SOURCE: RMD Entertainment Group

August 24, 2006 14:21 ET

RMDG Shareholder Update

PHILADELPHIA, PA -- (MARKET WIRE) -- August 24, 2006 --


Dear RMDG Shareholders,

RMDG (PINKSHEETS: RMDG) is in the final stages of transition from a development company to a fully functional corporation bringing various products to market. We have achieved this in a short time frame of about ten months. A true achievement, considering we had to first do a massive restructuring of the company and change the business focus from defense contracting to multimedia conglomerate with a focus on hip-hop content. Yesterday's announcement of the closing of our Regulation D,504 financing was welcome news to all and I wanted to take the opportunity to update shareholders on our remarkable progress.

Here is an update on our many initiatives.

1. Block Star DVD Magazine

The Company's long-awaited and highly anticipated DVD magazine project, Block Star DVD Magazine, officially hit the shelves of traditional 'bricks and mortar' retailers in the U.S. earlier this month. This DVD is the first of many RMDG projects to become available for consumer purchase through traditional retail channels. While RMDG has a stronghold on the digital arena, this is their first offline product delivery. Block Star DVD Magazine will continue to be available through Amazon.Com; however, it can now be found at Best Buy Co., Inc. and all Trans World Entertainment locations which include Wherehouse Music, Sam Goody, Suncoast and many more.

U.S. distribution is being handled through longtime distribution pioneers, Bungalo Records and Universal Music Group, a subsidiary of Vivendi Universal and Video Distribution, while The Pickwick Group Ltd. of London will handle retail placement abroad. Beyond instant 'off the shelf' profitability, RMDG executives continue to work with the creative forces behind The Block Star DVD Magazine to explore non-traditional ways for a project this unique to reach the ideal consumer -- like making it available on Sony's PSP™ gaming and media platform or as a bonus feature accompanying other RMDG products. On the more traditional side, RMDG executives are quick to point out the extremely profitable advertising potential that is being realized through our new relationship with Google Video. Block Star DVD Magazine is showing great promise for us and executives from Bungalo Records and Universal alike are encouraged enough to suggest a regular release of the product on a bimonthly basis.

2. Roc Monee

Earlier this year, our rising star Roc Monee delivered with his performance at Zanzibar in Washington, D.C. He was also showing his overall ability to generate revenue for RMDG. In spite of the intimate venue, Roc Monee's live performance was able to generate over $25,000.00 in net revenue for the RMDG Entertainment family. The intended purpose for the evening was for Roc to tape his first of many appearances on the Real Hip-Hop Network (RHN); however, his performance obviously had a significant impact on the live crowd at Zanzibar as well by turning the evening into an unforgettable live event. Roc Monee has also secured his own one-hour special on the Real Hip-Hop Network (RHN). The special is currently set to air in late September around the release of Roc's highly anticipated debut album -- "Diamond In The Rough." We are heavily promoting him at the national radio level -- preparing his fans for an amazing album. Roc Monee is loved by his fans and the media -- we expect huge numbers from him.

His single "Overdrive" is being serviced to all major hip-hop radio stations around the country with a heavy emphasis on traditional terrestrial giants like Clear Channel, Archway Communications, Access 1 Communications, Cumulous Broadcasting Inc, Welch Communications, Radio One Incorporated and satellite pioneers like Sirius Radio and XM Radio. Currently, "Overdrive" has taken the airwaves and clubs by storm. It is in rotation in 31 radio stations across the country including but not limited to KBTT-FM, KMLL-FM, KBLR-FM, KHTE-FM, WBTJ-FM, WOWI-FM, WJUC-FM, WERQ-FM, WJBT-FM, WHHH-FM, and HOT 97-FM. All of our target radio stations should be serviced by the end of this week and we expect more stations to be added to the existing list, which is already impressive for a new artist. We anticipate weekly or biweekly updates for shareholders on our radio campaign via press release.

