We received the Interview Questions responses from CEO, Georgio Costonis today.
Here they are from beginning to end.
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Mr. Georgio Costonis
CEO, RMD-Entertainment Group
717 South Columbas Blvd
Suite 701
Philadelphia, PA 19147
October 9, 2006
Dear Mr. Costonis,
First, I want to thank you and your leadership team, on behalf of our CEO, Investor’s Paradise staff, and our members, for granting us the opportunity to interview you. We have over 1500 members that look to our website and message board to provide financial opinions and professional guidance related to a wide variety of securities and asset classes. Investor’s Paradise CEO, Seth Richards, our founding member, started Investor’s Paradise last year and we have steadily grown.
Second, a number of our members are very interested in RMD Entertainment group’s potential, the Hip Hop niche market, RMD’s catalog content, the artists that RMD is promoting, and the business model you have developed for RMD.
With that noted we are pleased and excited that you’ve offered your time and that of your leadership team to respond to our questions. In my previous conversation I noted that I would limit the questions to high level, broadly defined topics, and found that constraint difficult to attain. I have included more specific questions which seem to be of great concern to our various members as well.
Our members are thirsty for information and I look forward to reading your responses.
Thank you again.
Sincerest Regards,
Bill
Oklahoma City, OK - USA
RMD Entertainment Group - Message Board – Investor’s Paradise
http://www.investorsparadise.com/m-1131455653/s-all/1. Interview question: A number of members have expressed concern and uncertainty surrounding RMD as a speculative stock and fear that they will burned again by an untrustworthy leadership team that will take their money and walk away. What can you and the leadership team communicate to our members regarding RMD's values and beliefs pertaining to honesty, credibility, reputation, etc. of yourself, your leadership team, and other RMD staff? Marketmaker06.
Response: I was fortunate enough to be raised by a father who preached one overall rule of “respect” for his children and his household as I was growing up. It has been my experience that without credibility, honesty, and truthfulness I could not approach this position at RMDG with the respect it deserves. Reputation is everything in life and in the business community. If a personal acquaintance knows that you are a good hearted individual with transparency between you, they will respect you more because there is a huge level of confidence and comfort with you. My staff and I treat people as we would like to be treated back in both our personal lives and business dealings. I am fortunate enough to have people that share most of the same value systems that I do and also have my best friend for the last 14 years working with me as my Vice President (Mark Davis). The “R” in RMD stands for “real” and the complete company name in long form is “Real Music Deal”. We pride ourselves on doing what we say we are going to do for our artists, strategic partners, customers, and shareholders. Hip-Hop has a very checkered past when it comes to “hustling” people or their own artist stable for money. When we accepted the challenge laid before us we committed to breaking the stereotype that has previously existed. That is the only way we could truly blur the lines between Hip-Hop and Wall Street. There is no glory in being dishonest but there is almost certain victory with integrity and hard work. We didn’t cut any corners during this turnaround and the building of RMDG. By following our game plan with integrity we are able to build a strong sustainable foundation for the company that should foster stability and profitability.
2. Interview question: There a number of technological changes emerging related to wireless communication, downloadable videos, streaming television to mobile phones, YouTube, MySpace, Apple's I-tunes and video, etc. Where do you see RMD positioned, as a niche HipHop segment, with respect to all of the technological changes that are occurring? Marketmaker06.
Response: It is my feeling that we are positioned at the highest level when it comes to the multiplatform digital marketplace. There is not another Urban Media Content company in a more aggressive pattern than RMDG in the world. As a matter of fact, many other labels are looking very closely at our matrix of 64 distributors as a case study to see where the future of the industry is going in terms of the bricks and mortar outlet sales versus on line retail outlets. There has been a profound shift towards the digital line in the last three years and we see it continuing that way.
The great news here is that although the technology continues to develop and the profit lines become more and more directed at digital sales, content is still king and we don’t have any shortage of content to drive sales through our numerous channels. As you know Roc and Kuntree are under three album deals, we are developing our own television shows via MOTV Productions, and earlier this year we signed a content deal with RHN that gave us access to over 15,000 hours of urban media content.
