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The Guitammer Company, Inc. (GTMM) Executive Provides Comprehensive Overview of the Company and Its Exciting Prospects

Mark Luden, President and CEO of The Guitammer Company, was recently introduced by Singular Research, a trusted supplier of performance-based research on micro-cap companies. Mark Luden had presented at Singular’s 7th Annual “The Best Of The Uncovereds” conference, making a big hit with a product demonstration.

The Guitammer Company, based in Ohio, is a leader in low frequency sound products and technology, with award-winning innovations through their ButtKicker brand, that let users feel low-frequency sound in ways never before possible. The frequencies they work with are below the audible level, so the user doesn’t hear the sound, but actually feels it. As a result, users are immersed in the sound-feeling experience, whether at home or elsewhere, without having to worry about annoying others or damaging their hearing. Their products are now used around the world by such entertainment and theater companies as AMC, IMAX, and Disney, and by world famous musicians, as well as with in-home theaters and advanced car audio systems.

Mr. Luden began his presentation by describing how his company is in the process of changing the way that people watch sports and other broadcast entertainment. The company has the platform and broadcast technology to allow users to actually feel the action, revolutionizing the experience much like Dolby has done with their patents on surround sound or TiVo has done with television viewing.

Mr. Luden went on to describe the company’s key strengths, both internally and in the marketplace.

The Guitammer Company effectively has two growth platforms: their established core business of making and selling their unique low-frequency technology based products, and now their emerging low frequency broadcasting technology called ButtKicker Live! The latter is currently being tested in sports arenas and other settings, and offers the potential of significant recurring revenue.

Revenues from their core business operations for fiscal 2012 already exceed total fiscal 2011 sales of $1.3 million, and are backed up by gross margins of over 40%, well above the industry average. And the company’s new ButtKicker Live! technology offers significant opportunity for high-margin recurring revenue across multiple channels, with initial revenues expected in fiscal 2013. Overall, the company expects to pass the break-even point by the first quarter of fiscal 2013. To fund their growth strategy, the company has completed a private placement raising $2.1 million in growth capital, extinguishing nearly $1.5 million in debt, and demonstrating the confidence the investment community has in Guitammer’s plans and potential.

ButtKicker brand products have definite competitive advantages:

• They provide a similar entertainment experience at a significantly lower cost than motion-based competition
• They include a patented “floating magnetic suspension system”
• They offer greater low frequency range (5-200 Hz) than any competitive device, representing a powerful immersive bass experience for consumers
• They provide smooth and accurate musical response, without resonant frequency peaks or hot spots
• They are virtually indestructible and maintenance-free due to superior design characteristics, as verified by years of real-world use across the globe
• Since the frequencies are not audible, there is no need to have sound levels annoyingly or even dangerously high
• They are the only tactile products designed for mass market consumer electronics distribution, with the appropriate packaging, pricing, and all-in-one kit ease of use

For the home market, the company offers products available for the average consumer to purchase and easily install for their home enjoyment, in addition to providing custom installation if needed. ButtKicker also comes as an option in some home theater seating systems. In addition, their products are used extensively with gaming systems, in movie theaters, and by professional musicians.

The home theater and gaming market is huge, with home theater sales, including theater-in-a-box system sales, exceeding 3 million units annually. HDTV sales alone now average close to 32 million units per year, with 87% of households expected to have at least one HDTV by the end of 2012. Associated “sound bar” sound systems sales have tripled in unit volume over the past 3 years, and are now forecast to top 3 million units per year. And, unlike some systems, ButtKicker products integrate automatically with any movie or video game, regardless of source, and don’t require any special motion codes.

The movie theater market is also huge, with over 69,000 digital screens worldwide, and 36,000 digital 3D screens worldwide. Because of ButtKicker’s cost effectiveness, the system can be affordably installed in an entire auditorium, every seat, versus other systems that may only cover a few rows due to much higher cost. Guitammer now covers over 10,000 seats around the world, and is rapidly growing in viewer popularity, as evidenced by the fact that viewers are willing to spend considerably more to experience ButtKicker.

However, the primary reason Guitammer decided to go out as a fully reporting public OTC company was the critical broadcast patent issued to the company in 2011, which supports its new ButtKicker Live! technology. Current ButtKicker technology is dependent upon the sound output inherent in the movie or game being experienced, output that is typically artificially enhanced by the movie or game’s creators to highlight impacts and other events. Such enhancement is not a part of live broadcasts, like a live football game being watched on television, reducing the full potential of the ButtKicker experience. ButtKicker Live!, developed in conjunction with cable television providers, will overcome this problem by essentially delivering a third channel representing an enhanced low frequency pickup for key events. Moreover, the patent involves the technology used to create the signal, not the end device, which makes it device independent. As a result, any device that chooses to tap into this disruptive technology can be licensed, generating recurring revenue.

