It's a good start. The game balance is a bit off - there are way too many items, and not enough money to get them, for how short this episode is. Or perhaps you intended it that way - farm Muggers for hours to afford new spells, and enter the boss fight too powerful to be hurt?
A neat concept, decent physics and gameplay. Now upgrade the graphics with snazzy asteroids, and gameplay with more than 4 directions the asteroids can travel, and perhaps update the sound effects and you've got yourself a game!
Throw in some powerups and you've got a good game!
If you level up as The Beard does his horizontal laser, you can't move or jump out of the way in time when exiting the level up animation, and lose a life. So, wait until AFTER he does the laser to get your level!