Annual Report Current Date

Annual Report

Fiscal Period 2016

Submitted to Investors Sound Byte Music (This marks the end of the cover sheet and the beginning of the annual report.) Annual Report Fiscal Period 2016 Sound Byte Music Introduction

This report will present an overview of operations and a financial status report of Sound Byte

Music, a privately held company that began operations in January of 1994. This report was

1 Annual Report Current Date prepared as a result of the Annual Board of Directors Meeting held on January 5, 2017. A

2:00 p.m. meeting was held at the Sound Byte Music office, 105 North Main Street, Indianapolis.

The following board of directors was present for the annual meeting: Edward Thomas, President and CEO; Gail Swanson, Vice President of Marketing; Ricky Hayes, Vice President of Finance;

Kathy Rivera, Treasurer; and Linda Hefferin, Acting Secretary.

Overview

Sound Byte Music is located in Indianapolis, Indiana, with sixteen full-time employees. The company has grown from its original location on Third Street to its present location at

105 North Main Street. The current floor space occupies approximately 12,000 square feet.

Owned and operated by Edward Thomas, Sound Byte Music averaged fifteen percent growth during its first year of operation. Its collection of tapes, CDs, and videos is one of the largest in the Midwest. In addition to selling new products, Sound Byte Music began buying, selling, and trading used items during 2016, a marketing strategy that has helped Sound Byte Music achieve a high market share of the music business in Indianapolis.

New Retail Store

During the fourth quarter of 2017, there are plans to open a new Indianapolis retail store in

Northside Mall. This retail store will be built adjoining a coffee shop where people can meet, talk, and listen to music. If this idea catches on, the North Main Street store will expand and a similar coffee shop will be added by the end of 2018.

2 Annual Report Current Date

New Advertising Strategy

Sound Byte Music has managed such a high rate of growth by following an aggressive marketing strategy. Sound Byte is currently working with the Kessler Advertising Agency to develop some new radio advertisements. The plan is to air these 60-second radio advertisements on weekdays during prime drive time for the first quarter of 2017. These ads will focus on the new

Northside Mall store and the adjoining coffee shop.

The following table presents a schedule for the advertising planned for 2017.

Advertising Schedule 2017 First Quarter Weekday, Prime Time Second Quarter Weekend, Prime Time Third Quarter Weekday, Prime Time Fourth Quarter Weekday and Weekend, Prime Time

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Sales Figures for 2016

The following table presents the sales figures broken down by category for 2016:

Actual Sales by Quarter 2016 Quarter One $1,113,456 Quarter Two 2,035,222 Quarter Three 2,778,333 Quarter Four 3,242,788

Projected Sales Figures for 2017

The following table presents the projected sales figures broken down by category for 2017:

Projected Sales by Quarter 2017 First Quarter $2,450,000 Second Quarter 2,788,333 Third Quarter 3,022,222 Fourth Quarter 4,333,666

This report has been prepared, reviewed, and approved by the Board of Directors of Sound Byte

Music on this twenty-fourth day of January 2017.

Respectfully submitted,

______

Linda Hefferin, Acting Secretary