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Hitting All the Right Notes with this Unique Digital Media Entertainment Play

Dave Jackson Dave Jackson, Stockhouse
1 Comment| May 28, 2021

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If you haven’t heard of Montreal-based HITLAB Inc. (P.HIT, Forum) yet, chances are you soon will.

The soon-to-be publicly listed company is a musical website where bands and musicians can promote and advertise themselves. HITLAB is an A-I-based music technology platform, partially owned by Grammy-Award winning superstar Akon, that services artists, brands, and fans. Each artist or band has its own page that may include news, photos, videos, upcoming shows, background & biographical information, contact information, and music for free listening and downloads.

HITLAB's artists can share music with each other while providing a service portal for artists and listeners alike. Founded in October 2007, the website is a promotional ground for minor or up-and-coming artists, but also boasts label-signed mainstream bands, as well.

The Company is also part of an exclusive Stockhouse DealRoom early-stage seed offering where potential investors can get in on the ground floor of a company with prospectively consistent long-term revenue generation and profitability.

In this exciting and enlightening video podcast, Stockhouse Media’s Dave Jackson was recently joined by company CEO Michel Zgarka and Executive Chair Rick Groome to get shareholders and potential investors up-to-date on what HITLAB is all about along with investment opportunities in the digital music / AI space.


SH: To start off with, can you tell us a little bit about yourselves and the history of the company?

HL: We started many moons ago in 2007, 2008 and we, my partner, Pierre, who unfortunately couldn't join us today and I had the vision of analyzing music and using algorithms and artificial intelligence to determine what a potential hit song could look like. Originally the algorithms came from the University of the OA in France. Pierre went over to purchase them and started using them in the mining business, which ultimately became diagnosed. We split the company up into music and the mining side separately. For the music side, at the end of the day we were extremely early, probably about seven, eight years too early. $23 million have been invested in the company so far. This suite of products that we're going to talk about today is extraordinarily exciting and actually perfect for today's world that we live in with COVID etcertera. So we're very, very excited to launch the first product, which is the digital emerging artist’s showcase, andd that's now live in Africa and we have three other products that we'll talk about during this interview.

SH: The digital technology that you’ve developed sounds fascinating. Can you tell us a bit about it?

HL: Yes. So basically our patented and proprietary technology, first one is called DNA for Digital Nuanced Analysis. It is basically, and I always give the same comparison when you go to your doctor and your doctor asks you for tests, you asked for specific tests against your own DNA. What we do in the music business, we've analyzed that every song, regardless of the language or norm as its own DNA made up of 83 parameters. When we analyze a song, we do not select one, two or three parameters like a doctor does for your blood test. We analyze the 83 parameters that make up all of the songs and that would give you a result within seconds because we're able to analyze up to a hundred thousand songs per hour so it is an immediate service to any talent record labels, producers, distributors, because we are basically at the mining source to find best towns anywhere in the world.

SH: An artist can submit their song to HITLAB then see their proximity to radio hits. How does it work, and can you expand on this initiative for our investor audience?

HL: Yes, what we did besides having the technology to analyze a song against what makes up a song, we then decided in order to maximize deep analysis, let's ingest into our system big data. So we started in 2012 to ingest all of the songs who made the top 100 initially on billboard. Then since we decided to go multilingual, we did the same was charts in different languages all over the world. So today when an artist says, okay, I want to know where my song stands, initially he has a score against the DNA of that song. Then that song is compared to songs that have made it on charts for, thus, he gets a second result. The two results put together, puts that song on our leaderboard, on the digital emerging artists’ showcase. So in about a minute and half maximum, he gets all of those results and knows where he stands and as a possibility of becoming an international star.

SH: Let’s talk a little bit about your ‘Can-U-Sing’ technology app. How does it perform and what separates this technology from your competitors?

HL: The Can-U-Sing app is very, very cool. In today's day and age, most of the artists that we know are in negative cashflow because they're not out performing on tour. Although in Montreal, we did get to Genesis and the band actually sold out in an hour and they just booked the second gig in Montreal and one in Toronto. Maybe we'll have some live shows soon, but in the meantime, Can U Sing is designed to create something called non-traditional revenues. We call it NTR, and we can create a contest and let's give an example. If we convince Justin Bieber that we can do a contest with the Can-U-Sing app, let's say if he has a hundred million fans on Facebook and his Instagram, he can do a shout out and say, “Hey, I'm doing a contest for Can U Sing of one of my songs, and the top 30 winners will earn a prize. That prize could be a Zoom singing lesson with Justin Bieber for two hours on a Saturday or something, or it could be a meet and greet cocktail before or after whenever he starts up his concerts again. To enter that contest, you would download the app pay $1, and if you want to try two or three times, you'd pay $1, $2 or $3. The closest score to a hundred would be classified as one of the winners and there'll be 30 winners. So that type of contest we can create with any artist or any media company or any consumer brands company, anywhere in the world, at any time. We're going to have a complete rollout of the Can-U-Sing app, we should be ready to go by July so we'll have all of our team ready by September, and then we'll start deploying that app it with their agents, the brand name agents, as well as other media companies and radio stations, TV stations, and web websites.