Considering that 100 million households get ESPN, the potential for this new technology can be appreciated. It offers major benefits for content providers looking to improve fan experience, networks and broadcasters looking to capture more viewers, and cable or satellite distributors/operators looking for competitive options to offer their subscribers. The company’s current installed base is clear evidence of the system’s popularity. The company expects innovative broadcast technology to be monetized through monthly user fees to the distributor/operator or perhaps broadcaster, based upon a license. And, of course, there will be additional options for the company, such as outfitting luxury boxes at sports events, or even sports bars. All of this will obviously increase the total valuation of Guitammer in the marketplace.

Behind all of this is the Guitammer management team:

President CEO – Mark Luden

Mark Luden held positions of increasing executive responsibilities in sales, marketing, and executive management in the software industry for 13 years prior to joining The Guitammer Company. In addition to leading the strategic and day-to-day operations of Guitammer, he has earned the respect of his peers in the consumer electronics industry, serving as an elected member of the Executive Board of the Consumer Electronics Association, the Board of Industry Leaders, the Chairman of the Division Executive Board, and past Chairman of the Small Business Council.

Sr. VP, ButtKicker Live! – John Ertmann

John founded the Columbus Sports Network in 2005, and served as its President and General Manager. Prior to that, he was Legal Counsel for the New York Yankees, Executive VP for Major League Soccer, and VP of Sports Negotiations for NBC.

Director of Engineering – Marvin Clamme

Marvin is a professional studio engineer and a graduate from Purdue in Electronics Engineering Technology. Marvin has extensive audio engineering experience, including as the recording engineer at Britannia Studios in Los Angeles. He has worked for and traveled with such well-known artists as Merle Haggard and Tom Jones.

Founder and Board Member – Ken McCaw

Ken is an accomplished musician, producer, writer, and inventor. A graduate of the UCLA Film Scoring program, he has worked as a producer for Walt Disney Productions. Additionally, he has written and produced music for the U.S. Olympic Committee, The White House, and Opryland Productions theaters.

The company is also bringing in a technical advisory group to further support ButtKicker Live!, consisting of the following:

• John Ertmann – Sr. VP for ButtKicker Live!
• Mark Bell – Sr. Director for Industry Affairs & Administration, Nat’l Cable & Telecommunications Assoc.
• Dr. Rich Prodan – VP and Chief Technology Officer for Broadband Communications, Broadcom Corp.
• Bill Warga – VP of Technology, Liberty Cable

Following the formal presentation, there were a number of callers with questions seeking additional information, including:

Q: How does the company plan to fund and handle the manufacturing of all the equipment that would be required for the ButtKicker Live! rollout?

A: Guitammer equipment is produced largely in China, through well-established connections the company has there, and the expectation is that equipment costs will go even lower than they are now, so the company expects to be able to work out whatever arrangements will be needed to get that initial equipment in the homes.

Q: Is there anticipation of some sort of revenue sharing arrangements with theaters?

A: There are various ways this can be approached which are under consideration. For example, the company might place ads before the movie presentation, perhaps offering an online coupon, showing people how they can have the ButtKicker experience in their homes, with any resulting sales being shared with the theater. In this way not only does ButtKicker draw more people to their theater, but it also offers the theater a cut of the sales they generate.

Q: Given the potential of ButtKicker Live! for recurring fees and other revenue, where is the company’s core business expected to go?

A: The company still sees the core business side as easily generating a $15 – $20 million per year if properly funded. Remember that the tight economy encourages people to seek richer at-home experiences, and the ButtKicker core product is extremely affordable with a great customer satisfaction standing around the world. The fact that theater sales have been based largely on word-of-mouth, with people requesting the product, indicates the power of the product in the marketplace.

Q: At what level does the company’s insider ownership currently stand?

A: Management is very invested, with insider ownership currently standing at about 54 percent, and the float is fairly tight. And there is only one type of stock, common shares, so management is invested the same way as everyone else. It’s important to note that, as execution of ButtKicker Live! goes forward, the company is expected to become a very attractive acquisition.

Q: What are the key differences between Guitammer and other micro-caps?

A: Unlike many micro-caps, Guitammer already has a real physical product that works and is selling well in the marketplace, generating good gross margins. From a fiscal standpoint the company is executing successfully, unlike many micro-caps. The Guitammer Company is an execution company, not just a story company. The core business is expected to go cash-flow positive next year, providing a very real money generating engine to fund the growth of ButtKicker Live! and future developments.

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