A promotional campaign like this is used to create demand for Roc Monee's album by large retail outlets like Target and Best Buy. Bungalo Records (exclusively distributed by Universal Music and Video Distribution) will service the U.S. retailers directly on behalf of RMDG. The precise in-store date for the album's release is determined with the retail outlets' input based on predicted sales -- it will hit shelves in early Fall of '06 on September 26th. RMDG will also release the album in digital and ring-tone formats through their 60 digital distributor list including familiar names such as iTunes, Sony Connect, Jamster, and more.

Roc Monee recently wrapped the video shoot for "Overdrive." Lamont Liquid Burell, one of the industry's brightest up-and-comers, directed the video and was blown away by Roc's natural ability to shine. Burell has worked with the likes of Alicia Keys and reported that Roc was a star whose charisma and raw energy were made for the camera. The video is in final stages of the editing process and is expected to be completed next week. Once completed, the video will be serviced to key players such as MTV, VH1, RHN, and BET, much like the radio stations were. Video rotation will not only impact Roc's sales, it will also convince any radio stations to increase their plays for him. Roc will have many more opportunities to shine on film in the years to come, including his upcoming special on The Real Hip-Hop Network (RHN).

To increase Roc's visibility we are booking as many promotional appearances as we can for him to meet and greet his fans and perform selected tracks from his album. He performed last week with the girl group Lover and is slated for a September 8th performance in Atlantic City for The FunkMaster Flex Car Show. As the September 26th release date approaches, Roc will be doing a lot of phone-in radio interviews with the stations that support his album and will be seen doing in-store appearances with major store chains and mom and pop chains alike that carry his album. Two weeks prior to the album release, street teams will be servicing major metro areas around the country with posters, sample CDs and other advertising materials to help push sales and awareness as well.

Management is very pleased with the progress of Roc's project thus far. In conjunction with several key industry professionals we have working on "Diamond in the Rough," we believe we have no less than 5 singles (songs) to service radio with and are committed to doing so. We are fortunate in the fact that normally there are one or two songs that will be serviced to radio in the attempts of raising awareness and interest in an album project. RMDG had a good dilemma in that there were so many strong tracks, we had a hard time picking the first one to service.

This does not happen often, however, there have been some examples of albums this strong. Bobby Brown's first solo album had 5 singles (songs) serviced to radio including "MY PREROGATIVE," "TENDERONI," "EVERY LITTLE STEP I TAKE," and "DON'T BE CRUEL." What resulted was multi-platinum success and strong sales for the album during the first 9 to 12 months and it still sells units today.

Although I am not guaranteeing platinum performance of the album, we are convinced that the potential for rather significant sales is there and we will service numerous tracks to radio to spike sales. Roc has given us an exceptional product to sell and we thank him for all of his creative efforts. To be lucky enough to have an initial flagship project like this to service our distribution matrix with is truly a blessing.

3. Big Kuntree

Big Kuntree is in the last phases of recording his debut album for us. We expect it to be completed within 30 days at which time we will begin the process that we have already put into place with Roc Monee (see above). Samples of Kuntree's tracks have been played to the same promotional team that is working Roc's album and many feel that this one is just as strong. We expect his album to be released maybe late fourth quarter this year, most likely early first quarter 2007.

4. Heavy D

With names like Sean "Diddy" Combs, Anthony Hamilton, and Heavy D himself producing tracks on the album, we are firmly planted among some of the biggest names in the history of hip-hop. We are honored to be in a position to deliver a project of this caliber to the masses. We at RMDG have set the bar extremely high with regard to quality of projects we get behind -- the Heavy D project is merely the tip of the iceberg. Heavy D has been attracting international acclaim on several levels; however, this project is particularly hot. Originally set for release later this year, Heavy and the executive team at RMDG agreed to put our feet firmly into getting the project aligned with his fan base which is different than the 14 to 24 demographic that Roc and Kuntree are pursuing. He is targeting the 25 to 35 demographic who grew up with hip-hop that feel they don't have a large choice in today's market when buying music. Most of this demographic has been relegated to buying past catalogue releases to get their musical fix. Heavy and RMDG are working together to align the project with key publications that could assist in our success like Essence and Vibe magazines. We will be very deliberate and careful in our promotional campaign as we see a lot of potential in this project. The final release date will be determined by our team acknowledging that it has put all of the "out of the box" promotional pieces in place so we can best service this most important project by a true hip-hop legend.

