads) enforces the Usage Rules and all other applicable requirements contained in this Agreement but not a mobile wireless handset or like devices utilizing mobile carrier networks.

44.   “Territory” means the United States of America and all its territories and possessions.

45.    “Usage Rules” means those limitations and restrictions on the use of Authorized Items required to be made by Distributor hereunder, as contained in each Product Schedule attached to this Agreement, as the same may be amended from time to time in EMI’s sole discretion upon written notice to Distributor.

46.   “Video Clip” means a contiguous audio-visual recording excerpt of up to thirty (30) seconds in length taken from a single audio-visual Master Recording and approved by EMI.

47.   “Video Clip Download” means a Digital Download of a Video Clip.

48.   “Video Digital Download” means an Authorized Video encoded in an Approved Format, that has been “wrapped” in an approved DRM, for sale to and use by End Users solely in connection with Approved Devices.

49.   “Video DRM-Free Download” means an Authorized Video encoded in an Approved Format, that has not been “wrapped” in any DRM or had any DRM technology applied to it, for sale to and use by End Users solely in connection with Approved Devices.

50.   “Video Stream” means a Stream of an audio-visual Authorized Item.

51.   “Video Tune”means a Video Clip digitally encoded in an Approved Format for use solely as the “ringer” audio-visual file that resides on, and is rendered by, a called End User’s Approved Handset to signal the presence of an incoming call or message.

52.   “WAP” means the international standard for application layer network communications in a wireless communication environment through which End Users can access the so-called “mobile web” with Approved Handsets.

 

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EXHIBIT 2

REPORTING AND AUDIT GUIDELINES

1.      Reporting.

(a) Timing.Distributor will provide EMI with the following, set forth by Product type: (a) with each monthly payment a statement setting forth the manner in which the payment due EMI was calculated in sufficient detail for EMI to verify the same; and (b) on each Tuesday, by 11:59am Pacific Time, during the Term, Distributor shall submit to EMI a full, true and accurate weekly royalty report ("Sales Report") in a flat .txt file (or other exportable format mutually agreed) detailing all distribution of Authorized Items during the seven-day period ending the immediately preceding Sunday (e.g., on Tuesday, April 13, Distributor would submit a Sales Report covering all distributions from Monday April 5th through and including Sunday April 11th).  EMI will determine all payments due based on the Sales Report.

(b) Format.  The Sales Report shall be consistent with the parameters set forth in the "Sales File Format" set forth in Exhibit 3 hereto, on the Product Schedule or otherwise provided to Distributor by EMI and updated from time to time in EMI’s reasonable discretion.  In addition to the information Distributor is required to report to EMI hereunder, Distributor shall furnish to EMI any other category of data relating to End Users and Digital Downloads that Distributor provides to any other provider of sound recordings.  Such categories of data shall be furnished to EMI no less frequently and in a manner no less beneficial than the manner in which Distributor furnishes such information to any other provider of sound recordings.

(c) Faulty Reporting.  Distributor will work with EMI to resolve promptly any discrepancies between payments and the Sales Report and promptly pay any remaining balances due as determined through the reconciliation.  Subject to the remediation process set forth below, a failure to submit the Sales Report on the day due or to omit data specified in the Sales File Format shall each constitute a material breach of this Agreement.  Distributor shall additionally submit reports to all charting organizations and similar reporting bodies including any charting organizations in respect of a digital download or other chart established or existing during the Term within the Territory, in accordance with the reporting requirements established thereby.  Commencing with the date that the fourth (4th) weekly Sales Report is due, if Distributor fails to deliver the Sales Report in the correct, designated format on the due date, EMI shall deliver a notice of non-compliance and Distributor shall immediately cure such non-compliance.  If Distributor’s Sales Reports still do not comply by the date that the next Sales Report is due, EMI will suspend, and will instruct its designee to suspend, any further delivery of EMI Content to Distributor.  If Distributor’s Sales Reports still do not comply by the date that the next Sales Report is due, EMI may: (x) withdraw some or all Authorized Items pursuant to Section 4.3; and/or (y) notwithstanding any other provisions of this Agreement, immediately terminate this Agreement.  In addition to the rights of termination set forth in Section 13 of this Agreement, EMI shall have the right to terminate this Agreement immediately in the event Distributor repeatedly (even if not consecutively) fails to submit the Sales Report on the day due or omits data specified in the Sales File Format.  If EMI determines, in its sole discretion, to try to process an inaccurate or incomplete Sales Report, Distributor shall provide all co-operation to EMI as EMI may reasonably request and shall pay to EMI, as liquidated damages, the sum of six hundred dollars ($600) for each such report.  Notwithstanding anything in this Agreement and without prejudice to EMI’s rights under Section 13 of the Agreement, EMI may immediately, upon notice to Distributor (which may be by e-mail), withdraw any or all Authorized Items if Distributor fails to submit a complete and accurate Sales Report to EMI.  The foregoing provision shall be without prejudice to any other rights or remedies which may be available to EMI hereunder, at law or in equity.

