Initiating Coverage: July 12, 2013 Equity Research Beamz Interactive Inc. Executive Summary Beamz Interactive Inc. - Corporate Description: Based in Scottsdale, AZ, Beamz Interactive, Inc. (http://www.thebeamz.com) has created a new interactive laser controller technology that can be used to develop new market opportunities in a wide variety of - The Company’s product development focus seems music, game, therapy and consumer applications. In its to be consistent with the opportunity identified by first application, the Company developed an innovative Electronic Arts, the North American Music new music technology and product offering that brings Manufactures (NAMM) and others in ter music to literally everyone in a manner that has - ms of physical specifications, MIDI capability, previously not been possible. Beamz allows people that Windows and Apple compatibility, expanded music have no musical background or training to play and library, targeted education / special needs / senior enjoy music within minutes, yet it has the depth to care content, and virtual DJ software for Mac, PC, enable accomplished DJs, artists and musicians to and mobile hardware. perform, compose and create very sophisticated interactive music. Beamz Interactive's technology Outlook for BZIC: As illustrated later in the report, portfolio includes multiple patents, patents pending and Murphy Analytics (MA) is estimating that BZIC may hit trade secrets covering interactive music, software, laser- breakeven at approximately $6 million in sales. At $25 based controllers, gaming applications and related million in revenue, MA is estimating BZIC may designs and devices. generate up to $0.31 / share in net income. While the Company’s run rate for the current fiscal year is closer Select Highlights Regarding the Beamz Opportunity: to $300,000, annualized revenue of over $40 million for - The endorsement and licensing agreement the Singing Machine’s (OTCBB: SMDM) karaoke announced with international multi-platinum artist machine and music provides a relevant reference for the and producer Flo revenue opportunity before BZIC. Additionally the Rida provides a great Company’s strategic initiatives seem to be well suited to deal of validation for capture opportunity in its target markets. Ultimately, the Company’s the success of many consumer products is defined in identified strategic large part by its marketing success, and the partnership initiatives as it with Flo Rida creates a unique opportunity to re-launch provides visibility and expand the Beamz brand and reach. While the into the vision for Company faces many financial and operational marketing, social challenges, MA believes it is reasonable to expect media, and product significant progress for BZIC over the coming quarters. development. If the Company is able to demonstrate progress towards - A special version of a revenue run rate of $10 million, or 10% of BZIC’s Virtual DJ software is included with the long term revenue objective, MA estimates this may Company’s DJ product, providing users with a translate into potential net income of $0.10 / share. At a unique, exciting DJ experience. Virtual DJ software market derived multiple of 15x earnings, this implies has been downloaded over 70 million times at that this level of performance may justify a price of CNET, earning the #1 ranking in the DJ Software $1.50 for BZIC over the coming quarters. category. - Across its Consumer and Artists / DJ target BZIC Recent Price $0.31 markets, BZIC is operating in an interactive Please review the risk factors entertainment market opportunity worth tens of Outstanding 16,017,812 outlined later in billions of dollars. Shares Estimate - BZIC has relationships with top online retailers, this report and content providers and distributors. BZIC – Market the important $5 million - The recent closing of an initial $2.5 million Cap Estimate disclosures and financing with management and others is an disclaimers at 12-Month Price indication that knowledgeable investors believe in $1.50 the end of this the BZIC opportunity. Potential for BZIC report. www.murphyanalytics.com ‖ www.thebeamz.com Page 1 of 24... Initiating Coverage: July 12, 2013 Equity Research Beamz Interactive Inc. BZIC Initiation Report – Table of Contents BZIC Management and Ownership Page 3 BZIC Operational Overview Page 7 BZIC Strategic Initiatives and Licensing Agreement with Flo Rida Page 11 Discussion of BZIC Market Opportunity Page 15 Discussion of BZIC Financials Page 17 Illustration of Potential Impact of BZIC Growth Plan Page 19 PowerShares Dynamic Leisure and Entertainment and PoweShares QQQ Funds Page 20 BZIC Risks Page 21 BZIC and Comparable ETF Performance Chart from quotemedia.com Page 22 Murphy Analytics Disclosures and