5. MoTV Inc.

MoTV Inc., formerly a privately owned entity, has been working alongside an RMDG development team for the last two years to bring a brand new mobile experience to the marketplace in 2006. The finished product can best be explained as a real-time broadcast similar to the original MTV platform -- coupled with an interactive retail element reminiscent of the Home Shopping Network. This new hybrid mobile network not only delivers a totally new experience for the viewer, it also introduces three distinct revenue streams for network supporters: advertising, subscription, and retail. With deals being structured around the globe for our overwhelming content, MoTV Inc. is our own delivery vehicle designed to capitalize on the content we've worked so hard to amass. This technology by itself provides an unparalleled experience to the end user by delivering entertainment and retail interactivity to any mobile phone or device. This goes far beyond the current goal in the industry, which puts such a heavy emphasis on content; we are delivering real-time interactive content, which empowers the audience with the tools necessary to be entertained and shop simultaneously. Utilizing RMDG's massive global hip-hop influence, we structured MoTV Inc. technology in such a way that there doesn't need to be one central hub for global content delivery, which means that we aren't limited by traditional bandwidth issues and our network is ready for implementation on a global scale as we speak

In July we announced the completion of the pilot episode of their highly anticipated original series entitled, "Hip-Hop Tonight™ With Jay Milla." The pilot episode marks the first in a series of new original projects being produced specifically for the mobile platform. To penetrate the market on multiple levels, we will have multiple versions produced for global redistribution. The objective is to utilize the original RMDG content as an advertising vehicle with key relationships they have in place with industry giants like Google, AOL and the Real Hip-Hop Network, to name a few. While the primary function is to create powerful street driven content, the other network avenues open the door to enormous advertising potential and massive global exposure for the RMDG brand.

MoTV Inc. has evolved into a content delivery platform company, a program production house, and content management corporation. In 2007, we expect significant revenue from this subsidiary. Revenue has begun trickling in from this initiative this month and we expect it to increase dramatically on a monthly basis as we distribute more of our content globally through the MoTV platform and other platforms like Google, and AOL.

6. RHN

Not too long ago, RMDG entered into a strategic partnership with the Real Hip-Hop Network (www.rhn.tv), arguably the largest multimedia hip-hop content resource in existence with over fifteen thousand (15,000) hours of original programming in the can. According to the parameters of the agreement, RMDG will have complete discretion with respect to the global distribution of all RHN content and is entitled to 50% of any revenue generated as a result of RMDG involvement. By utilizing our longtime relationships with Bungalo Records (exclusively distributed by Universal Music & Video Distribution), The Pickwick Group Ltd. and over sixty digital music distributors, RMDG Entertainment will instantly convert content to capital through both traditional and alternative distribution channels.

The Real Hip-Hop Network is the first ever cable television network geared specifically toward the dynamic lifestyle and culture that defines hip-hop. By the end of 2006, RHN will reach over 17 million homes nationwide via cable and satellite, which gives this deal with RMDG that much more impact. Not only will RMDG now have a massive cross-section of its ideal demographic to introduce its artists, products and alternative content distribution to, but it will also be able to capitalize on the staggering advertising possibilities that come with that level of market penetration.

Along with our other RHN projects, we will co-produce five of the biggest hip-hop concerts to hit the stage this year. While details are still being ironed out with respect to performers and venue dates, hip-hop legends LL Cool J and Jadakiss were the first two headliners to announce their participation in the RMDG/RHN production. RMDG's own Roc Monee recently performed in Washington, D.C. with LL Cool J...the show was taped for later broadcast on RHN; however, the crowd was blown away by Roc's performance and showed their support at the door.

Beyond that, we recently announced our deal with the Real Hip-Hop Network to be a primary content provider for the highly anticipated MoTV platform by co developing a mobile network devoted strictly to RHN programming. The Real Hip-Hop Network will be the primary provider of applicable hip-hop content for MoTV over the next five years and the two companies will equally split all revenue generated as a result of the new mobile network. Tentatively called "MoRHN," this new network can utilize the proprietary MoTV technology to bypass traditional cable barriers and deliver RHN programming directly to the consumer via any IP (Internet Protocol) enabled mobile device.

