MusicSource Plans $4.7-Million Stock Offering

MusicSource USA Inc. said Wednesday that it plans to raise $4.7 million through an initial public offering expected to take place the first week of December.

The Newport Beach-based company, which hopes to distribute sheet music to retailers via computer, has tentative plans to sell 900,000 shares of stock priced at $5.25 per share, according to a recent filing with the Securities and Exchange Commission. Continental Broker-Dealer Corp. of New York will underwrite the offering, and the company has applied for a listing on the NASDAQ exchange.

“We’re looking for quite a large response from the music industry,” said Dale Jacobs, president and chief executive of the company.

Money raised in the offering will be used to help the company install computer systems at music retail outlets.

Since it was founded in 1989, MusicSource has been test marketing its computer system, which enables a retailer to print out sheet music from a computer database, providing access to arrangements worldwide. The service eliminates the need to wait for sheet music to arrive by delivery or through the mail.

“It’s an electronic Federal Express system for sheet music,” Jacobs said. “There really isn’t anyone else doing this.”

The network would also allow retailers access to lesson programs for music students and provide for setting up lease programs for musical equipment, Jacobs said.

The company plans to bear the $45,000 cost of placing each system in a store and then charge retailers about $575 for monthly service, Jacobs said.

MusicSource was started with about $1.5 million in investment capital and has seven employees at its Newport Beach headquarters. Another 10 employees and distributors are on the East Coast.

According to the filing, the company reported a loss of $986,169 in the six months ended July 31, compared to a $322,417 loss in the same period a year earlier.