AVT, Inc. (AVTC)Analyst Report
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SUMMARY

Research, Report & Profiling Services
by IPOdesktop.com
AVT, Inc. (AVTC)
Stock symbol: AVTCD.PK…………….....…..………………Common shares: 8/23/11: 8.6mm

Stock price 9/22/11: $2.01….….…..………….....…..…………….…………..Float 2.4mm(est)

52-week price range: $ 1.75 – 5.30….………………….Equity market capitalization: $17.3m

Recent News….. Stock Price & Chart …..SEC Filings

VALUATION SUMMARY

Valuation drivers
. AVTC recently added a very well known industry leader and veteran to its management team, Mike Kiser. We believe that Mike Kiser, by working with AVTC’s management team, can help double and triple AVTC sales, by leveraging AVTC’s backlog of 20 or more successfully completed pilot programs into long term, significant production contracts.

Listen now to Francis Gaskins’ interview with Mike Kiser and Shannon Illingworth, AVTC founder.

Potential market capitalization

AVTC generated over $4 million in revenue for the six months ended June 23, 2011, with $2.67 million in sales for the June 2011 quarter. We believe AVTC’s September quarter will equal or exceed the June quarter, and we expect the December quarter to be higher.

Our AVTC revenue estimate for the calendar year of 2011 is $10 million in profitable revenue.

AVTC then should be qualified for a listing upgrade, and is expected to leave the pink sheets and the OTCQB.

Based on valuation drivers and financials, it seems probable that AVTC can generate a profitable revenue run rate in the neighborhood of $18 million per year during 2012. As AVTC’s growth becomes more visible, then the market capitalization could exceed $40 million or around $5 per share.

AVTC’s stock has been very stable during the recent stock market downdraft, which must be a source of comfort to shareholders.

AVT’s FINANCIAL METRICS SHOW MAJOR IMPROVEMENT

During a difficult economic cycle, AVTC’s financials showed major improvements, validating AVTC’s ‘value add’, core competency and leadership in the business of self-service solutions.

Income statement

Comparing the June 2011 quarter with the June 2010 quarter
(1) Revenue skyrocketed 170% to $2.67 million from $1 million
(2) Gross profit leaped 96% to $1.26 million from $645,333.
(3) Net income increased to a $35 thousand profit from a loss of $375 thousand.

Balance sheet

(1) AVTC has a very high current ratio: current assets / current liabilities = 5.55.
5.55 is very high, higher is better.
(2) AVTC has a low long term debt to equity ratio = 1 / 25.
1 / 25 is very low, lower is better.
(3) AVTC’s net worth to $18 million
AVT is well capitalized.

Summary 2011 Quarterly Progression

2011

March

June

Sept

Dec

Year-to-Date

Revenue

$1,404,198

$2,667,926

$4,072,124

Gross Profit %

77%

47%

58%

Operating income %

3.4%

3.1%

3.2%

Operating income

$48,077

$82,058

$130,135

Interest expense

$38,161

$47,258

$85,419

Income taxes

0.0%

$0

$0

Net after-tax income

$9,916

$34,800

$44,716

Net income % of rev

0.7%

1.3%

1.1%

EBITDA

$276,356

$257,537

$533,893

EBITDA % of revenue

20%

10%

13%

Stockholders equity

$16,665,326

$17,868,187

$17,868,187

RECENT DEVELOPMENTS

Sheets Energy Strips Invades Malls with Launch of State-of-the-Art Vending Machines. Aug 9…read more

New ExpressPay System Outperforms. July 13…read more

NOTE: (1) & (2) below confirm that AVTC is converting pilot programs to production contracts

(1) Rug Doctor® Partners With AVT for Self Service Kiosk System. With over 35,000 rental locations worldwide, Rug Doctor is the market leader in home carpet cleaning rentals, and can be found in grocery, drug, hardware, and home center stores across the United States. June 28…read more

(2) From April 6, 2011 through June 15, 2011, AVTC received $1. 5 million in purchase orders from H.U.M.A.N. (Helping Unite Man and Nutrition) of Santa Monica, California
. For the manufacture and delivery of 260 custom product dispensing, averaging almost $6,000 per unit. This order also confirms that AVT is converting smaller pilot programs into full production contracts.
8k filed June 20

Mike Kiser joins AVTC as Chief Marketing Officer
Listen now to Francis Gaskins interview Mike Kiser and Shannon Illingworth, AVTC founder.
. In his most recent position, Mr. Kiser served as Chief Executive Officer for the largest vending, dining and office coffee company in the world. His strategy and follow-through implementation helped develope and execute brand deployments internationally.

Mr. Kiser now utilizes his vast experience to help AVTC expand market reach inside and outside the United States. He is an industry veteran with major league national and international experience in brand development, product development, sales, marketing, innovation, logistics and operations management.

Mr. Kiser is from the industry, knows the industry and has helped shape the industry. His commitment to AVTC is a shining endorsement of AVTC’s success to date and to its future.

IPOdesktop believes that by working together, Mr. Kiser and AVTC will set new industry standards. Together it appears they will help very large and small retailers implement AVTC’s unique, innovative and cost-effective approach, in both the U.S. and international markets.

