I. Background Information:

Jolida, Inc. is a privately held Subchapter S Corporation under the laws of Maryland. Michael Allen holds the sole ownership of the company. The primary business focus in 1983 was the international design manufacture and sales of vacuum tubes/cavities to the industrial markets.

In 1994, Jolida began the design of moderately priced integrated vacuum tube amplifiers for the home electronics market. In estimating the potential, there were two major factors:

1. The electronics market had no moderately priced tube based equipment and the median price of a tube power amplifier was $3,600.

2. Sales of existing home electronics had degenerated into the purchase of a commodity in which convenience features and price were the primary reasons for buying instead of operating performance. It was our conviction that demonstrable superior performance would be attractive and practical for the average individual given the universal appeal of music and movies. Presently, the company has 17 SKUs for sale with another 5 in the design process. During the period from 1997, the company has won 4 Design and Innovation Awards from the Consumer Electronics Manufacturing Association. two product of the year awards, four products in the Audio Review's Hall of Fame (these are consumer appreciation awards). In addition, the company has garnered numerous worldwide reviews (Including Time Magazine) for its performance equipment.

II. Mission Statement:

Jolida is a communication company. We believe that sound can have a great impact on the life of an individual. Sound has the capacity to inspire, stir emotion and create empathy. It encompasses the whole range of human emotions and transcends age, color, race, culture and walk of life and goes right to the heart of our humanness. The ability to create emotion is the province of the artist. Our task is to provide the electronic means by which this artistry can be communicated as the artist intended, hence we are a communication company not the communication. We are the message bearer, not the message. Therefore, our mission is to develop, manufacture and distribute quality sound systems that are recognized as the best performance value in the market.

Corporate values of Jolida can be summarized in four words: people, technology, performance, and value. Our Philosophy of "using our human resources and technology to share our passion for sound" is instilled in everything we do--from research and development, to workmanship and performance, to reliability and service.

lII. Scope of Jolida:

H.A. Overstreet writes, "I have my own particular sorrows, loves, delights; and you have yours. But sorrow, gladness, yearning, hope, love, belong to all of us, in all times and in all places. Music is the only means whereby we feel these emotions in their universality." The voice and instruments of music are expressed by mankind in its symphonies, movies, rock and roll concerts, theater, ballet and even the simple tune we hum on our way to work. Starting with the initial phonograph inventions of Thomas Edison, the technology of electronic sound reproduction has become woven into the fabric of our lives. Radios, televisions and music systems have become common items in nearly every household of the industrial world.

Jolida scope is to connect our clients to superior sound. Jolida is pursuing a planned program of manufacturing and distribution of audio and home theater lifestyle systems.

IV. Why Performance Equipment:

Audio and audio/video equipment is a luxury. The equipment will not physically feed, physically heal, or provide shelter from the environment. Its ultimate task is to bring a level of beauty into an individual's life. The brand equity manufacturers have focused on feature elements such as twenty hall-effect sound levels or complex remote controls. However, these convenience factors have compromised the sound quality. (It is the law of physics in analog amplifier technology, more feature circuitry results in a corresponding compromise in signal clarity). It is our contention, that if value audio products with performance were presented to the average consumer, they would forgo features and format.

During the 1980s and 1990s, there were four major technical developments that created the potential for performance equipment to re-enter a larger market:

1. The first technical development was the marketing and acceptance of the Compact Disc player. The CD player delivers a superior audio signal compared to the inexpensive turntable of the previous decade.

2. The second technical development was the improvement of audio recording. Given that the CD player revealed the defects of poor recording, studios began to improve their techniques and equipment.

3. The third technical development was the improvement of cable components. The components of any musical system are attached with cable that allows the audio signal to pass from one component to another. In the past, cheap-high-resistance cable was used, and even with good components the sound was limited. Good cable can improve the performance of a system by as much as 30%.

4. The fourth development was the dramatic improvement in speaker technology. There are approximately 240 brands of speakers marketed in the U.S. and many of these units provide significant sound quality at reasonable prices.

Thus, this decade is producing performance equipment in all elements of an audio-audio/video system. The average consumer has the opportunity to build a value system that has the basic elements of a "Hi End" audio system.

Performance factors are appealing to the average person. People are willing to purchase Starbucks Coffee at $3 a cup because of the taste differential. Similarly, the average consumer can distinguish the clear and mellow tones of superior equipment. We think the digital revolution is applicable to computers, controls, sensors, information transmission and picture quality; however, it has little to do with the reproduction of sound. One cannot hear the binary code of digital processing unless they have an IC chip imbedded on their person. Sound must come from analog technology. The key of Jolida's strategy is penetration into the current market based on the logic that an individual desires quality sound from a "sound" reproduction system and that performance can be practical. For example, a performance system can demonstrate utility in terms of volume levels, low, medium, high. Although seemingly simplistic, this is a key issue for the average individual. Often people are more impressed on how a system plays at low levels. Why. Because listening is often done in the evening while others are trying to go to sleep. There are to many systems in audio or audio videa that lose the voices when they are turned to low volumes.

V. The Products:

There are three criteria to the Jolida's approach of product development:

1. The First Criteria; People love music/sounds/voices. In the ancient languages, the symbol for "word" is "thing". The ancients understood that a word was not an abstract symbol, it had substance and the ability to be a physical reality. If the king demanded the army go to war, the physical reality of war would come to past; thus, words transform to the physical reality of life and death. Sound is not symbolic, it is not about fanfare marketing or the latest disposable toy. Sound is a powerful physical reality that is an avenue to a person's thinking and their emotions. New product must have a perceptible sound differential from the plethora of competing product offerings in the same price category. The sales task is different when the client can experience the difference. Our product will always reflect the art of communication.

2. The Second Criteria: Value. For the past twenty years, many companies have followed the strategy of "Hi End" performance without regard for price. In the lower cost arena, the design criteria are convenience and features. A small cadre of designers are coming into the field who are designing lower cost product with outstanding performance. The products we will emphasize in design and manufacture will be based on providing top performance in its price category. Whenever, we develop a product, the second criteria is outperforming the competition in the same price range.

3. The Third Criteria: Reliability. We have a saying in the factory," Don't scare the straights". If tube equipment is perceived as twitchy or unreliable, first time buyers would never try performance equipment. Jolida builds reliability into the design. For example, We use an ultralinear design which not only improves sound at low volumes, but helps the amplifier to run cooler and at lower currents which improves long life and operating reliability. We series the tubes back to the fuse, so if a vacuum tube short circuits, all that is lost is a 3 cent fuse.