Disclaimers Page 23 Overview of the OTC Bulletin Board Page 24 Company Contact Information: Beamz Interactive, Inc. Charles R. Mollo 505-263-9707 [email protected] Investor Contact: Trilogy Capital Partners Darren Minton, President 212.634.6413 [email protected] www.murphyanalytics.com ‖ www.thebeamz.com Page 2 of 24... Initiating Coverage: July 12, 2013 Equity Research Beamz Interactive Inc. BZIC Management and Ownership licensed in the securities business from 1986 through 2011. During that time, he held various corporate Charles R. Mollo, CEO –Charlie Mollo has served as finance positions with the following broker dealers a director since 2007, and as President, Chairman of all based in the southwest, including Spelman and the Board and CEO since January of 2009, and is Company; Paradise Valley Securities; Peacock, responsible for the overall management of business Hislop, Staley and Givens; and Girard securities. His strategy including development of product sales responsibilities included structuring private channels, marketing, finance and product placements, Initial Public offerings, bridge loans, and development. As a successful business leader, Mr. various mergers and acquisitions, including securing Mollo has worked in a number of industries including private placement financing for iGo, Inc. wireless telecommunications, consumer electronics, computers, child care and real estate, growing privately-owned entrepreneurial start-up Albert J Ingallinera Jr., VP Product Management organizations into leading publicly-traded companies. and Business Development – Joining Beamz His management experience with mergers and Interactive in March of 2009 as Vice President, acquisitions, financing, venture capital, strategic Product Management and Business Development, planning and technology, and his passion for music Mr. Ingallinera is responsible for leading product have earned him his role as BZIC’s leader and CEO. management and marketing, including messaging, advertising and public relations, channel marketing Prior to joining Beamz Interactive, Mr. Mollo was a and website development and management. Mr. co-founder and Chairman, President and CEO of Ingallinera has more than 20 years’ experience Mobility Electronics, Inc. (now iGo, Inc.), a launching new hardware and software technology NASDAQ company focused on developing and products into consumer, business and vertical marketing innovative products for the converging markets. mobile electronics industry from May 1995 to June 2007 (from June 2007 until January of 2009, Mr. Prior to Beamz Interactive, Mr. Ingallinera was the Mollo primarily managed his personal investments Vice President of Sales and Marketing for Ambir and consulted with various parties). Mr. Mollo also Technology, Inc., a digital imaging product helped build Alliance Telecommunications manufacturer and scanner software provider, from Corporation in the late 1980s and early 1990s. This January 2003 to April 2009. In this role, Mr. wireless telecommunications company went from Ingallinera contributed to the establishment of Ambir start-up to just under $100 million in revenues, and as a leading provider of ID card imaging and was successfully sold in July 1992 to a New York scanning technology products in the healthcare Stock Exchange listed company. Other notable market through branding, event marketing and accomplishments include the management of a business development initiatives. Mr. Ingallinera variety of venture investments, including a $150 ventured into the mobile computer world in 1998, million venture capital fund for Meadows Resources, when he took a sales and product marketing position and managing New Vistas Investments Corporation, with CNF Mobile Solutions, a PC notebook a New Mexico real estate and investment company, peripheral manufacturer. He eventually moved to Mr. Mollo has an MBA from the University of New Mobility Electronics, Inc. (now iGo, Inc.), where he Mexico, a Master’s in Electrical Engineering from became the Director of Corporate Marketing and Newark College of Engineering, NJ Institute of Market Development. Since 1991, Mr. Ingallinera Technology and a Bachelor’s in Electrical has worked with leading computer product Engineering from Manhattan College. technology manufacturers, distributors and resellers, holding various leadership positions in sales, Scott Coyle – VP Finance – As Vice President, marketing, business development and product Finance, Scott is responsible for leading Beamz management. Other past employers include Iomega financing and investor relations efforts, as well as Corporation and Merisel Corporation. Mr. Ingallinera identifying and evaluating merger and acquisition received a Bachelor in Business Administration opportunities. Scott