CONVERTING TO FULL PRODUCTION ORDERS
three examples

(1) Rug Doctor® Partners With AVT for Self Service Kiosk System. With over 35,000 rental locations worldwide, Rug Doctor is the market leader in home carpet cleaning rentals, and can be found in grocery, drug, hardware, and home center stores across the United States. June 28…read more

(2) AVTC strategic partner/customer H.U.M.A.N. has sold over 600 of AVTC’s hi-tech healthy automated retail systems to-date. Projections are to at least double that number over the next 12-months. These state-of-the-art units feature touch screen LCDs, streaming video content, cashless payment systems, eco-friendly power devices, and attractive graphics. May 25, 2011…read more

(3) AVTC strategic partner/customers Pop N Go in April shipped an AVTC manufactured N9000 popcorn vending machine to its Bentonville, Arkansas showroom.
. Bentonville is, coincidentally, the world headquarters for Walmart.
Walmart is the world’s largest retailer, with a market capitalization of $187 billion.
. "We are excited that the N9000 has been shipped and will be exposed to chains with thousands of stores. Pop N Go's popping technology has always been robust and with the N9000 we have added and integrated patented vending and wireless video systems to make the N9000 an outstanding vending delivery system that delivers a healthy product at a value price point, said James Winsor, AVT CEO. April 25, 2011…
read more

BUSINESS

AVTC manufactures technology-driven, integrated automated retail stores, easily customized using patent-pending software and hardware. AVTC is the emerging market leader in the dynamically growing, hot self service retail space.
. We believe AVTC is the low cost, high tech leader in the industry, and has created very high barriers to entry for its competition.
AVTC is the only pure play public stock in the industry.

AUTOMATED, SELF SERVICE MARKET EXPLODING

According to NCR’s CEO, Bill Luria…
. About 20 percent of the check-out lanes at grocery and general merchandise stores are self-service now, up from almost zero a decade ago
. Self service tends to be much more software intensive
. Retailers are looking at their capital budgets again and they see self-service as a way to increase efficiency and improve service

INTERNATIONAL MARKETS

"We are excited that international demand for the N9000 has been picking up steam. In addition to India, we are in active discussions with distributors and operators in Cypress, Qatar, Ireland and other markets worldwide," said Bryan Ross, AVT's Sales Director for Pop N Go product

"We are very pleased to have the opportunity to introduce the N9000 to the large Indian market. Our experience selling snack foods in India tells us that this innovative popcorn delivery system will be very popular in many locations. We anticipate that, after the initial trial program, we will be ordering large quantities to fill the anticipated demand," said Shobha Agarwal, Director, Fun Diets. May 18, 2011…read more

MORE PILOT CONVERSIONS IN PROGRESS

IPOdesktop estimates that AVTC has another 20 or so strategic partners/customers who have either completed or almost competed their pilot projects with AVTC. IPOdesktop believes most of those pilot projects will result in significant on-going production over the next 18 months.

AVTC’S BLUE CHIP ACCOUNTS

AVTC’s impressive sales growth is fueled by 20-30 successful pilot and production programs with blue ship retailers including Costco, Walmart, Sam’s Club, Blue Rhino, Rug Doctor, Quiksilver, Ed Hardy plus Prescription Vending Machines, Pop & Go, H.U.M.A.N., Flix on Stix and many others.

AVTC’S HISTORICAL GROWTH

. AVTC generate internal, organic growth of 154% from 2007 to 2010, during times of severe economic stress and uncertainty

. Top line revenue grew from $2.2 million in 2007 to $5.6 million in 2010. Gross profit percent increased to 77% for the three months ended March 31, 2011. For the three months ended March 31, 2011 AVTC continued to invest in developing successful pilot programs which are expected to transition very soon into full fledged ongoing production programs. During this major R&D, pilot program development AVTC has managed to remain profitable.