SH: You say that HITLAB uses its own patented technology to create unique experiences for consumers to interact with brands, bands, and artists. Plus, your innovative tools nurture the connections between brands and consumers primarily through music. Can you unpack the benefits of it?

HL: Yeah, sure. Well, since we're able to analyze so many songs, we become a necessary service to any brands and so forth because for example, an advertising agency will do an amazing message, but when it comes to choosing the right music, it'll either be very expensive if they want a very established artists or maybe they'll find one, which has the wrong demographics. With our system, we can analyze exactly what will fit the message and the demographics for any type of brands, but also in any language, and that is done within minutes. Whether it's for a brand, for an artist themself or for a major label who says, okay, my artist has just completed in studio 12 songs, but which one should be the first released, the one which has the most potential of getting to the top five on a charts.Our system will analyze, let's say the 12 songs they just finished in the studio and give them the immediate ranking, which one should be the first release, second release and on and on, those are all areas our DNA can do and eventually with Can-U-Sing, we'll be able to match an amazing song with such an amazing voice and get the new release of all those sounds put together.

SH: You’re looking to raise over $3 million dollars in private equity at 30 cents per share. How will the company be able to accomplish this?

HL: Well, we're going to start with posting it on, on the new Stockhouse web private placement portal. Number one, we have about a hundred shareholders, Dave. To successfully list in Canada, you need 150 plus shareholders. So we're looking to add to the shareholder base anywhere from 50 to 250 new shareholders. We've invested about, as I mentioned previously, $23 million so far, we have very longstanding and devoted shareholders. Most of them are high net worth and private equity people. And we've just completed a small convertible debenture of about $1.5 million to $2 million, and the equity portion that we're doing now with Stockhouse should carry us for the next 12 months into profitability as the company starts deploying our various products.

SH: When and where can we expect HITLAB to be publicly listed?

HL: Well, currently Dave, we're evaluating our options. We have options in the United States, and we have clearly options in Canada. So we haven't exactly the board has not decided what stock exchange to list on, but the board has made the decision to go public in the next six to eight months. The exact timing of which I cannot exactly say because the there are delays with respect to auditor's and COVID delays and all that kind of stuff. But it is clearly the intention to go public as soon as practicable and of course the market loves everything to do with artificial intelligence and algorithms. Now, if you listen to us three years ago most people would say, these guys are absolutely crazy artificial intelligence with music. What? So the timing is actually perfect. We're very much gearing up to a public offering and we'll likely do a non-offering perspectives because we'll have enough shareholders to carry the right.

SH: …and a bit about the distribution round and a bit about the public offering. What can investors expect with the raise?

HL: Well, the raise will give us enough working capital to really finish off in launch. Can-U-Sing -- number one, number two -- we are we've created something called the HITLAB Academy of Music. We've signed an agreement with the provost or assistant provost at the university of Southern California, the school of arts and music that was actually set up by Roy and Walt Disney years ago. And this gentleman, his name is AJ Kapoor. He has a PhD in artificial intelligence and, and music of course and he's setting the hit lab Academy music up for us, and we expect to have our first three or four courses ready to go by the fall, so August - September time frame.

SH: Looking into the proverbial crystal ball, for potential company shareholders and investors, what kind of future development and progress can we expect at HITLAB moving forward?

HL: Well, I can touch on that and Michel can chime in another product that we have in our pipeline that we haven't really talked about is NFTs non fungible tokens, and there's been an absolute explosion of these NFTs over the past 12 months. We've been following it very closely, it wasn't in our business model, but it is now, and we plan on putting together a complete NFT strategy that's in process as we speak. The interesting thing is if we have an inventory and database of, let's say anywhere from half a million to five or ten million emerging artists, imagine if we can actually rank the songs in order of success and how it compares with its peer group. Imagine if we write a check for the NFTs for each one of those artists that score 90% plus on our leaderboard and when they become a massive success the NFTs could be extremely valuable.

