Analyst: Victor Sula, Ph.D. Initial Report July 28th, 2008
PYBX daily 7/25/2008 1.75 1.50 1.25 1.00 0.75

300 100 0




Market Data
Symbol PYBX Exchanges OTC BB Current Price $0.66 Price Target $1.90 Rating Speculative Buy Outstanding Shares 32.05 Million Market Cap. $21.15 Million Average 3-m Volume 29,631

Company Introduction
PlayBOX (U.S.) Inc. (PYBX) is a fast-growing media entertainment distribution company offering a wide variety of distribution channels for new music artists and small-to-medium-sized record labels. The Company is aggressively expanding its traditional (retail) and non-traditional (digital, online and mobile) distribution networks to enable independent artists to reach their targeted audience quickly and easily, while leveraging emerging industry distribution trends. Through a series of strategic mergers and acquisitions, PYBX plans to become a leader in the distribution and marketing of global entertainment media, while delivering digital media through PCs, television and mobile phones. The Company is in the process of acquiring Delta Leisure Group plc. Delta Leisure, a successful, established record company, owns music and visual copyrights, and has both online and offline CD and DVD distribution channels. The Company is also acquiring New Visions Mobile (NVM), a company involved in the mobile social networking market and music to mobile platforms. In addition, PYBX is negotiating to acquire three additional companies involved in music publishing, IP and copyright exploitation, global distribution of traditional and digital copyrights, and advertising-funded downloads.

Source: Yahoo Finance, Analyst estimates


PlayBOX (U.S.) Inc. 222 Cray Avenue Orpington Kent BR5 3PZ U.K. Tel. +44 (0)1908 551815

0.50 volume

Analyst: Victor Sula, Ph.D. Initial Report July 28th, 2008

Investment Highlights
Fast-growing market for digital music downloads
Customers around the world are finding new ways to download and distribute music. While overall music sales were flat in 2007, digital music download sales soared. According to eMarketer, global digital music sales grew 46% in 2007 to approximately $4.2 billion and single track downloads (the most popular digital music format) grew 53%. Digital sales now account for an estimated 13% of the global music market, up from 9% in 2006 and zero in 2003. In the United States, online and mobile channels now account for 30% of all music sales.

PYBX is capitalizing on an $8 billion independent entertainment market
PYBX specializes in intellectual property (IP) exploitation, content and copyright ownership, distribution, promotion and creation of entertainment content across many different mediums. Through the pending acquisitions of Delta Leisure and New Visions Mobile, the Company will gain a foothold in online and over-the-air music sales and the physical distribution of music. Delta Leisure will also provide PYBX with a major music and DVD catalog that extends the Company’s market reach and enables it to add more IP in the form of music, video and brands to the Company’s portfolio. PYBX intends to extend its presence in the $8 billion independent entertainment markets and targets a 3% share of the independent market within the next two years.

Aggressive acquisition strategy builds visibility and revenue stream
PYBX is achieving critical mass in the global media market by acquiring undervalued entertainment companies. It is acquiring IP, music and visual copyrights, along with the means for exploiting its assets through online downloads, mobile music, social networking, advertising-funded downloads and traditional physical distribution. The Company expects to complete the acquisitions of Delta Leisure and New Visions Mobile in 2008. These acquisitions will make PYBX a leader in the distribution and marketing of entertainment media delivered through PCs, television and mobile phones. Three additional acquisitions are scheduled to close in the fourth quarter of 2008.

Extensive distribution channels combining retail, catalog and online distribution
Through Delta Leisure, PYBX will control a network of more than 700 stores in the UK which supply CDs, videos and DVDs to retail customers. At the same time, the Company is expanding its online presence and becoming both an online and physical distributor of music. The NVM acquisition adds another distribution channel and leverages PYBX’s IP portfolio.

Multiple revenue streams and capitalizing on online advertising momentum Through the NVM acquisition, the Company expands into advertising and gains the ability to leverage its brand by placing ads at multiple online and offline points of presence. NVM generates revenues via online and mobile advertising sold around each NVM OurTribe™ network; ecommerce merchandising; 14 OurTribe™ networks

PlayBOX Inc. (PYBX)


Analyst: Victor Sula, Ph.D. Initial Report July 28th, 2008

sold, with another 23 in the pipeline; and its “Kylie Konnect” site, which has already amassed 11,000 “fan sites” with more than 20,000 visitors each month. NVM revenues are determined by the number of networks (37 projected in 2008), traffic and growth of advertising impressions and growing demand for mobile advertising. Strong forecasted revenues and EBITDA growth
PYBX expects to generate revenues from online, physical and mobile distribution of music, as well as from advertising and ecommerce merchandising via its social networking Web sites. The Company projects FY 2009 revenues in a $49.5 million range and EBITDA at approximately $9.7 million.