Wireless communication and streaming is key to any content distributor in today’s market. Our subsidiary MOTV Inc. has been working very hard to position itself to be involved in that market and we now have the content to begin to compete in that business space. RHN will be ready to provide an upgraded transponder signal to MOTV within the next 40 days at which time we will have the capability to do live broadcasts of the network to anyone who has a mobile device or pda around the world.
3. Interview question: RMD has a significant number of distribution channels and agreements with both online and brick and mortar stores to market digital products (i.e., music, ring-tones, video, etc.). How have these distribution agreements helped RMD posture itself in the HipHop genre compared to your competitors? Marketmaker06.
Response: I think I answered this question for the most part in the previous answer above. However, let me make this clear. I am confident that we can work with or compete in a friendly manner with other companies in our genre. We are not a company that engages in a hater (envious in a destructive sense) mentality. We want our successes to benefit the Hip-Hop world in general. Working with companies that are larger and more advanced than RMDG is currently or working with smaller less advanced companies, it doesn’t matter. As long as there is a mutually beneficial honest relationship on the table we are open. We want companies in Hip-Hop to understand one thing, we want to be the best we can be and that is why I have challenged my staff to make us the number one corporation in the Hip-Hop community.
4. Interview question: The HipHop genre appears to be continuing its growth as an accepted music industry segment. What can you tell our members about the size, scope, and trends of this segment related specifically to RMD's share of the market? Marketmaker06.
Response: The opportunity on the table is an enormous one. According to the latest numbers available, Hip-Hop related products will gross over 70 billion dollars in 2006 alone. This number sounds outrageous but it is accurate. In my estimation this growth will continue for several more years. I come to this conclusion because Hip-Hop is the voice of the inner cities around the world. As each new brick is laid, as each city block is expanded, there is a new story to be told. That is why Hip-Hop will continue to expand its boundaries and as a result of that expansion sales will continue to increase. RMDG sells music and video content within this realm. Management is confident that with success in just a small portion of every world market we can become a very large company in a short amount of time. The rubber has just started to meet the road recently and we have much more to deploy now but the future looks very bright for all of us.
5. Interview question: A few months ago RMD issued a statement regarding a special dividend. I've read reports that Canadian shareholders were issued dividends first but I have not heard about those dividends being issued to US shareholders. What can you tell investors and traders about this dividend and the current status? Marketmaker06.
Response: The dividend was issued to shareholders that qualified in terms of date and number of shares held. At the time of the dividend I believe we had an outstanding share structure of 1.8 billion shares and we received roughly 12million shares of Wectec Stock. Therefore, not every shareholder qualified.
6. Interview question: Long-term goals support a company's mission and vision. In terms of long-term goals, where do you and your leadership team see RMD a year from now? Five years from now? Marketmaker06.
Response: We have the relationships, we have the content, we have the distribution, and we have the plan to bring this to reality. We just have to stick to our guns on the strategic plan and understand that this is a process. We are the new kids on the hip hop block now. We are also a company that is coming out of a major turnaround with a complete overhaul of our business focus. We have successfully launched the first two of many products that we have to bring to market and we are testing a huge distribution network to see what the yield of each product will be so we can start to forecast earnings accurately to our shareholders and internally.
Going into 2007 I definitely see us profitable and getting off the Pink Sheets early summer time. This turnaround has been exhausting but very successful to this point. My goal in five years is to have a bulletin board stock that is driven by a corporation that is a huge aggregator or urban content, a quality music label with high yield digital sales, and a mobile broadcast company in the ever changing content delivery sector. I would like to see a company that would look like a combination of Interscope Records, Comcast for phones, and Viacom. I know this is ambitious but it is important to understand that I can see this very clearly. Its all about positioning and delivery at this point.
7. Interview question: Question I would like Mr. Costonis to consider:
Mr Costonis RMD seems to be involved with many different aspects and business ventures. Can you elaborate on the breakdown of the overall RMD profits will come from each venture. Also, WIMAX is going to be a reality within the next year or so. It should be pretty widespread of the technology giants can pull it off. How is RMD positioning itself to take advantage it??? Thanks for the time.... Monty1117
Response: As you can see by the reference I make to proper cash forecasting and the measure of the yield from each of our potential revenue streams, I don’t have an answer for the first part of this question at this point in time. As we continue to compile data through our earnings I will have a better idea on this facet of our businesses. It is my plan to take a detailed look at each revenue stream at the end of 2007 to see where our greatest margins are by examining the return on investment values of each initiative. If necessary, I will make adjustments on the allocation of our cash resources accordingly once I review the data with my executive team. For the second part of the question, We agree, WIMAX is going to be a huge factor in delivering content. However, As I have stated many times, content is king. No matter what the flavor of the week technology is RMDG will have enough compelling content to sell it into any delivery system for profit.