July marked a leap forward for our relationship with RHN as we announced that through a landmark distribution deal with MHz Networks, the Real Hip-Hop Network (RHN) will air in over 2 million D.C.-area households from 12:00 am to 6:00 pm -- six days a week. This additional viewership is in addition to their previous viewer numbers, which reached well above 15 million. The new outlets carrying the network are as follows: Verizon FIOS (Channel 34 in DC/31 in MD/31 in VA), Adelphia (Channel 25 in Spotsylvania/Richmond/Stafford), Dish Network (Channel 53 or 8084), Metromedia (Channel 18 in King George County) and DirecTV (Channel 53 or 971).

We are most excited about our recent announcement regarding Real Hip-Hop Network; collectively, we are rolling out its initial 35-hour block of original content -- specifically engineered for use with Google Video platform. RMDG recently entered into an alignment with Google Video for the specific purpose of delivering quality content, in exchange for a substantial share of the advertising revenue generated along the way. RMDG and RHN will consistently deliver cutting edge content to the Google Video millions, while being able to utilize Google's proprietary technology to stream content to the masses while using the platform to generate revenue from billable content downloads, merchandising and the multitude of advertising opportunities.

Atton Muhammed, CEO of RHN, and I are dedicated to expanding our strategic partnership far beyond normal expectations. We share a common understanding of the potential earnings in hip-hop media as well as the shortcomings of the status quo of our industry (hip-hop). I am confident that our relationship with RHN will bring us major earning power for years to come as well as tremendous promotional power for our music and DVD products. Soon, many people will associate RHN and RMDG in the same breath as one in the same, striving for excellence and change.

7. Google

We recently signed an agreement with Clayton Entertainment (www.claytonentertainment.com), which enables them to feature our entire content library on Google Video. After dealing with Clayton Entertainment for a short time, it became quite evident to Anthony Lucas (CEO, MoTV Inc.) and me that they were not big enough for our plans and could not facilitate our vision or requirements. In response to this Anthony met directly with Google, presented our position, and we signed a deal directly with the Internet giant to become content providers. This step marks a profound evolutionary step for RMDG and our original video distribution model. According to the deal, Google Video will now be the premier distribution platform for all RMDG multimedia content including, but not limited to, artist videos, live concert events and the bulk of the 15,000 hours of urban media programming acquired from their recent deal with the Real Hip-Hop Network (RHN). Through our relationship, RMDG will now be able to utilize Google's proprietary technology to stream content to the masses while using the platform to generate revenue from billable content downloads, merchandising and the multitude of advertising opportunities. Multimedia business platforms are changing every day because they are still in their infancy. Google remains both flexible and creative in its approach to working with us. We see major revenue and promotion opportunities working with Google and are excited about the prospects of working within a framework that provides a network of 350 million visitors a day to its portal.

8. The New RMDG Website

Our web marketing and design team are putting the final touches on the new RMDG corporate website. Many of the top professionals in the Internet design community have been diligently working for months on delivering a website that mirrors RMDG's commitment to bringing the highest quality artists, products and projects to the entertainment marketplace. The new site is live and can be viewed at http://www.rmd-entertainment.com. However it is not in its final stages of development. I have directed the design staff to make the site able to support multimedia platforms for press release purposes. So in the not too distant future you will be able to see letters like this one delivered via video feed on the site for shareholders to view promotional items as well. We will continue to push the envelope in our corporate appearance as we evolve.

In conclusion, I feel the most difficult times for the company are over and we have grown tremendously. We stuck to our guns and our plan no matter what people said or thought and it was that spirit of conviction that put us in the position we are today. Now we have the luxury of selling our products on a global scale with the support of industry giants such as Google, Universal, AT&T, ITunes -- just to name a few. It has been my staff's and my own pleasure to serve the shareholders and the company during this time. This is where the fun begins for us. Now we can begin to realize our vision and corporate potential as we hit the road running for the first time. The future looks very promising for us all. I thank you for all of your support.

God Bless,

Giorgio Costonis
CEO
RMDG "Where Hip-Hop Meets Wall Street"

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