Proven management team
PYBX’s management team has been expanded to include Laurie Adams, who founded Delta Leisure and has more than 20 years of industry experience. The Company’s chairman, Harry Maloney, has more than 30 years of industry experience, including experience at BMG and BPI. We expect the management team to continue to expand as PlayBOX implements its acquisition strategy and adds industry talent from acquired businesses.

Business Model
PYBX owns an online music hosting and downloading application that targets unsigned music acts and small to medium-sized record labels. Its service enables these customers to establish their own music downloading or hosting services. The application includes supplemental services such as hosting, streaming, ecommerce and digital rights management (DRM) using the latest MP3 and Windows Multimedia technology. The Company bundles these services together to offer its customers a cost-effective, professional platform for selling and promoting music products. PYBX plans to grow by making acquisitions that extend its product line and distribution channels, and by capitalizing on consolidation within the media entertainment market. The Company specializes in IP exploitation and copyright ownership, as well as the distribution, promotion and creation of entertainment content across all different mediums.

PlayBOX Inc. (PYBX)


Analyst: Victor Sula, Ph.D. Initial Report July 28th, 2008

Through the pending acquisitions of Delta Leisure and New Visions Mobile, the Company gains a presence in the market for online and over the air music sales in addition to the physical distribution of music. Delta Leisure also gives the Company a music and DVD catalog which significantly enhances PYBX’s reach and adds new IP (in the form of music, video and brands) to its portfolio. PYBX is creating critical mass in the global entertainment market by acquiring undervalued entertainment businesses. Through these initiatives, the Company gains new IP, music and visual copyrights, as well as the means for monetizing its assets through online downloads, mobile music, social networking, advertising-funded downloads and traditional physical distribution.

PYBX software application
To date, PYBX has been involved in commercializing its PlayBOX online music application. PlayBOX consists of a set of computer software applications that enable artists and content owners to establish their own music downloading or hosting services and make it accessible to consumers via the Internet. Unsigned music acts and small to medium-sized record labels are using PlayBOX to cost-effectively promote and sell their music. The Company’s online music application consists of four dynamic interfaces, namely White Label, Aggregator, Bespoke and Jukebox, which provide an interface between artists and content owners and their listeners via the Internet. The White Label interface allows listeners to download individual songs either directly from the Company’s Web site or from the artist’s own Web site. The Aggregator interface provides small to medium-sized record labels with the ability to sell their tracks via an online downloading store with built-in ecommerce, tracking, reporting and billing functions. The interface can be operated as a stand-alone Web site or can be integrated into the client’s existing Web site. For the Bespoke interface, PYBX hires independent Web designers to create specialized interfaces for particular clients with unique requirements. The PlayBOX Jukebox interface gives listeners unique tools for listening to their music and managing their music collections on their personal computer. Listeners can submit their personal ratings of stored music or use the Jukebox ratings to identify and recommend other music likely to suit their taste. The Company has completed development of PlayBOX Jukebox and recently commenced commercial sales.

Delta Leisure Group plc In May 2008, PYBX announced an agreement to purchase 100% of the issued capital of Delta Leisure, an established record company which owns an extensive catalog of major music CDs, DVDs and videos across the UK and Europe. Delta Leisure was an early mover in the digitization of owned copyrights, having secured sales and distribution

PlayBOX Inc. (PYBX)