2.      Audit Rights.

(a) Books and Records.  During the Term and for three (3) years thereafter, Distributor shall, and shall cause each Distributor Affiliate and Third Party Contractor to, keep accurate and complete books and records (including records stored in electronic formats) as are necessary to determine and verify the accuracy of the amounts paid or which are otherwise payable to EMI under this Agreement.  Such books and records shall include as a minimum:

 

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CONFIDENTIAL

(i) all documentation, including without limitation both current and historical data and other information that may be contained in physical books, records and files and/or contained on the systems and servers used in connection with the distribution of EMI Content, as may be necessary for EMI to verify all of the transaction information (including but not limited to sales figures)required to be reported to EMI or otherwise made available to EMI under or in connection with this Agreement; and

(ii) details of all EMI Content (e.g., without limitation ISRCs, artist name, track titles, etc.) that is under the control of or stored on the servers of Distributor and any Distributor Affiliate or Third Party Contractor during the Term and all channels through which any EMI Content is Distributed hereunder.

(b) Audit.  Once a year during the Term of this Agreement and for three (3) years thereafter, EMI (along with any royaltors, and their respective representatives, as required for EMI to comply with its obligations herein, so long as such royaltors, and their respective representatives are subject to this paragraph), at EMI’s initial expense and upon no less than ten (10) days’ notice to Distributor (except in the case of fraud or suspected fraud in which case EMI and its representatives shall be entitled to immediate access), shall have the right to audit Distributor’s (and any Distributor Affiliate’s or Third Party Contractor’s) relevant books and records as set forth in Section 2(a) above in this Exhibit 2, to assess compliance with the terms of this Agreement.

(c) Cooperation.  Distributor shall, and shall cause any Distributor Affiliate and Third Party Contractor to, cooperate with EMI and its representatives in the performance of the audit and, without limitation, shall ensure their full and unrestricted access to all of the above mentioned books and records including, without limitation, supervised access to any such books and records stored in electronic format (and EMI and its representatives shall be entitled to make copies and extracts from them).  Such books and records will be made available at the place where these records are kept in the ordinary course of business.  If, as a result of such examination, EMI determines that Distributor mis-reported any figure or underpaid any amount, EMI will furnish to Distributor a copy of the results of its audit setting forth the discrepancy, and showing, in reasonable detail, the bases upon which the same was determined.  Distributor will remit to EMI a sum equal to the amount of any underpayment within (30) days after notification of the discrepancy.  If such discrepancy is greater than five percent (5%) of the total amount reported by Distributor for the period audited, then Distributor will reimburse EMI for the cost of the examination.  In the event a royaltor (e.g., a publisher or an administrator) requests a direct right of access to any of Distributor’s books and records respecting any sales or other figures reported in any report or statement required hereunder, upon EMI’s written request, Distributor shall provide such royaltor’s third party auditor with such books and records (subject to the auditor agreeing to mutually agreed terms and conditions of confidentiality) in order to verify such figures provided that any such access is subject to the provisions of this paragraph.  Distributor shall cooperate, consult and coordinate with EMI with respect to any such royaltor.

(d) Attorneys Fees.  In the event that a court in a civil action finds that Distributor has failed to pay or has underpaid to EMI any amounts that were due from Distributor to EMI hereunder, then in addition to paying such underpaid amounts, interest thereon and any other damages awarded in such an action to EMI, Distributor shall also pay to EMI the reasonable attorneys fees and costs incurred by EMI in connection with such civil action, and Distributor consents to the award of such attorneys fees in such a civil action.

(e) Costs.  EMI shall not be responsible for any of the Distributor’s or any of the applicable Distributor Affiliate’s or Third Party Contractor’s costs in complying with its or their obligations under Section 2 (Audit Rights) of these Reporting and Audit Guidelines.