Summary 2009 Quarterly Progression

March

June

Sept

Dec

2009 Year

Revenue

$677,460

$869,448

$896,561

$1,987,685

$4,431,154

Gross Profit %

69%

60%

67%

58%

62%

Operating income %

-53%

6%

7%

19%

3%

Operating income

-$361,574

$55,488

$60,911

$379,251

$134,076

Interest expense

$0

$1,635

$894

$14,479

$17,008

Income taxes

$0

$0

$0

$0

$0

Net after-tax income

-$361,574

$53,853

$60,017

$364,772

$117,068

Net income % of rev

-53.4%

6.2%

6.7%

18.4%

2.6%

Summary 2010 Quarterly Progression

March

June

Sept

Dec

2010 Year

Revenue

$976,818

$996,647

$1,798,252

$1,886,425

$5,658,142

Gross Profit %

58%

65%

62%

82%

69%

Operating income %

-27.3%

-28.5%

13.9%

32.7%

5.6%

Operating income

-$266,652

-$283,682

$250,249

$616,523

$316,438

Interest expense

$66,320

$90,570

$60,455

$76,902

$294,247

Income taxes

8.4%

$0

$0

$0

$0

Net after-tax income

-$332,972

-$374,252

$189,794

$539,621

$22,191

Net income % of rev

-34.1%

-37.6%

10.6%

28.6%

0.4%

Summary 2011 Quarterly Progression

2011

March

June

Sept

Dec

Year-to-Date

Revenue

$1,404,198

$2,667,926

$4,072,124

Gross Profit %

77%

47%

58%

Operating income %

3.4%

3.1%

3.2%

Operating income

$48,077

$82,058

$130,135

Interest expense

$38,161

$47,258

$85,419

Income taxes

0.0%

$0

$0

Net after-tax income

$9,916

$34,800

$44,716

Net income % of rev

0.7%

1.3%

1.1%

EBITDA

$276,356

$257,537

$533,893

EBITDA % of revenue

20%

10%

13%

Stockholders equity

$16,665,326

$17,868,187

$17,868,187

INTELLECTUAL PROPERTY

. Powered by intellectual property based on five pending patents
. Enhances AVTC’s ability to deliver high tech services, such as acceptance of credit and debit cards for cashless payment, dynamic advertising, remote tracking, and inventory management.

COMPETITIVE ADVANTAGES

AVTC is a low price, high quality leader offering technology solutions at 50% less than the best known competitor

. For example employs a a unique robotic arm that dispenses up to 150 items of all types, from cell phone to swimsuits, cameras to cologne.
. AVTC employs patent pending state-of-the-art computer technology running new, highly advanced software programs and patent pending technologies that process a customer's credit card in a matter of seconds, while also sending alerts to the machine's owner -- providing instantaneous real-time sales reports and inventory notifications.
. Units can be configured to feature cash and/or cashless payment systems, enhanced security, on-board refrigeration and heating, custom graphics, instant online inventory status, and system health reports."

COMPETITION

AVTC is the only publicly traded pure play we can find to participate in the growth of the high technology self service retail space. Major competitors include

• Crane: Owns Dixie Narco, AP (Auto Products) and National Vendors & is the largest manufacture of traditional baseline vending systems.

• USI: Seasoned vending manufacture having many years in the manufacturing of traditional baseline vending systems.

• AMS: Designs its own traditional baseline systems and has been in the vending business for many years.

• Zoom Systems: Designs vending systems which integrate high levels of technology. Because Zoom Systems integrates high levels of technology into its systems, it would be considered one of AVT’s primary competitors.

 

Twitter -- http://twitter.com/AutomatedStores
Blog -- http://automatedstores.blogspot.com/

AVTC on NBC 4, Los Angeles, March 29, 2011

Video, audio, article in "The Press-Enterprise"

AVTC Featured on Fox Business News, November 9

 

Address: 341 Bonnie Circle, Suite 102, Corona, CA 92880
Telephone: (951) 737-1057
CEO: James Windsor
Web Site:
http://www.avtinconline.com/
State or other jurisdiction of incorporation or organization: Nevada
Transfer Agent: Action Stock Transfer, Salt Lake City, Utah
Investor contact:: James Winsor, 951-737-1057

 

IPOdesktop (ID) SAFE HARBOR STATEMENT: Statements contained in this document, including those pertaining to estimates and related plans, potential mergers and acquisitions, estimates, growth, establishing new markets, expansion into new markets and related plans other than statements of historical fact, are forward-looking statements subject to a number of uncertainties that could cause actual results to differ materially from statements made. ID provides no assurance as to the subject company's plans or ability to effect any planned and/or proposed actions. ID has no first-hand knowledge of management and therefore cannot comment on its capabilities, intent, resources, nor experience and makes no attempt to do so. Statistical information, dollar amounts, and market size data was provided by the subject company or its agent and related sources believed by ID to be reliable, but ID provides no assurance, and none is given, as to the accuracy and completeness of this information.

DISCLAIMER: The information, opinions and analysis contained herein are based on sources believed to be reliable but no representation, expressed or implied, is made as to its accuracy, completeness or correctness. Past performance is no guarantee of future results. This report is a paid advertisement and is for information purposes only and should not be used as the basis for any investment decision. ID has been compensated up to eight thousand five hundred dollars from a third party or the company for preparation and posting of this report, audio interview, virtual road show and other advertising services. This constitutes a conflict of interest as to ID’s ability to remain objective in its communication regarding the subject company. Analysts, principals, associates and employees of ID do not own or trade equities under coverage. For detailed disclosure as required by Rule 17b of the Securities Act of 1933/1934 contact IPOdesktop, 11693 San Vicente Blvd., #350, Los Angeles, CA 90049. ID is not an investment advisor and this report is not investment advice. This information is neither a solicitation to buy nor an offer to sell securities but is a paid advertisement. Information contained herein contains forward-looking statements and is subject to significant risks and uncertainties, which will affect the results. The opinions contained herein reflect our current judgment and are subject to change without notice. We encourage our readers to invest carefully and read the investor information available at the web sites of the U.S. Securities and Exchange Commission (SEC) at http://www.sec.gov and the National Association of Securities Dealers (NASD) at http://www.nasd.com. The NASD has published information on how to invest carefully at its web site. Readers can review all public filings by companies at the SEC's EDGAR page.