Analyst: Victor Sula, Ph.D. Initial Report July 28th, 2008

deals with iTunes, Rhapsody, eMusic and more than 60 other e-retailers. In April 2008, Delta Leisure signed a partnership agreement with X5, a global digital mobile “over the air,” online distribution and marketing company. The agreement further develops Delta’s digital business by providing access to 2 million copyrights X5 controls. Delta Leisure Group plc UK consists of Delta Music Ltd. and two subsidiaries: Delta Home Entertainment Ltd. and Delta Music Merchandising Ltd. Delta generates revenues in excess of $14 million and EBITDA approaching $1 million. Delta Music plc is the holding company that owns all the copyrights and is responsible for all manufacturing of Delta UK-owned products. It sells to both UK subsidiaries and to Delta Germany. It also markets the Delta UK video and DVD catalog through a distribution agreement with Pinnacle. Delta Music began its business with 11,000 tracks for sale on the iTunes digital store. Sales doubled in 2007 with the addition of 60 more e-retailers, and revenue close to $700,000. Delta Home Entertainment (DHE) supplies Delta UK- owned products to its customers, either in bulk from its Orpington warehouse or to traditional retail customers through a distribution agreement with Avarto (A Bertelsmann company). Delta Music Merchandising (DMM) controls more than 700 retail stores in the UK and supplies a merchandising service for CDs, videos and DVDs to retailers who would not normally stock and sell these products. The service provides retailers with a rack for displaying products, a selection of attractive, low priced CDs, videos and DVDs, and regular visits by a merchandiser who checks stock and replenishes inventory from the Orpington warehouse.
Delta Revenue and EBITDA, $

2005 Actual

2006/07 Actual 16 months

2007/08 Budgeted

Revenue EBITDA

15,862,228 490,134

20,963,092 640,658

14,150,000 1,050,000

Source: PYBX’s SEC filings

Through distribution agreements with Pinnacle and Avarto, traditional music and video/DVD shops are supplied with Delta Leisure products. DHE and DMM also supply product to other blue chip accounts, including Asda, Tesco, Aldi, Sit-Up TV, TK Maxx, Toys-R-Us, Sainbury’s, Waitrose, Netto, Universal and Matalan. In addition, DMM supplies merchandising services to Edinburgh Woollen Mills, Marie Curie, Shelter, CBS (part of GUS) and a large number of Garden Centres.

PlayBOX Inc. (PYBX)


Analyst: Victor Sula, Ph.D. Initial Report July 28th, 2008

New Visions Mobile
The NVM acquisition provides PYBX with a foothold in social networking and ad-funded music downloads. The merger of NVM with Delta Leisure and PlayBOX provides an integrated platform for new media IP exploitation. NVM creates mobile campaigns for record labels and media owners. It owns and operates the OurTribe™ Network, a collection of user-generated “fan-sites” built around established music brands, bands and artists. NVM uses social networking and user-generated content to create active communities of like-minded people who connect online and via the mobile Internet. NVM is the company behind “Kylie Konnect,” the hugely successful social network of pop artist Kylie Minogue. The network has amassed more than 11,000 fan sites and generated nearly 250,000 visitors since its November 2007 launch. This successful network is just one example of how NVM uses social networking and user-generated content to create active online communities. NVM generates revenues from: Online and mobile advertising sold around each OurTribe™ network; ecommerce sales via merchandising; 14 OurTribe™ networks sold with 23 in the pipeline; and “Kylie Konnect” which launched in April 2008 and has already amassed 11,000 “fan sites” with more than 20,000 visitors a month. NVM clients include Parlophone, Atlantic Records, EMI Records, Virgin Records, Harper Collin and others. In addition NVM works with major full- service agencies on brand campaigns - BBC’s The Mighty Boosh, Calvin Klein, VW, MBNA and Sony Ericsson, as well as putting the Collins English Dictionary on mobile. NVM has created more than 2,000 mobile campaigns for record labels, media owners and artists such as Queen, Lilly Allen, Rihanna and Robbie Williams.

PlayBOX Inc. (PYBX)


Analyst: Victor Sula, Ph.D. Initial Report July 28th, 2008

Industry Outlook
According to PricewaterhouseCoopers’ “Global Entertainment and Media Outlook: 2006–2010” report, the global entertainment and media industry is forecast to grow 6.6% annually and reach $1.8 trillion in 2010.
Global Entertainment and Media Industry - 2010

Grow at a 6.6% Compound Annual Growth Rate (CAGR) to $1.8 Trillion 0 Video Games Recorded Music Internet Advertising Filmed Entertainment Casino Games Internet Access Television Networks Television Distribution $ Billions 0 50 100 150 200 250 5 10 15 20%