(f) Confidentiality.  For the avoidance of doubt the books and records referred to above and all results of any examination hereunder shall be Confidential Information pursuant to Section 9 (Confidentiality) of this Agreement.

(g) Direct Accounting.   Upon EMI’s request, Distributor shall (i) account directly to any publishers or collecting societies as may be required for EMI to obtain the licenses set forth in Section 11.2(b) of the Agreement and (ii) pay any royalties due directly to such publishers, at rates to be advised by EMI.

 

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(h) Technical Audit.  Once a year during the Term of this Agreement and for three (3) years thereafter, EMI, at EMI’s initial expense and upon no less than ten (10) days’ notice to Distributor (except in the case of fraud or suspected fraud in which case EMI and its representatives shall be entitled to immediate access), shall have the right to conduct a technical audit of Distributor’s (and any Distributor Affiliate’s or Third Party Contractor’s) facilities and operations to assess compliance with the terms of this Agreement.  Distributor shall, and shall cause any Approved Third Party to, cooperate with EMI and its representatives in the performance of the audit and, without limitation, shall ensure their full and unrestricted access to (i) the premises and systems used to store, manage, process and distribute or transmit the EMI Content, including, without limitation, those used to make it available to End Users; and (ii) Distributor’s and such other third parties’ applicable personnel.  If such audit determines that Distributor is not in compliance with the terms of this Agreement, EMI shall, without prejudice to any other rights or remedies which may be available to Distributor, notify Distributor and Distributor shall promptly take all necessary steps to remedy that non-compliance in a manner satisfactory to EMI.

 

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Field	Length		From		To		Example Value		Digital Service Type Required (R) / Optional (O) / Not Applicable (NA)		Definition
									Pay Per Transaction Service (Weekly)
File ID#		6		1		6		000123		R	Unique file number (must be the same as detail records file number)
Header ID		1		7		7		H		R	Header ID – always the letter H
Usage Code		3		8		10		DDL		R	Usage code provided by EMI (e.g., DDL – Digital Download, KSK - Kiosk, RIN – Ring Tune, OUT – Ring Back, MDL – Mobile Download)
Provider Code		8.0		11		18		00435688		R	Provider Account # provided by EMI
Provider Country Code		3.0		19		21		840		R	Provider ISO Country Code, e.g., USA = 840
Reporting Date (ccyymmdd)		8.0		22		29		20040617		R	Date of report
Sound Scan ID		20		30		49		99999		O	Sound Scan ID number, if available
EMI Quantity Sold – Single Track Releases		15.0		50		64		000000000000005		R	Total unit quantity of EMI single track releases during period, e.g., 5
Total Quantity Sold – Single Track Releases		15.0		65		79		000000000000050		R	Total unit quantity of single track releases during period (all labels), e.g., 50
EMI Quantity Sold – Multi Track Releases		15.0		80		94		000000000000005		R	Total unit quantity of EMI multi track releases during period, e.g., 5
Total Quantity Sold – Multi Track Releases		15.0		95		109		000000000000010		R	Total unit quantity of multi track releases during period (all labels), e.g., 10
# Customers		15.0		110		124		000000000002698	Not Applicable		Customers during period e.g., 2,698, required for per customer deals
Min Per Customer due to EMI		15.2		125		139		000000000000350	Not Applicable		Min payment per customer e.g., $3.50, required for per customer deals
Net Provider Revenue		15.2		140		154		000000000051050	Not Applicable		Net Revenue during period e.g., $510.50 use to calculate EMI revenue share.  Required for revenue share deals
Total Revenue due to EMI		15.2		155		169		000000000006775		R	Total Revenue due to EMI for reporting period e.g. $67.75
EMI Quantity Free – Single Track Releases		15.0		170		184		000000000000005		R	Total unit quantity of EMI single track releases during period for which no payment is due to EMI, e.g., 5
EMI Quantity Free – Multi Track Releases		15.0		185		199		000000000000005		R	Total unit quantity of EMI multi track releases during period for which no payment is due to EMI, e.g., 5
Blank - For Future Use		177		200		376				R	Blank – For Future Use

 

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CONFIDENTIAL

EXHIBIT 3

Sales File Formats – DRM-Free Downloads

Sales File Formats – DRM-Free Downloads (continued)

