TSXV TRADING SYMBOL: XX
TORONTO, Sept. 8, 2011 /CNW/ - Avante Logixx Inc. (TSXV: XX), an
innovative security and technology company, today issued the following
open letter to stakeholders.
Dear Avante Stakeholders,
Much has transpired since I joined Avante Logixx Inc. ("Avante") just
over a year ago. I would like to take this opportunity to update you on
the progress we have made as well as comment on our future direction.
As many of you know, Avante has had two distinct business focuses over
the past several years. One is our core executive residential and
commercial security offering ("Avante Security" or "Security") in which
we offer industry leading response times, high touch personalized
service, cutting edge security and protection products, secured
transport as well as intelligent video monitoring, spanning both
residential and commercial accounts. The second business is one of
technology development and innovation "Technology" in which Avante has
developed unique technology such as the SmartBoxx for use in security,
automation and energy management applications.
For the past several years, Avante has been consuming significant cash
on a net basis as investment in Technology has exceeded cash flow
generated by Security which has resulted in regular capital raises to
fund this shortfall along with the assumption of debt. This pattern
was exacerbated in fiscal 2011 as trials of SmartBoxx for the purposes
of energy management with several utilities were executed which
resulted in further cash consumption despite generating revenue of $0.3
million. While the trials progressed positively, the long
sales/decision cycle was proving to be very challenging given the
amount of financial and human resources Avante was dedicating. Despite
positive feedback, no firm order commitments arose from these trials.
Avante's burn rate (which reflects net cash used) peaked at over $1.8
million annualized early in calendar 2011. Further, our Security
division, while stable from a revenue perspective, was not receiving
the appropriate corporate resources to pursue growth.
We needed to make some challenging decisions as a result. In the past
eight months, Avante has decided to focus on achieving a cash flow
positive run-rate while continuing to pursue opportunities in the
Technology business on a more measured basis. The premise was that by
becoming cash flow positive and renewing focus on growth in Security,
it would provide us a more sustainable capability to explore growth
opportunities in the Technology realm (which will continue to include
Energy Management but will also include shorter sales cycle and lower
financial risk endeavors) without the need to constantly raise new
capital. Further we ensure the value of the core Security business is
protected and enhanced.
We believe these initiatives assist investors to better understand
Avante's composition and value. The core Avante Security business
being a growing, primarily recurring revenue, profitable and unique
operation. The Technology business being a 'venture like' technology
development operation pursuing scalable growth opportunities related to
Avante's core competencies. The goal is for the latter to be
'self-funded' by the former which has not been the case to date.
Further our intent is to ensure Avante generates positive cash on a net
basis and that this grows over time.
Lastly, by taking steps to simplify our balance sheet (including the non
cash write-down of $2.6 million of capitalized costs among other recent
announcements), Avante's financial position becomes clearer to current
and potential investors for the purposes of valuing the company.
Through measured human resource decisions, expense containment, a focus
on efficiencies, process improvements, better resource management,
combined with a growth focus in Security we are close to achieving our
goal of eliminating the $1.8 million annualized cash consumption. The
burn rate has steadily declined since early calendar 2011 as Avante's
annualized payroll has decreased by over $1 million from its peak level
with the other aforementioned factors bridging the remaining gap.
We are optimistic that we are turning the corner. Today Avante is debt
free and for the sixteen weeks (approximation for one quarter) ending
September 1, 2011 Avante has been modestly cash flow positive - the
first such period since the company went public in 2008. While this is
only one quarter of data, we are on the right track. Further our
rededication to Security division growth has resulted in an executive
response client count growth of over 10% since January and we are
working to continue this trend.
In the coming quarters, Avante will drive recurring response and
monitoring revenue growth and target a positive quarterly EBITDA. Note
that while net income is still reflecting certain costs of executing
the changes mentioned above, most of these costs will roll off by the
end of the third quarter of fiscal 2012.