Market Size 2010 CAGR – Top Axis

Source: PricewaterhouseCoopers

Global spending via online and wireless channels was estimated at $19 billion in 2005 and is expected to reach $67 billion by 2010. These channels include online rental subscriptions and digital streaming in filmed entertainment, licensed digital downloads and mobile music, online and wireless video games, electronic books and online casino gaming. The number of people with a wireless telephone subscription will rise to 2.8 billion by 2010, adding 1 billion potential new customers for mobile content over the next five years. Global advertising spending will grow at a 6.2% annual rate to $521 billion by 2010 and the Internet will continue to be the fastest-growing advertising medium, with spending increasing 18.1% annually to $52 billion within two years. By 2010, the Internet will account for nearly 10% of global advertising spending versus 3% in 2002. Other 2010 projections for the entertainment market include the following: Global Internet advertising will grow 18.1% annually to $51.6 billion and Internet access revenues will expand 11.9% annually to $214 billion; The television distribution market will grow 8.3% annually to $230.3 billion. The introduction of IPTV will help fuel subscriber growth, and the migration of subscribers to higher-priced digital services will increase revenues per subscriber; The television networks (broadcast and cable) market will grow 6.6% annually to $227 billion; and Recorded music spending will rise 5.2% annually to $47.9 billion. Spending in the United States will reach $14.7 billion by 2010.

PlayBOX Inc. (PYBX)


Analyst: Victor Sula, Ph.D. Initial Report July 28th, 2008

Music industry
The traditional music industry remains strong. Global revenues were $32 billion in 2007, of which 75% were controlled by four major companies: Universal Music, EMI, SonyBMG and Warner Music. The remaining 25% ($8 billion) is controlled by independent companies. PYBX intends to build on its existing foothold and targets a 3% share of the independent market within two years. Traditional physical distribution of music still accounts for 85% of global revenues.
Global music industry revenues by segment, $ million
2006 2007 2008 2009 2010

Total Music Revenues Total Digital Music Revenues Mobile Music Revenues

31,416 2,832 1,274

31,937 4,152 2,076
Source: eMarketer

32,576 6,515 3,909

33,227 9,968 6,479

34,058 11,920 7,748

While overall music sales were flat in 2007, digital music download sales soared. According to eMarketer, global digital music sales grew 46% in 2007 to approximately $4.2 billion and single track downloads (the most popular digital music format) grew 53%. Digital sales now account for an estimated 13% of the global music market, up from 9% in 2006 and zero in 2003. In the United States, online and mobile sales now account for 30% of all music revenues 1. Analysts project that digital music will account for 35% of total music sales and sales will exceed $12 billion by 2010. Revenues from mobile music are forecast to exceed $7 billion. Nielsen SoundScan reported more than 840 million digital tracks were purchased during 2007. Digital album sales rose to 50 million in 2007, up 53% from the previous year, accounting for 10% of total album sales compared to 5.5% in 2006. Last year, nine digital song tracks were downloaded more than 2 million times. More than 390,000 different recording albums sold at least one copy over the Internet during 2007 and Internet album sales set a new record with sales of 30.1 million units 2. Forrester Research projects that half of all music sold in the United States will be digital by 2011 and sales of digitally downloaded music will surpass physical CD sales by 2012. Digital music sales are forecast to grow 23% annually over the next five years. Drivers of digital music sales growth include: MP3 player adoption. The average MP3 player is only 57% full, suggesting that the devices are underutilized. In addition, most of the devices are being purchased by households that already have more than one MP3 player.
1 2

PlayBOX Inc. (PYBX)


Analyst: Victor Sula, Ph.D. Initial Report July 28th, 2008

DRM-free music. With the four big music labels now committed to eliminating digital rights management (DRM), the distribution of DRM-free music will extend beyond pioneer to Apple iTunes and other major online music sites. Social networking. DRM-free music allows every or profile page to immediately become a music store where friends can distribute their favorite tracks to friends. Up to 70% of young Americans aged 9 - 14 download music in a given month. Almost one-half, or 49%, use iTunes, while another 26% use Limewire. MySpace has a 16% market share and was listed as the third most popular site for sharing music.

Portable MP3 player market
to grow. It is estimated that 18% of Americans have listened to an audio podcast this year, up from 13% in 2007, and 9% of Americans have listened to an audio podcast within the past month (an estimated 23 million listeners).