Field	Length		From		To		Example Value		Digital Service Type Required (R) / Optional (O) / Not Applicable (NA)		Definition
									Pay Per Transaction Service (Weekly)
File ID#		6		1		6		000123		R	Unique file number (must be the same as header  file number)
Detail ID		1		7		7		D		R	Detail ID – always the letter D
Usage Code		3		8		10		DDL		R	Usage code provided by EMI (e.g., DDL – Digital Download, KSK - Kiosk, RIN – Ring Tune, OUT – Ring Back, MDL – Mobile Download)
E-Tailer Code		8.0		11		18		00528045		R	Etailer account number provided by EMI
Digital UPC		25		19		43		067003016254	R for album sales only		Digital UPC of album sold.  Blank if track sale.
EMI Digital Track ID (Proprietary Code)		25		44		68		USEDD0300223	R for track sales only		Proprietary EMI digital IDs for tracks. Blank for album sales. ***Also, required when reporting to Soundscan
Physical UPC		25		69		93		067003016223		R	Physical UPC of album
Component  Number		3.0		94		96		001	R for track sales only		Physical Disc  #
Track Number		3.0		97		99		003	R for track sales only		Physical Track #
Artist Name		30		100		129		Coldplay		R	Artist Name
Title		30		130		159		Parachutes		R	Title of album or track
Quantity		15.0		160		174		000000000000001		R	Number of Units Sold
Date of Sale (ccyymmdd)		8.0		175		182		20021113		R	For pay per transaction, provide the date of consumer sale.
Format Code		3		183		185		WMA		O	Type of file format sold - codec
PO Number		25		186		210		PO123456		R	Unique number for each line of report – for reconciliation
Retail Price		15.4		211		225		000000000163000		R	Price consumer paid e.g. $16.3000 (4 decimal places)
Wholesale Price		15.4		226		240		000000000146000		R	EMI wholesale price e.g. $14.6000 (4 decimal places)
Net Effective Price		15.4		241		255		000000000128000		R	Unit price due to EMI e.g. $12.8000 (4 decimal places)
Deal /Promo Code		6		256		261		FREE		O	For use with any deals set up by EMI.  Free/Promo units should be populated with “FREE”
Consumer Country		3.0		262		264		840		R	Consumer ISO Country Code, e.g. USA = 840
Zip Code		12		265		276		90049		R	Consumer Zip Code
Blank - For Future Use		100		277		376				R	Blank – For Future Use

 

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Sales File Formats – DRM-Free Downloads (continued)

Sales File Record Format

1.   Flat .txt file

2.   Header record and detailed records should be in one file

3.   The header record length on this file is 376

4.   The detail record length on this file is 376

5.   Blanks for filler of alphanumeric fields – left justified.

6.   Zeros for filler of numeric fields – right justified

Information Provided by EMI Music Marketing for Reporting Purposes

1.   Provider and E-Tailer account numbers will be provided by EMI

2.   Digital UPC will be provided on EMI digital content lists

3.   EMI Digital Track ID will be provided on EMI digital content lists

4.   Usage codes = DDL – Digital Download, KSK - Kiosk, RIN – Ring Tune, OUT – Ring Back, MDL – Mobile Download

Other Reporting Information

1.   Digital UPC should be left blank for track sales records

2.   Digital track ID should be left blank for albums sales records

3.   PO Number must be a unique identifier per line of the report

4.   No decimal point in the price fields

FTP Site Information

1.   FTP site for the digital sales file will be provided by EMI

2.   IP address of the FTP site, a user logon and password will be provided by EMI

3.   The naming convention of the file will be consistent: including EMIUS + usage + report date.  (e.g. EMIUSDDLmmddyy.TXT for Digital Download)

4.   The file will be deleted by EMI once it is received by EMI

 

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Sales File Formats – Streams, Tethered and Portable Downloads