8. Interview question: I have performed a number Google searches, of the Texas Beach Party DVD, and found several references to its sale offerings. Can you provide details specifically about the DVD’s acceptance world wide? In line with this question how have global sales been impacted by the use of the several distribution channel agreements RMD has in place? Marketmaker06.
Response: There have been other Texas Beach Party dvds produced in the past. We have titled ours the Texas Beach Festival. It is important that we separate ourselves from the other dvds that have been out there as they have been very low quality, low budget productions with a focus on promiscuous behavior during what used to be Kappa week. Our production is a celebration of Houston’s Hip-Hop movement. We have several huge stars including Chamillionaire and Mike Jones in the Concert footage. The dvd will be released in the first quarter of 2007 in all world markets.
9. Interview question: There are a number of techniques in which to promote sales through distribution channels such as offering greater margins to distributors, offering bundles of various products packaged as one unit, offering incentives other than margin increases, etc. What can you tell us about the efforts RMD is using to increase sales numbers through the distributors? Marketmaker06.
Response: We have an internal marketing arm that comes up with promotional campaigns that we must sell to our distributors which then must sell them to the retail outlets that buy the product. I am not at liberty to discuss our techniques or those used by our distributors such as Universal Music Group. I will say that I feel confidence in this aspect of our business.
10. Interview question: You’ve done an amazing job, through your leadership, using the grand strategy of a turn-around, taking Sciax as a digital imaging defense contractor to a multi-media company. What were some or your most significant challenges to make this happen and how did you overcome them?
Response: When I was appointed CEO the company was known as Sciax Corporation with a primary focus on thermal imaging camera devices that were to be sold to the military and governments around the world for anti-terrorism applications. I think the statement I just made gives you an idea of the challenges we faced as an organization. Anytime you change your business focus from surveillance cameras to Run DMC and LL Cool J you have a challenge on your hands for sure. After the obvious changes we had to make in staffing we had a near riot on our hands with the old shareholders. A lot of them did not like Hip Hop music at all because of what they thought it stands for and how it was portrayed in the media. After a while the tide turned in our favor. It’s funny how things change when you create a real business that competes in a multi billion dollar market isn’t it?
11. Interview question: The following excerpt, posted by member Santa, describes the process in which a music label generates demand for an artists material:
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This has been copy pasted to other boards by other stock holders so I saw it fit to also show it on this board!
A couple of notes for everyone after reading the last twenty posts or so.
First, the investment in this company is not for anyone trying to do a "quick flip" who is under any financial strain. The home run pay off may take another 3 to 5 months before it starts in a huge way well into the pennies. There is no use in bitching about the timing of the company doing well, the most important thing is to undertsand that it is in fact starting to do well which will obviously translate into a much better share price. People, the album just dropped.
Second item, As far as advertising goes, a record label will typically put together national street teams as RMDG has done and constantly feed different geographical locations with posters etc to raise visibility. In some areas it is done pre-release and some it is done during the release, depending on the reaction each location is getting from radio play. I know they have spent money on this issue of The Source Magazine (number 1 mag in hip hop) on two full page ads one for Roc one for Blockstar DVD. This is a high profile move.
Advertising programs continue on myspace where they are doing blasts of 1 million users with the first of many internet commercials. Everybody, including my company is using them. They are cheap, creative, and cost effective. Advertising will continue to grow with the servicing of the video and radio promotion. When Roc does a promotional appearance it looks something like this:
1. For a week before Rocs show in a certain city there are advertising spots on the radio hyping up his show and an in store appearance at a music retailor.
2. When the day of the show arrives, He calls into the station, says he will see everyone at the store before the show and at the show itself, goes to the store where that particular store would order more product than normal to have on hand for his appearnce to sell, and then he goes on to perform that night. Some advertising dollars will be what is called co-oped or split with the music retailor in exchange for his appearance.