According to Edison Media research, nearly four in 10 households (37%) own an iPod or portable MP3 player, up from 30% in 2007 and more than twice the number in 2005 (14%). Nearly 73% of American teenagers own a digital audio player. Music lovers who regularly listen to online radio are more likely to have profiles on social networking sites. More than 40% of all weekly online radio listeners have a profile on a social networking site compared to 24% of the general population. More than one-third of American teenagers (37%) visit social networking sites nearly every day.
How digital music gets on users’ phones Source of digital music on the phone Transferred from PC Direct to phone - transferred from friends/family Direct to phone – downloaded from music service Direct to phone – other France 85.8% 12.5% 8.3% 8.8% Germany 88.7% 8.8% 7.6% 2.9% Italy 86.9% 9.8% 4.7% 4.3% Spain 87.3% 7.1% 8.6% 7.0% UK 83.6% 12.5% 10.0% 6.4%

US 75.2% 8.1% 18.3% 3.7%


Transition to Internet
According to Edison Media research, the Internet is gaining share from radio as the chosen medium for learning about new music. In 2002, 63% of consumers identified the radio as the best medium for new music and only 9% of consumers identified the Internet as a superior medium. By 2008, about 49% of consumers were citing radio as the medium they turn to for new music while 25% identified the Internet as the best medium for new music.

PlayBOX Inc. (PYBX)


Analyst: Victor Sula, Ph.D. Initial Report July 28th, 2008

Global Internet penetration rates exceed 18.9% and the global Internet subscriber base is expected to grow 7.8% annually between 2006 and 2011. The number of Internet users already exceeds 1.2 billion worldwide, according to Internet World Stats, and the 2 billion user milestone will likely be reached by 2011. Internet penetration rates in the United States exceed 70.2% and further increases are anticipated due to the large-scale rollout of WiFi, mobile broadband (WiMAX) and broadband services.
Internet usage, 2007 Population, Mn ( 2007 Est. ) Europe North America World’s total 809.9 334.5 6,574.6 % Pop. of World 12.3 % 5.1 % 100.0 % Internet Users, Latest Data, Mn 337.9 232.6 1,244.4 Penetration (% Population) 41.7 % 69.5 % 18.9 % % Usage of World 27.2 % 19.8 % 100.0 % User Growth ( 2000-2007 ) 221.5 % 115.2 % 244.7


Social network advertising
Some 37% of U.S. adult Internet users and 70% of online teens visit social networking sites every month, and the numbers continue to grow. It is estimated that 12 million more U.S. adults will become social-network users in 2008, increasing the total to 69.0 million users. eMarketer projects that, by 2011, one-half of online adults and 84% of online teens in the United States will participate in social networking. That adds up to about 17.7 million teens. According to eMarketer, global online social network ad spending will grow from $1.2 billion in 2007 to $2.2 billion in 2008. Worldwide spending is forecast to reach $4 billion in 20113 . According to the report, Social Network Marketing: Ad Spending and Usage, U.S. advertisers are expected to spend nearly $1.6 billion in 2008, up 69% from the $920 million spent in 2007. Within four years, U.S. ad spending on social networking sites is expected to reach $2.7 billion.


PlayBOX Inc. (PYBX)


Analyst: Victor Sula, Ph.D. Initial Report July 28th, 2008

Valuation and Summary
With the acquisitions of Delta Leisure and NVM, PYBX becomes an important player in the global independent entertainment market. Over the next three months, PYBX plans to: Finalize the acquisition of Delta Leisure Group and New Visions Mobile; Appoint new members to the Company management team, adding additional depth in the areas of corporate financial control and mobile, and appoint an advisor team of independent directors; Sign distribution partnerships for digital media under license in the UK and mainland Europe; Begin identifying and approaching additional potential acquisition targets in the UK, United States and European entertainment markets; Develop strategic partnerships with operators in the digital entertainment world; Identify and negotiate with four target companies in complementary businesses who can help PYBX generate cash flow and profits from social networking and advertising-funded downloads; Expand the Company’s reach in North America and Asia by signing deals with United States, Canadian and Japanese-based digital service providers; and Commence fund raising for future acquisitions.

By year-end 2008, PYBX expects to: Consolidate its acquired businesses and brands; Update and distribute marketing material reflecting its new product offerings; Secure an additional $20 million to $25 million in financing for future mergers and acquisitions; Increase its visibility in the worldwide digital marketing market; Launch a branded multimedia content Web site offering services to third parties; and Identify additional acquisition targets. The Company is already negotiating with three acquisition candidates.

