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. We also face competition from mobile phone "Apps"
such as Pandora which allow users to listen (but not purchase) music on their
smart phones.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. We believe that our relationships in
the music, entertainment and recording industry provide us a competitive
advantage through access to individuals strategically placed within the record
companies, which in turn can shorten our time to negotiate and consummate a
distribution agreement.
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.”
Commensurate with our name change and the change in the focus of our business,
we ceased actively marketing our greeting cards, although we still offer such
cards through our website.
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 years ended December 31,
2011 and 2010, and the three months ended March 31, 2012, we have reported
net losses of $1,837,201, $1,486,487, and $525,374, respectively. As of
December 31, 2011 and 2010 and March 31, 2012, we reported accumulated
deficits of $3,401,191, $1,563,990, and $3,926,565 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 six 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. We expect to roll out these gift cards
beginning in the third quarter of 2012 to retailers such as Play n’ Trade,
Fry’s Electronics, Variety Wholesale, Casey’s General Store and Kum & Go
Convenience Stores. Our business plan also 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.