3. This is repeated again and again with a new artist to stimulate sales until the album has so much momentum that Roc is doing a full blown tour making between 20 to 50 grand a night.
4. Then he does not do the instore appearances but still calls in to the station to offer ticket give aways for his tour.
5. This is continued over and over again for each of the singles that RMDG releases to radio.
The bottom line is this, the drill I just broke down to you has been done a million times. RMDG's main focus now is to convince the retailors of the demand for the product in general. If they are convinced, they will order more and more product and start spending more and more money on advertising it. These are the realities of where the company is now.
From my position, seeing what I am seeing, they are doing better than expected. We can all play monday morning public company CEO if we want to, especially bashers. The bottom line is they are all about making money now and understand the process of how to make it happen. Most record labels cant even get one distribution deal, never mind 62.
We are witnessing history in the making. I truly believe that. Let the executive team execute so that we can all win big on this. I hope this post was helpful.
One other note:
We all know that RMDG has a huge upside that is coming into plain view for us now. Lets not all lose our minds when the stock goes up or down 0001. Thats not the real money. Lets be patient, get the numbers reported in as they come and continue to monitor the progress of the company as we go along. Once again...common sense always prevails. Stay calm, breath deeply...it helps you think more clearly.
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Question: Is this process described accurate? If not would you please help our members to understand the effort and work that goes into promoting an artist and their material? Marketmaker06.
Response: The outline above is very accurate. I am impressed. Obviously a music person who has done this before.
12. Interview question: The last posted annual financials were dated 2002 and earlier. When can we expect to see updated financials? Marketmaker06.
Response: I am planning on posting financial after the end of the year 2006. It’s too early to post them at this point as RMDG has only been in an earning mode since the August release of Blockstar.
13. Interview question: Moving from the Pink Sheets to the OTCBB is a huge step forward and resources are required to begin regular reporting. What can you tell us about RMD’s efforts to put that infrastructure in place and when do you envision the move to the OTCBB occurring? Marketmaker06.
Response: Answered earlier
14. Interview question: Some traders and investors are concerned and fearful of a Reverse Stock Split. Some have even mentioned that they have seen a Reverse Stock Split of 1: 900 in other company stocks. What’s your position with respect to reverse splitting RMD’s stock? Marketmaker06.
Response: I have no plans for a reverse split at this time at all.
15. Interview question: Roc Monee seems to have a great following judging by the PR news releases. What can you tell Investor’s Paradise members about how the tactical program is going to produce demand for his music? Marketmaker06.
Response: I will not go into detail on the tactics any more than the PRs that have been and will be released. I will point out that we are going into our second phase of promotion of the album shortly. There will be a PR outlining this for shareholders to review.
16. Interview question: RMD has several strategies for promoting artists, platforms, and content. If you could rank their significance, highest to lowest, and describe the reasons for their position that would help Investor’s Paradise members understand how well RMD is doing with respect to each value stream? Marketmaker06.
Response: Answered earlier.
Closing Statement for IP and Bill.I appreciate your support and your interest in RMDG. We have accomplished so much in so little time. It warms my heart to see how things are shaping up for us and our shareholders currently. Personally, I am very pleased with our progress thus far. I would caution those that would like to make a very quick return on their money that RMDG is not a quick fix flip stock at all. As a matter of fact, I would discourage that kind of trading of our company. We are progressing at a pace that is sensible and manageable. While our growth potential remains outstanding we are committed to doing it in a profitable manner. To date, our goals are being met successfully, some on time and some took longer than expected. The most important thing is that our checklist of items from our business plan are being done and progress continues to be made as a result.
And Finally, I see the potential we have in front of us and remain committed to the company and protecting it at all costs. I strongly suggest to anyone that has shorted this stock in the past or planned to short it now that you do not engage in this behavior as I will not stand for it at all under any circumstances and will do everything in my power to make you pay for this unlawful behavior. There has been too much work done and we have too many quality shareholders to let anything jeopardize our pending successes together. I thank you all.
Best regards,
Giorgio C Costonis
CEO
RMDG
“Where Hip Hop Meets Wall Street” 
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