Field	Length		From		To		Example Value		Digital Service Type Required (R) / Optional (O) / Not Applicable (NA)	Definition
									Subscription Service (Monthly)
File ID#		6		1		6		000123	R	Unique file number (must be the same as detail records file number)
Header ID		1		7		7		H	R	Header ID – always the letter H
Usage Code		3		8		10		STR	R	Usage code provide by EMI (e.g., STR – Streaming, IRA – Interactive Radio, TDL – Tethered Plays, JUK – Jukebox, PST - Portable)
Provider Code		8.0		11		18		00435688	R	Provider Account # provided by EMI
Provider Country Code		3.0		19		21		840	R	Provider ISO Country Code, e.g. USA = 840
Reporting Date (ccyymmdd)		8.0		22		29		20040617	R	Date of report
Sound Scan ID		20		30		49		99999	O	Sound Scan ID number, if available
EMI Quantity Sold – Single Track Releases		15.0		50		64		000000000000005	R	Total unit quantity of EMI single track releases during period, e.g., 5
Total Quantity Sold – Single Track Releases		15.0		65		79		000000000000050	R	Total unit quantity of single track releases during period (all labels), e.g., 50
EMI Quantity Sold – Multi Track Releases		15.0		80		94		000000000000005	NA Currently	Total unit quantity of EMI multi track releases during period, e.g., 5
Total Quantity Sold – Multi Track Releases		15.0		95		109		000000000000010	NA Currently	Total unit quantity of multi track releases during period (all labels), e.g., 10
# Customers		15.0		110		124		000000000002698	R	Customers during period e.g., 2,698, required for per customer deals
Min Per Customer due to EMI		15.2		125		139		000000000000350	R	Min payment per customer e.g., $3.50, required for per customer deals
Net Provider Revenue		15.2		140		154		000000000051050	R	Net Revenue during period e.g., $510.50 use to calculate EMI revenue share.  Required for revenue share deals
Total Revenue due to EMI		15.2		155		169		000000000006775	R	Total Revenue due to EMI for period e.g., $67.75
EMI Quantity Free – Single Track Releases		15.0		170		184		000000000000005	R	Total unit quantity of EMI single track releases during period for which no payment is due to EMI, e.g., 5
EMI Quantity Free – Multi Track Releases		15.0		185		199		000000000000005	NA Currently	Total unit quantity of EMI multi track releases during period for which no payment is due to EMI, e.g., 5
Blank - For Future Use		177		200		376			R	Blank – For Future Use

 

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Sales File Formats – Streams, Tethered and Portable Downloads (continued)

Field	Length		From		To		Example Value	Digital Service Type Required (R) / Optional (O) / Not Applicable (NA)	Definition
								Subscription Service (Monthly)
File ID#		6		1		6	000123	R	Unique file number (must be the same as header  file number)
Detail ID		1		7		7	D	R	Detail ID – always the letter D
Usage Code		3		8		10	STR	R	Usage code provide by EMI (e.g., STR – Streaming, IRA – Interactive Radio, TDL – Tethered Plays, JUK – Jukebox, PST - Portable)
E-Tailer Code		8.0		11		18	00528045	R	Etailer account number provided by EMI
Digital UPC		25		19		43	067003016254	NA for tracks	Digital UPC of album sold.  Blank if track sale.
EMI Digital Identifier (Proprietary Code)		25		44		68	USEDD0300223	R	Proprietary EMI digital IDs for tracks.  Blank for album sales. ***Also, required when reporting to Soundscan
Physical UPC		25		69		93	067003016223	R	Physical UPC of album
Component  Number		3.0		94		96	001	R	Physical Disc  #
Track Number		3.0		97		99	003	R	Physical Track #
Artist Name		30		100		129	Coldplay	R	Artist Name
Title		30		130		159	Parachutes	R	Title of album or track
Quantity		15.0		160		174	000000000000001	R	Number of Units Sold
Date of Sale (ccyymmdd)		8.0		175		182	20041231	R Currently, provide the last date of the reporting period	e.g., 12/31/04 for December monthly report
Format Code		3		183		185	WMA	O	Type of file format sold - codec
PO Number		25		186		210	PO123456	R	Unique number for each line of report – for reconciliation
Retail Price		15.4		211		225	000000000163000	NA Currently	Price consumer paid e.g., $16.3000 (4 decimal places)
Wholesale Price		15.4		226		240	000000000146000	R	EMI wholesale price e.g., $14.6000 (4 decimal places)
Net Effective Price		15.4		241		255	000000000128000	R	Unit price due to EMI e.g., $12.8000 (4 decimal places)
Deal /Promo Code		6		256		261	FREE	O	For use with any deals set up by EMI.  Free/Promo units populate “FREE”
Consumer Country		3.0		262		264	840	R	Consumer ISO Country Code, e.g., USA = 840
Zip Code		12		265		276	90049	NA Currently	Consumer Zip Code if available
Blank - For Future Use		100		277		376		R	Blank – For Future Use

 

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Sales File Formats – Streams, Tethered and Portable Downloads (continued)