System Integration and Installation continues to be a priority for the
company but our effort therein will be targeted towards higher value
added residential and commercial sales that can generate recurring
response revenue. We have also adopted a system neutral philosophy by
which we can and will provide our industry leading alarm response
service to clients regardless of whom their current alarm provider is,
providing the installed system can provide Avante real time and
reliable alarm reporting
While the past eight months have resulted in many changes at Avante, we
continue to maintain our development capability in the SmartBoxx realm
and our engineering abilities remain intact. Some interesting new
growth opportunities are shaping up in Technology including the
PestBoxx product offering that was recently announced.
Further, we are open to and are currently pursuing certain acquisition
opportunities for Security as well as additional revenue streams that
build on our culture of 24/7 reliable mission critical response and
which can benefit from our Avante Control Centre.
We are confident we are moving in the right direction and we will
continue to push towards our ultimate goal of materially growing our
revenue base, cash flow and ultimately, our valuation.
Above all our most valuable asset, which is not reflected on our balance
sheet, is our loyal client base, established over fifteen years that is
unmatched in our market place. Our clients demand the best protection
service possible for their families and their businesses and we strive
to deliver just that in our target area.
What makes Avante Security different? The short answer is that we do
whatever it takes to secure our clients' families, properties and
Our operatives conduct patrols (three to six times a day) of our
clients' homes or businesses looking for unusual activity, unlocked
doors or windows or other indications of trouble. We provide extra
patrols and other enhanced for families when a spouse is traveling. We
provide vacation service where we ensure the home is secure with
appropriate security protocols adhered to including lighting and
vehicle rotation and mail pickup. We drive their children to school
with our secured transport offering and/or discretely pick up/drop off
our clients as needed 24/7 for business or personal functions. We
provide a real-time flood alert system for their home or cottage which
automatically shuts off the water supply if a flood is detected
preserving valuable assets. We provide a real-time camera feed to our
clients' iPad or Smartphone so they can watch their young children at
home in real time. We send instant messages informing who has armed
and disarmed the alarm system so our clients can know who is in their
home at all times. We protect valuable art work with state of the art
motion sensors and analytic cameras. We conduct intelligent video
monitoring of homes, businesses and construction sites with real time
response. We enable our clients to open the garage or unlock the door
remotely via a smartphone as needed. These are a few examples but we do
Our most important offering, however, is getting there first when our
clients need us the most. Arriving at their homes or businesses in
just minutes to respond to security conditions, often foiling break-in
attempts or other threats in real time is our key offering. Discount
alarm solutions use monitoring station call centres and dispatch police
or guards which cannot effectively compete with our response time and
can result in expensive fines for false alarms. Our clients realize
that this response time differential could make the ultimate difference
for their family's safety and for this reason they choose Avante. In
summary, we offer the pre-eminent security solution providing a
superior service level and response time and we continue to build this
business through word of mouth and client referrals.
We would like to thank our loyal clients, employees, shareholders and
other stakeholders for their continued support and dedication to
Co-Chief Executive Officer
Avante Logixx Inc.
Please join our email list for company news at www.avantelogixx.com
About Avante Logixx Inc.
Avante Logixx Inc. (TSXV: XX) is a Toronto based security and technology
company. Its primary operating subsidiary, Avante Security Inc. (www.avantesecurity.com), provides best in class security response and other executive security
services for residential and commercial applications as well as being
an industry leader in designing and installing complex security
systems, access control, and video analytics. The company continuously
develops innovative products and applications within its core
competencies. Please visit www.avantelogixx.com .
Forward Looking Statements
Certain statements in this letter may constitute forward-looking
statements. Such forward-looking statements involve risks,
uncertainties and other factors, which may cause actual results,
performance or achievements of Avante Logixx Inc. to be materially
different from future results, performance or achievements expressed or
implied by such forward-looking statements. This letter does not
constitute an offer to sell or solicitation of securities.
The TSX Venture Exchange Inc. has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release. The TSX
Venture Exchange Inc. has in no way passed upon the merits of the
proposed transaction and has neither approved nor disapproved of the
contents of this release.
SOURCE Avante Logixx Inc.