As a result of these developments and the Delta and NVM acquisitions, we expect PYBX to report FY 2008 and FY 2009 revenues and EBITDA as follows:
Revenue and EBITDA forecast, $ Million
FY 2008E FY 2009E FY 2010E

Revenue EBITDA

21.2 1.6
Source: Analyst estimates

49.5 9.7

136.3 33.9

The Company anticipates it will need up to $25 million in additional funding to complete the acquisition of Delta Leisure, New Vision Mobile, Delta Germany and the other three target companies. In addition, PYBX plans to establish operations in Asia and expand its presence in mainland Europe and the United States. We think it likely that the Company will issue equity to raise funds. As a result, we expect the number of shares outstanding to increase from 32.05 million currently to 60 million in FY 2009.

PlayBOX Inc. (PYBX)


Analyst: Victor Sula, Ph.D. Initial Report July 28th, 2008

A strong growth outlook for PYBX is supported by the fact that digital music and mobile music downloads are growing faster than the overall music market. The shift from bricks-and-mortar retailing to online ordering is already a well-established trend in other markets such as DVD rentals and CD sales. PYBX is pursuing new online channels for cost-effectively distributing digital music.

Comparative valuation analysis
PYBX competes with record label, digital music distribution, ecommerce solutions and social networking companies and other Internet entertainment providers.
Peer valuation

Company Name 24-Jul-2008 RealNetworks Inc. The Orchard Enterprises Inc. Navarre Corp. Trans World Entertainment Digital River Inc. Napster Inc. Apple Inc. Yahoo! Inc. Google Inc. Median


Price, $ 7.13 4.84 1.67 2.93 39.44 1.42 161.29 20.56 485.52

Mrkt. Cap. $ Mn 1,014 30 61 91 1,460 68 142,130 27,860 152,270

P/E 2008 n/a n/a 7.95 n/a 20.76 n/m 30.96 43.74 24.63 2009 118.83 n/a 5.57 n/a 17.45 n/m 26.48 34.85 20.07 2008 1.59 n/a 0.09 0.08 3.64 0.52 4.35 4.90 9.40

P/S 2009 1.45 n/a 0.09 0.10 3.24 0.48 3.52 4.36 7.45 2.34

24.63 23.28
Source: Yahoo Finance


The median forward Price/Sales multiple for the peer group is 2.34 times sales. We believe PYBX warrants a similar valuation because of its strong growth prospects and significant acquisition pipeline. We multiply our $49.5 million FY 2009 revenue estimate by a 2.34 times forward Price/Sales multiple to obtain a $115 million market capitalization target and a $1.90 price target. As a result, we are initiating coverage of PlayBOX (U.S.) Inc. with a Speculative Buy rating and a $1.90 price target. However, we strongly advise investors to consider the Company’s early development-stage status, lack of revenues and need for additional financing as significant risk factors.

PlayBOX Inc. (PYBX)


Analyst: Victor Sula, Ph.D. Initial Report July 28th, 2008

Risk Factors
Inherent business risks
PYBX is pursuing an aggressive growth strategy in the Internet entertainment and digital music markets. While the Company has provided estimates for FY 2008-2009 revenues and shared its goals for future growth, there is no guarantee that the Company will achieve these growth targets and/or become profitable. The Company’s expansion opportunities will be limited if PYBX cannot generate positive cash flow and profits.

Intense competition
Competition in the Internet entertainment and digital music markets is intense and PYBX competes with several nationally-known competitors who have much larger marketing budgets and superior access to capital. Competition may result in pricing pressures, reduced profit margins or loss of market share, any of which could adversely affect the Company’s business and financial performance.

Our valuation case is contingent on the acquisitions of Delta and NVM
Historical financial data is not indicative of PYBX’s future performance. As a result, we based our valuation case on the combined results of PYBX, Delta and NVM. Should these acquisitions fail to close, PYBX will not be able to implement its business plan successfully.