Sales File Record Format

1.   Flat .txt file

2.   Header record and detailed records should be in one file

3.   The header record length on this file is 376

4.   The detail record length on this file is 376

5.   Blanks for filler of alphanumeric fields – left justified

6.   Zeros for filler of numeric fields – right justified

Information Provided by EMI Music Marketing for Reporting Purposes

1.   Provider and E-Tailer account numbers will be provided by EMI

2.   Digital UPC will be provided on EMI digital content lists

3.   EMI Digital Track ID will be provided on EMI digital content lists

4.   Usage Codes = STR – Streaming, IRA – Interactive Radio, TDL – Tethered Plays, JUK – Jukebox, PST – Portable.

Other Reporting Information

1.   Digital UPC should be left blank for track sales records

2.   Digital track ID should be left blank for albums sales records

3.   PO Number must be a unique identifier per line of the report

4.   No decimal point in the price fields

FTP Site Information

1.   FTP site for the digital sales file will be provided by EMI

2.   IP address of the FTP site, a user logon and password will be provided by EMI

3.   The naming convention of the file will be consistent, including EMIUS + usage + report date.  (e.g. EMIUSSTRmmddyy.TXT for Streaming)

4.   The file will be deleted by EMI once it is received by EMI

 

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EXHIBIT 4

CONTENT SUPPLY SPECIFICATIONS

1.   Content Orders.

No order forms will be required.  All EMI Content released and available for use pursuant to this Agreement will be delivered in accordance with this Exhibit 4 and your election of specific file formats and bitrates as specified below or otherwise communicated in writing to EMI’s digital supply chain group or to a person designated to Distributor in writing by EMI.  Distributor will be sent a digital delivery notification providing brief details of the new releases of Authorized Tracks and Authorized Videos available each month of the Term of the Agreement.

2.  Content Delivery.

(a)   Sony DADC is currently EMI’s designee to provide audio EMI Content pursuant to this Agreement, however, EMI may, from time to time, in its sole discretion, appoint alternative designee(s) or deliver such EMI Content directly to Distributor.  Distributor will be required to complete a content ingestion test before receiving any EMI Content pursuant to this Agreement.

(b)   EMI Content will be made available via a FTP site where it will be available to Distributor for a period of thirty (30) days in a “new release” (or similar) folder; thereafter it will be available in a “catalog” (or similar) folder.

(c)   EMI will only make non-mobile Authorized Tracks and Artwork available in one of the following formats and bitrates.  Only one format and bit rate may be selected.

(i)  Audio (non-mobile):  (A) WMA Lossless, and (B) MP3 320

(ii)  Artwork:  (A) 1300 x 1300, 300 dpi - jpg, and (B) 1300 x 1300, 300 dpi - tif

(d)   Notice of Distributor’s election in respect of formats and successful completion of test ingestion process are required by EMI before Distributor is given access to the FTP.  If Distributor requires alternative or additional bit rates, the Authorized Tracks may be transcoded by Distributor or an Approved Source on Distributor’s behalf, subject to compliance with the provisions set out in Section 2(e) of this Exhibit.

(e)   If Distributor requires alternative or additional formats or bit rates, Distributor will be permitted to “transcode” the EMI Content or engage a Third Party Contractor to do so on Distributor’s behalf, subject to Distributor’s compliance with the following guidelines:

(i)   To create files from EMI Content with a bit rate of less than 128 Kbps, Distributor may:

A.   transcode from files where (1) the bit rate is twice that of the file created and (2) is of the same codec as the file created; and

B.   transcode from files where (1) the bit rate is three times that of the file created, and (2) the codecs are different.

(ii)   To create 128 Kbps MP3 files to be used for streaming purposes, Distributor may transcode them from 320 Kbps MP3 files.

(iii)   For Digital Downloads to be distributed as so-called “dual-mode” downloads, upon prior written approval from EMI, Distributor may transcode from 128 Kbps WMA files to create 64 Kbps AAC files.

(iv)   Distributor shall not, under any circumstances, Distribute or otherwise make available any Authorized Track which has been encoded at a bit rate in excess of 512 kbps.

This Section 2(e) is subject in each case to Distributor obtaining all licenses, permissions and consents necessary to undertake any such transcoding.  Sony DADC, EMI’s current nominee for the delivery of audio content under this Agreement, may be willing to perform such transcoding services, but this will require a separate agreement between Distributor and Sony DADC.

