GENERAL

CD Warehouse, Inc. (together with its wholly owned subsidiaries, the "Company") is engaged in the franchising and ownership of music stores offering new and pre-owned compact discs ("CDs") and related products under two similar but distinct franchise systems, "CD Warehouse" and "Disc Go Round." The term "CD Warehouse System" encompasses the two franchise systems and their respective stores, which variously operate under the trade names "CD Warehouse," "Disc Go Round", "CD Exchange" and "Music Trader." Since its initial public offering in January 1997 (the "IPO"), the Company has engaged in a program of expansion to achieve strong market...