Harry Maloney Chairman Harry Maloney has been active in the UK music industry for more than 30 years in executive positions. As chairman of a multi-national music company (Apex Entertainment Group), he closed numerous entertainment industry mergers and acquisitions. Mr. Maloney served as commercial director for BMG Records, where he delivered five new business areas and 40% of company profits, including catalog exploitations of acts such as Annie Lennox, Take That and Elvis Presley. BMG’s Commercial Division grew under Mr. Maloney’s guidance to a $28 million business. More recently, he served as director of BPI (the British Record Industry’s Trade Association). Mr. Maloney has been an advisor to a number of independent UK record companies, developing their businesses and digital strategies. Mr. Maloney is also an architect and holds a diploma in architecture from Oxford. Laurie Adams started Delta Music in 1984 as Target Records. She established a close working relationship with Delta Music GMBH in Germany, which led to its agreement to purchase a 75% interest in Target Records in 1993. In the process, Target Records changed its name to Delta Music. Delta Music has moved from being a distributor to a record company, and Ms. Adams has guided its development into a multi-million dollar company. Ms. Adams organized a management buyout from the German parent company in 2006 and now holds 100% of Delta, which is in the process of changing its name to Delta Leisure plc. Robert Burden was appointed head of PlayBOX in 2004. From November 2002 until he joined PlayBOX UK in May 2004, he served as an account manager for Interactive Prospect Targeting Ltd., a UK-based IT company specialising in data capture and online direct marketing. From 1999 to 2001, Mr. Burden was a sales manager at CHA Media Sales Ltd., a UK-based publisher of B2B technical periodicals. He holds a marketing management diploma from Damelin Business College in Durban, South Africa.

Laurie Adams CEO CFO: Group Managing Director of Delta Music

Robert Burden Director of PlayBOX (U.S.) Inc.

PlayBOX Inc. (PYBX)


Analyst: Victor Sula, Ph.D. Initial Report July 28th, 2008

Beacon Equity Research (otherwise known as BER) is an independent research firm specializing in small and micro capitalization companies. BER has no investment banking or consultation conflicts thereby minimizing the inherent conflicts of interest between the research analysts and the companies they cover. BER is not a registered investment advisor or broker dealer. No information in this report should be construed as an endorsement to either buy or sell any securities mentioned in this report. The analyst(s) who prepared this report rely on publicly avail¬able information which neither the analyst, nor BER, can guarantee to be error-free or factually accurate. All conclusions in this report are deemed reasonable and appropriate by the author. The Private Securities Litigation Reform Act of 1995 provides investors a “safe harbor” in regard to forward-looking statements. To fully comply with the requirements of this law, BER cautions all investors that such forward-looking statements in this report are not guarantees of future performance. Unknown risk, uncertainties, as well as other uncontrollable or unknown factors may cause actual results to materially differ from the results, performance or expectations expressed or implied by such forward-look¬ing statements. Investors should exercise good judgment and perform adequate due-diligence prior to making any investment. BER and its affiliates have been compensated sixty thousand dollars from Pine Mountain Ventures for enrollment of PYBX in its research program and other services. Ratings and price targets in this report should not be construed as recommendations or stock price predictors. Readers of this report are urged to use due-diligence in any purchase of security listed herein. Readers should consult the Company’s SEC filings as well as our initial report on the firm to better understand the inherent risks associated with this security. There may be many uncontrollable or unknown factors which may cause actual results to materially differ from the results, performance or expectations expressed or implied by such forward-looking statements. Investors should exercise good judgment and perform adequate due-diligence prior to making any investment. All decisions are made solely by the analyst and independent of outside parties or influence.

I, Victor Sula, Ph.D, the author of this report, certify that the material and views presented herein represent my personal opinion regarding the content and securities included in this report. In no way has my opinion been influenced by outside parties, nor has my compensation been either directly or indirectly tied to the performance of any security listed. I certify that I do not currently own, nor will own and shares or securities in any of the companies featured in this report.

Victor Sula, Ph.D. - Senior Analyst Victor Sula, Ph.D. has held the position of Senior Analyst with several independent investment research firms since 2004. Prior to 2004, Mr. Sula held Senior Financial Consultant positions within the World Bank sponsored Agency for Restructuring and Enterprise Assistance and TACIS sponsored Center for Productivity and Competitiveness of Moldova, where he was involved in corporate reorganization and liquidation. He is also employed as Associate Professor at the Academy of Economic Studies of Moldova. Mr. Sula earned his Ph.D. degree in 2001 and bachelor’s degree in Finance in 1997 from the Academy of Economic Studies of Moldova. Mr. Sula is currently a level III candidate in the CFA program.

PlayBOX Inc. (PYBX)