Beamz Interactive (BZIC): My Favorite 'Special Situation' Company

Quick Facts: Company quietly restructuring, eliminating all debt and raising $1.5-2 million in private placement that management is significantly participating in; management owns 60% of company; the CEO is passionate about the business and making it successful...and his track record suggests he will get 'er done.

Three Year Stock Chart

Disclosure: Long BZIC, initial purchase on 4/7/2015, cost basis of $0.01/share. 

Additional Disclosure: Recently, the CEO prepared a comprehensive business plan and financial forecast for the future and it is being distributed to potential accredited investors by a 3rd party investment firm. I was afforded the opportunity to receive the documents in exchange for signing an NDA, which I did. As part of the NDA I cannot buy or sell shares for 6 months from the date of the executed NDA, nor can I speak to any specifics within the documents. All information below is knowledge I had prior to signing the NDA.

Note: This is not what you would "typically" expect from a research article given the "special situation" status of this investment. I cannot provide financial projections for the business going forward due to the NDA I entered into with the company (noted above). However, it's safe to assume I would not be writing this article if what I read in the documents covered by the NDA were not incredibly positive.

If you have been following me on twitter you have noticed that Beamz Interactive (BZIC) is a company that I frequently comment on as being an incredible "special situation" play. I will even go as far as saying that with some patience this could be one of those positions that could ultimately change an investor's life. And while in most similar situations the risk would be too significant for my money, there are plenty of things with Beamz that are mitigating such much so that I have a significant portion of my portfolio invested in BZIC.

This is a "Special Situation" play because in no way is the investment in BZIC about the past or current state of the's about the future. And it's a future that is so far under any potential investor's radar that it hard to even contemplate the potential returns with the necessary funding and execution.

Why is my conviction on BZIC so high? For many reasons that will be discussed below, but for me this one starts with the CEO, Charlie Mollo. Charlie is a true class act with a proven track record. As you can see from his bio below, he previously was the founder and CEO of Mobility Electronics (subsequently iGo, Inc.) where he guided the company in raising over $100 million in funds and growing the business to $100 million in revenues before ultimately selling. What's even more exciting is that the CFO of BZIC, Joan Brubacher, was part of Charlie's Executive Team at iGo and played a crucial role in their ultimate success.

What does Beamz Interactive do?

Simply put, Beamz is a leading developer of products that uses laser technology in creating revolutionary interactive music experiences within the education, healthcare, elderly, and consumer markets. Beamz allows people that have no musical background or training to play and enjoy music, but it also has the depth to enable accomplished artists and musicians (example of a former endorsement is Flo Rida) to perform, compose and create interactive music. 

When I was first introduced to the technology and learned more about it, I immediately thought this could be a disruptive technology in the industry and could provide kids with special education needs the ability to do something they otherwise couldn't do. As I began to learn more about the company through conversations with Charlie, the Founder/CEO, I began to realize that this technology has broad applications across not only the educational fields, but also elderly, healthcare, and consumer. 

Here is a brief video introduction to help you understand the Beamz technology a little better:

The company ultimately did not succeed within the consumer market as the cost of building their brand far exceeded their expectations. Being the visionary CEO he is, Charlie recognized this and immediately switched gears to where things stand today...which is where things get extremely interesting. 

Why do I think there is so much potential going forward?

  • The company is completely under the radar right now; quietly eliminating all its debt while securing $1.5-$2 million in a private placement to fund the new business plan vision. Management is participating in the private placement and the company looking for some additional outside investors.
  • The company stopped spending money on Investor Relations early in 2014, which led to the ultimate decline in stock price combined with the company not being able to succeed in the consumer market.
  • CEO Charlie Mollo is exactly what I look for in a CEO... passionate, driven, past record of success with iGo, and heavily invested personally in the company (to the tune of $6 million or so, with management having invested $10 million total; management owns over 60% of the company).
  • The company has been quietly building a nice distribution network around the world, and has some high caliber folks on their team domestically on a contract basis to execute the sales vision.
  • Very strong portfolio of patents for their technology.
  • The company will re-commence its investor relations efforts and communications once funding is in the place. To me, this is one of the biggest reasons I chose to invest now; completely under the radar, yet knowing the direction and future plans I am extremely confident in the direction Charlie has the company moving in. Once investor relations efforts commence I believe the Beamz story will be widely accepted by the investment community and the company will slowly be on the radar of many investors.
  • The Company plans on a reverse split in the future once the funding is in place. The reverse split will likely be 100 to 1 in order for the stock price to be above $1/share. 
  • Every potential investor that researches the company based on current filings knows about the current state of the company, but without talking with the CEO or digging deeper they have no clue about the future direction. The reason for this is because the company stopped all investor relations efforts to save money as they felt it was useless until the new plan on funding is in place. It's the future direction that excites the hell out of me.
  • Multi-billion dollar healthcare, special needs, and education markets with products that produce high gross margins:

I have had many conversations via email with the CEO, and several on the phone. A few of his comments are below that I wanted to share with everyone:

  •  "With respect to the stock, it is simple. We made a decision in the second quarter last year to reposition our company and focus on the education, special needs, and health care markets where we are receiving a very positive response. Because of limited resources (we are seeking to raise $1-2 Million), at that time we made a decision to defer all investor relations until we advance the business with our new focus. If we can secure our desired financing we would expect to begin these efforts again later this year. In the meantime, however, we are essentially not doing any IR and are trading at all (as you note) and thus the price declined to the point where it is now totally meaningless. If we can secure necessary financing we are very confident in our planand believe the stock volume and pricing will turn around very quickly - representing a significant upside. Management has invested about $10 million in the company and owns a little over 60% of the company. As a result of this investment all our technology (including great apps for PC, MAC, iPhone iPad, and Android are 100% complete), we have lots of issued patents and IP, and are now focused on sales and marketing."
  • "With respect to the business, we are making steady progress in the special education market, and have recently established several important nonprofit relationships to advance our penetration of the special needs family market – which consist of over 30 million individuals in the US alone with special needs (ie. a multi-billion opportunity). We are getting a great response from many nonprofit organizations (such as Lekotek, United Cerebral Palsy, Down Syndrome Society, and the like) which I believe will lead to penetrating the family market and receiving grants (which we will start applying for shortly). As we make progress with the business and financing, we will follow this plan with pursuing OEM, partner, and/or licensing opportunities with our technology and apps in other strategic markets."
  • "I believe we will be in an entirely different position in 6-9 months. The key is raising some additional funds – as you see on the term sheet management (including me) is investing significantly in this round – but we need at least another $500k (hopefully $1 Million) somewhere along the way. Then we would be in good shape."

Share Structure

**The numbers below are assuming a 100 to 1 reverse split (to bring the share price to $1 or higher) within the next 90 days or so, which is what the company has suggested will happen. Since this investment is truly about the future, I choose to use the future share structure instead of the current.

  • 5.1 million fully diluted shares
    • 761,000 common stock
    • 2,783,236 preferred shares outstanding
    • 327,000 options and warrants
    • 1,250,000 management/partner pool (I believe these shares are reserved for management incentives and new management hires, but I am going to double confirm this)

Share Your Blessings Organization

Share Your Blessings is a charitable organization that was founded by Charlie Mollo and his wife. Here is a summary about the organization:

Share Your Blessings, Inc. is a 501(c)3 nonprofit corporation that was formed in 2006 to help individuals and families with a wide variety of specials needs, disabilities and difficult situations, including visual impairment, intellectual impairment, physical impairment, and the like. In 2007, Share Your Blessings received its first donations from several founding Donors, nad has subsequently continued to receive additional donations from a variety of sources. In early 2015 we received more substantial donations, as well as commitments for further donations, that have allowed us to plan more substantial programs and services. Share Your Blessings operates on a strictly volunteer basis, and any miscellaneous expenses are funded by various donors – thus 100% of every dollar received goes to providing programs and services that support our mission.

Donations to the organization are used to purchase Beamz units that are provided to special needs individuals. While this may seem like some sort of "conflict of interest", it actually isn't. Given that the organization was founded by the CEO and his wife, coupled with the fact that the Beamz technology has been recommended by many of the top special needs organizations, it's both a win-win for the Beamz brand and for the special needs individual. Beamz does sell the units to Share Your Blessings with the funds provided by donors, but at a very low cost (not enough to make any sort of impact on financials). However, from a brand perspective this is an excellent avenue for Beamz to land brand exposure and to potentially land additional/incremental business from some of those programs that they donate to.

A recent Share Your Blessings press release: Click Here

It can take a while for companies to get traction with non-profits, but Beamz has been doing it for years and has built up significant interest by many non-profits in the Beamz products and technologies. Once the business moves forward I would expect to see a lot of success quickly within the non-profit organization space.  

Bottom Line

Here is the bottom line...I believe in the CEO. He has put a lot of money into this company, he and management own over 60% of the company, and he is not going to let the company fail. He has a plan for the future, and with funding getting in place he will be ready to execute upon his vision. He has a track record of success, and the CFO that helped him grow iGo, Inc. from no revenues to $100 million in revenues is at his side at Beamz. The risk of failure is certainly there, but the reward if the funding is secured and the plan is executed is far beyond the potential return of any other investment I know.

Disclosure: Long BZIC, initial purchase on 4/7/2015, cost basis of $0.01/share. 

Additional Disclosure: Recently, the CEO prepared a comprehensive business plan and financial forecast for the future and it is being distributed to potential accredited investors by a 3rd party investment firm. I was afforded the opportunity to receive the documents in exchange for signing an NDA, which I did. As part of the NDA I cannot buy or sell shares for 6 months from the date of the executed NDA, nor can I speak to any specifics within the documents. All information below is knowledge I had prior to signing the NDA.