So, and we're all about Dave, the democratization of music also, we haven't really talked about that. What we're basically enabling artists with AI and algorithms and math and innovative products to generate cashflow. And right now if you look at all of the statistics the artists that are grinding it out don't make a lot of money at the end of the day on streaming services or what have you. So it's really a very interesting business model, and it's going to, we think turn the music industry really upside down.

SH: Aside from yourselves, can you tell our audience a little bit about your corporate management and board teams, along with the experience and innovative ideas they bring to the A-I entertainment space?

HL: So on our board, we have a gentleman by the name of Todd Rooper. Todd was the former CEO of T Rowe Price and T Rowe, I believe manages over a trillion of assets right now. Todd is also a board member of the Rock and Roll Hall of Fame and a dear music lover, what we have is a terrific team on our board that is engaged with music. Also, we have Akon on our board, Akon, as you mentioned, previously, is a Grammy award nominee, and Akon is doing some absolute fabulous work in Africa in the solar business, as well as in the mining business. So we've got a very strong music-oriented board, and we've invited AJ Kapoor out of the University of Southern California to come on our board.

On our corporate team, we have quite a group of very experienced people, including Randy Broughtus who has joined us after a very great career at Sony music, he's our executive vice-president. We also have AJ who runs our Hit Lab Academy. We have Xavi Gauthier, who's an artist on his own right, and is our executive vice-president. We also have a very good connections because of our technology, as we are preparing for the next generation of AI, we are a very close to a company called Nixa, who's one of the most renowned company in the AI true scientific search. So we work with them. So we have surrounded ourselves with potentially the best of the best to continuously update increase and be on the lookout of what the next generation of AI for the music industry, including sound separation and so forth.

SH: And finally, gentlemen, if there’s anything I’ve overlooked please feel free to elaborate.

HL: I'll just say, Dave, in closing that one thing we didn't talk about is we are looking constantly for acquisitions. We meet dozens of companies literally every month in the music space and it's quite extraordinary the innovation that's taking place globally. With zoom, we're only a minute away from Singapore versus Copenhagen, so we are constantly on the lookout for innovative, bright, young talent not only on the artist side, but on the technology innovation side, anything that is complimentary to HOTLAB. We're always looking for either to do a licensing deal, partnership, deal, JV, or even acquire them.

One other area that we are definitely moving fast forward is creating the next TV format, which will use AI to do the next generation of shows such as The Voice or American Idol, because with using our technology such shows, without reinventing the wheel, will cost +/- 10% of what the other costs, but will not be geo-localized and can allow any broadcaster to be able to do art TV show and also the same worldwide. This technology will be every time reading or restructuring the whole format and so forth to show, lets say we have a show which has eight contestants, those eight contestants could be singing in eight different languages. That was being interesting for mass demographics, but also to anyone anywhere in the world.

And just one summary item, when we started preparing to go public, of course, we started looking at the budgets and creating revenue lines and expense lines as usual, but what was quite extraordinary is that we ended up adding numerous revenue lines that did not previously exist. So I think we're now up to 12 or 13 different revenue lines in this business, and we don't have music videos on our site yet, but it's in the process of being built. I'll give you one example, once we have our music videos section on the site, we've actually got technology partners where we can code the t-shirt or the glasses or the jewelry or a purse or whatever, and if you're sitting down with your wife and watching this spectacular female artists from Tanzania, and she's got this really awesome purse and your wife says that is so cool, I'd love to have that, you can go point click, stop the video, see what the purse is made of, get all the details, and find out that it's $199, and it's available in Jemiah, which is the Amazon of Africa, and have a delivered in a week or so to your house, and the artists will get a 10% commission and so will HITLAB. Well that currently is not available for artists to generate that kind of cashflow. So if that music video is very successful, if it's seen a million times or more, there's every likelihood that that artist could generate, you know, $5, $10, $20, $30,000 in sales, just from the purse.

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FULL DISCLOSURE: HITLAB Inc. is a paid client of Stockhouse Publishing Ltd. (Stockhouse). Stockhouse is not registered as a broker, dealer, exempt market dealer, or any other registrant in any securities regulatory jurisdiction and will not be performing any registerable activity as defined by the applicable regulatory bodies. This deal room is for informational purposes only and does not constitute an offer to sell or a solicitation to buy the securities referred to herein. Offers to sell, or the solicitations of offers to buy, any security can only be made through official offering documents that contain important information about risks, fees, and expenses. The information contained in this deal room is selective and does not purport to contain all the information relating to HITLAB Inc. In all cases, parties should conduct their own investigation and due diligence, not rely solely on the data provided herein and are encouraged to consult with a financial adviser, lawyer, accountant, and any other professional that can help to understand and assess the risks associated with any investment opportunity.


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