(f)   The Approved Source will notify Distributor of completion of a delivery order by email confirmation within the same business day that the delivery has been completed.

(g)   In the event of a problematic delivery, Distributor must notify EMI and the Approved Source in writing (identifying in detail the problematic track or tracks and the nature of the problem) within thirty (30) calendar days after the delivery.  EMI will work with the Approved Source to find the root cause of the problem and take necessary and commercially reasonable action, including redelivery to Distributor as appropriate.

 

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3.  Charges.

If Distributor wishes to receive the existing catalog of audio (non-mobile) EMI Content, a fee will apply and the rate for Content Supply shall be set forth in the Product Schedule.  No fees will be charged for new releases of audio (non-mobile) EMI Content delivered hereunder.  Contact Distributor’s designated EMI Digital Supply Chain representative to discuss.

4.  Video.  If you require delivery of video content, separate terms and conditions shall apply.

5. Mobile Content.

Sony DADC is EMI’s designee to deliver mobile EMI Content and such content shall be delivered pursuant to separate terms and conditions.

6.  Payment of Outstanding Content Delivery Fees.

EMI’s obligations under this Exhibit 4 are conditioned on Distributor’s payment in full of any outstanding content delivery fees due and payable to EMI as of the Effective Date of the Agreement.

7.  Other.

(a)  Upon the Effective Date of this Agreement, any Content Delivery Agreement(s) which may be in place will terminate in respect of audio (non-mobile) EMI Content delivery.

(b)  EMI reserves to itself the complete freedom to modify these content supply specifications at any time on a going-forward basis by written notice to Distributor.  Distributor shall implement any required changes to these specifications within thirty (30) days after receipt of EMI’s notice.  Without limiting the foregoing, EMI shall review the codecs and bit rates on an annual basis each January and may from time to time make changes accordingly.

 

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EXHIBIT 5

PARENTAL ADVISORY LABEL GUIDELINES

These Parental Advisory Label Guidelines apply to Master Recordings authorized for distribution and sale by Distributor in accordance with this Agreement for which EMI has determined a Parental Advisory Label Guidelines is warranted or otherwise wishes to label as an “explicit” or “edited” version.

EMI shall identify all such Master Recordings which are Authorized Items by either including the words “Explicit Version” or “Edited Version” next to the name of such Master Recordings or words of like effect or otherwise indicating such in the Product Data.  An unedited version may also be identified by EMI by including the words “Explicit Version” (or words of like effect) next to one listing of a Master Recording and including no words next to a second listing of the same Master Recording (the second listing being the edited version).

For all Authorized Items embodying Master Recordings that EMI has determined a Parental Advisory Label is warranted or otherwise has designated as an “explicit” version:

1.           From the time such Authorized Items are offered through all stages of a purchase or a transmission, Distributor shall (i) display a Parental Advisory Label in a sufficiently legible size next to the name of the Authorized Item or (ii) prominently display the wording “Explicit Content – Parental Advisory” (or such other wording of like effect provided by EMI) next to the names of such Authorized Items and, if applicable, prominently display the wording “Explicit Content – Parental Advisory” (or such other wording provided by EMI) underneath or otherwise near any applicable album cover artwork being displayed by Distributor in accordance with the Agreement.

2.           Distributor shall make available to consumers a hyperlink to, or information extracted from, www.parentalguide.org.

For all Authorized Items embodying Master Recordings designated or otherwise identified by EMI as an “edited” version that are offered for sale by Distributor, from the time such Authorized Items are offered through all stages of a purchase or a transmission, Distributor shall prominently display the wording “Edited Version” (or such other wording of like effect provided by EMI) next to the names of such Authorized Items.

 

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EXHIBIT 6

 

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PRODUCT SCHEDULE A.2 – FULL-TRACK AUDIO DOWNLOADS:  FIXED-LINE ONLY

This Product Schedule, effective as of March 25, 2011 (the “Product Schedule A.2 Effective Date”), is made pursuant to and a part of that certain Digital Distribution Agreement dated March 25, 2011, by and between EMI Music Marketing, a division of Capitol Records, LLC, a Delaware limited liability company with offices at EMI Music North America, 150 Fifth Avenue, New York, New York 10011 (“EMI”) and Liquid Spins, a division of Malemark, Inc., a Colorado corporation with offices at 5525 Erindale Drive, Suite 200, Colorado Springs, CO 80918 (“Distributor”).  Except to the extent otherwise expressly set forth in this Product Schedule, this Product Schedule is governed by the terms and conditions of the Basic Agreement.  Any capitalized terms not defined herein shall have the meanings set forth in the Basic Agreement.

