1% Hangout

DJing at parties helped sharpen the ears and skills of 1% Hangout. Those skills have been horned and perfected to crank out quality songs that are not only catchy, but also listener friendly. Take the song "One Night In Tikrit." That song was written on the fly and recorded the next day. Listen to it and you'd never guessed it.

Here's an executive summary of some of our acheivements, goals, and, vision:

The entertainment industry is as vibrant and exciting as ever. Last year saw the emergence of digital music download as a legal way for consumers to experience, purchase, and own music. Wireless devices in development will enable music to be accessed anywhere in the not too distant future. Hangout Corporation has been at the forefront of the digital music paradigm shift and is well positioned for growth going forward. Some of our highlights since founding include:

· Digitally distributing records to radio stations for airplay
· Development of a reggae hip hop genre catalog for exploitation
· Acquisition of web domains hangoutcorp.com and nethangout.com
· Leveraging music assets into distribution deals with on-line retailers

The Company has also seen a strong interest in its business plan and Internet content primarily due to the launch of a web site for the artist 1% Hangout, signed to Hangout Recordings unit, and the successful release of the maxi-CD Yum Yum in fiscal 1997 and a digital music download revival in 2004.

Fiscal 2005 promises to position the company as a leader in its core recorded music unit by securing distribution deals for Hangout Recordings, and the re-launch of nethangout.com

Sincerely,

Chima A. Nwala
Chairman of the Board, President and Chief Executive Officer, CFO