Upon EMI’s execution of this Product Schedule, Distributor shall pay EMI the Prepayment as set out in Section 5 (Prepayment) below.

1. (a) Authorized Items and (b) Product	(a) Authorized Tracks in the form of (b) Audio DRM-Free Downloads.
2.  Service	For the purposes of the Distribution of Audio DRM-Free Downloads pursuant to this Product Schedule, the “Service” shall mean Distributor’s full-track a la carte audio download service, which allows End Users to purchase tracks by accessing Distributor’s web site via quick-response matrix barcodes (“QR codes”).  An End User has seventy-two (72) hours following the purchase to connect to his or her account on the Service from his or her Terminal Device, via secure log-in, in order to download the purchased track(s) to his or her Terminal Device.
3.  Product Schedule Term	The Product Schedule Term shall run for twelve (12) months years from the Product Schedule A.2 Effective Date to March 24, 2012.
4.  Distribution of Authorized Items	Subject to Distributor’s compliance with this Agreement, EMI authorizes Distributor, solely as part of the Service during the Term and in the Territory and within the limits of the Product Data, on a non-exclusive, non-transferable basis, to: (a)  make and store on Distributor’s servers such internal copies of Authorized Tracks as are reasonably necessary to enable Distributor to make available the Authorized Tracks through the Service; (b) sell Authorized Tracks as Audio DRM-Free Downloads from Distributor’s servers solely by way of transactions solicited and paid for via secure connection, via wireless or cellular public networks, from End Users’ Approved Handsets or Portable Devices, directed to Distributor’s web site via QR codes (but only delivered to Terminal Devices as set forth in (c) below); (c) distribute Authorized Tracks as Audio DRM-Free Downloads from Distributor’s servers solely by way of secure transmission via the Internet to the Terminal Devices of End Users; (d) encode (at a quality not exceeding 800x800 pixels at 72 dpi) and display Artwork on the Service for the sole purposes of identifying and promoting on the Service the availability of the related Audio DRM-Free Downloads on the Service and permitting End Users to (i) display such Artwork on the End User’s Terminal Device while the applicable Authorized Track is being browsed or played and (ii) print such Artwork solely for use as an insert in any End User-assembled packaging for the associated Authorized Track; and (e)  encode and digitally transmit excerpts of Authorized Tracks, up to thirty (30) seconds in duration, from Distributor’s servers to the Terminal Devices of prospective End User purchasers as Streams, for the purpose of allowing prospective End User purchasers to preview the corresponding Digital Downloads prior to purchase and not as part of any “clip sampling” or like service.

 

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5.  Prepayment	Distributor shall pay EMI, in addition to any other fees to be paid by Distributor under this Agreement ***** full no later than March 25, 2011. Once the Prepayment has been recouped by Distributor from PPDs due to EMI, Distributor shall pay to EMI the PPD due as calculated in accordance with this Product Schedule.
6.  Pricing	(a) Individual Tracks.  For each Audio DRM-Free Download distributed by Distributor hereunder as an individual track, Distributor shall pay to EMI the PPD applicable to such Audio DRM-Free Download as set forth in the Product Data, which shall be selected by EMI from the wholesale prices applicable to individual tracks on the Rate Card in effect at the time. (b)  Multi-Track Collections.  For each Audio DRM-Free Download distributed by Distributor hereunder as an album or as a multi-track collection (as defined by EMI in its sole discretion), Distributor shall pay to EMI the PPD applicable to such Audio DRM-Free Download as set forth in the Product Data, which shall be selected by EMI from the wholesale prices applicable to albums or other multi-track collections on the Rate Card in effect at the time.
7.  Content Delivery Fee	Distributor shall pay to EMI ***** the content supply and delivery of the Audio DRM-Free Downloads.
8.  Re-Installs	If Distributor chooses to offer re-installs of Products to End Users on a free basis or otherwise, Distributor shall pay to EMI the PPD for each such Product.

By signing below, EMI and Distributor agree to be bound by this Product Schedule.

For and on behalf of EMI		For and on behalf of DISTRIBUTOR
By:	/s/ Paul Kahn	By:	/s/ Herman Deboard
Name:	Paul Kahn	Name:	Herman Deboard
Title:	CFO EMI NA	Title:	CEO