Adaptive Ad Systems Operating Update
Adaptive Ad Systems Operating Update
First Quarter 2020 profitable for the 22nd Time in a Row.
Vancouver, Wash. June 2, 2020. Adaptive Ad Systems, Inc. (OTC:AATV), today provides an update on the company’s ongoing business development and the impact by COVID 19 on its operations. The Company provides Dynamic Digital Ad Insertion (DDAI) via its streaming media hardware and proprietary processing software for the U.S. cable TV and satellite markets.
Soon after 2020 started a new decade, the world, and the United States, experienced an unprecedented upheaval and disruption in the operations and performance of almost all businesses. Now that the first five months of 2020 have passed, the Company is providing this update regarding the Company’s developments during the last twelve months, the impact of the current pandemic on our business and the outlook for the year ahead.
In addition to what has previously been reported in press releases and filings on the OTC Markets platform, this letter provides information about our persistence in product/technology development, our improving financial performance and the expected impact of the current market turbulence on our performance.
Over the past five years, we have consistently improved the development of our technology and installed a significant number of new “head-end” systems equipped with our proprietary hardware and software for the operation of our network throughout the US. Our management team is focused on diligently implementing our business plan, which allows us to consistently increase our subscriber base.
Moving forward, we plan to further improve market awareness by increasing information flow to our shareholders and the public regarding important developments within our company and our market niche. We hope that in doing so, the market price of our stock will adequately reflect the value of the Company’s operations and its solid financial performance.
ADAPTIVE TECHNOLOGY – A DISRUPTIVE APPROACH
Our goal has always been to accelerate growth by developing proprietary hardware and software technology, continue expanding our existing network installations and acquire new subscribers as economically as possible. We provide content from major advertisers and distribute it over our own software-driven network, while providing complete turnkey administration for our clients. This model has proven to be more competitive in servicing the underserved, but valuable, Tier 2 and Tier 3 cable-TV markets. We generate higher output with less personnel and lower overhead than other companies because our operation is centrally managed through a cloud-based hub with a high level of automation for our digital ad insertion process.
ADAPTIVE PROFIT-SHARING MODEL – ONE STOP SOLUTION
We have achieved considerable advances in the development and deployment of our proprietary technology and constantly continue to refine our unique revenue-sharing business model, the combination of which sets us apart from our competition. We continue advancing our market position by deploying our proprietary ad insertion technology to clients in the underserved Tier 2 and Tier 3 US cable TV markets at no up-front cost. Client contracts initially run between three and five years, with options for renewal. Our model overcomes barriers that typically prevent the insertion of national and local cable TV advertising on major cable TV networks in these underserved markets. We provide our clients with a complete one-stop solution by exclusively selling all available advertising space in each market we have contracted, controlling, and managing the entire process. At all times we maintain complete proprietary technology ownership.
ADAPTIVE STATE-OF-THE-ART “CUE-TONE” FACILITY PROVIDES 99% EFFICIENCY
We began operation of our technologically advanced “Cue-Tone” facility in Arizona that provides all our systems with reliable ad insertion “Digital Cues.” Cue Tones are electronic signals sent to Cable TV System operators, “cuing” them to insert selected video advertisements from our ad network. By combining our proprietary software with our remote Cue Tone signals delivered from our state-of-the-art facility, we exceed 98% efficiency in inserting video advertising content into cable TV networks in a very economical way. The foregoing can allow the Company to grow at an even faster pace than in prior years.
NEW INSTALLATIONS OF DIGITAL AD INSERTION SYSTEMS INCREASE SUBSCRIBER BASE
During 2019, we installed over 25 new Digital Ad Insertion Systems throughout the country. Each Adaptive Ad Insertion served delivers local, regional, and national advertising to subscribers living in the Adaptive network area via cable, fiber, and IP systems. System size can range from 100 to 25,000 subscribers.
New installations of our proprietary equipment have added over 70,000 subscribers to our network in the past year. We continue to improve our digital technology for the national cable TV markets and continue accelerating installation of our hardware and software systems for new cable television head-ends. We believe these new installations and our consistently increasing subscriber base will continue to improve our financial performance for years to come. This growth also further strengthens our position to negotiate and obtain more favorable advertising rates with our advertisers.
ADDAPTIVE CENTRAL SOFTWARE HUB – HIGHER EFFICIENCY
Some of our competitors struggle to operate profitably because their operations are very labor intensive. We strategically plan, develop, and implement ever increasing automation through our central software hub, which requires fewer employees and results in reduced overhead and improved profits. While we service three times as many cable systems as some of our competitors, we operate with 90% fewer employees. Our technology has been built by us for our specific business strategy, allowing a small team of experts to manage our expansive system from a central software hub. This process is far superior to managing many inefficient individual systems that require intensive manual engagement and demands significantly higher overhead.
ADAPTIVE “ONE-STOP” SYSTEM FOR ADVERTISERS
We are one of the few companies that allows advertisers across the country to purchase ads in markets they typically would not have access to and insert them into a linked group of our digital TV advertising systems.
TECHNOLOGY DRIVEN BUSINESS MODEL FOR UNDERSERVED AD MARKETS
We have developed, installed, and operated our leading-edge technology for many years, and during that time have identified a substantial number of underserved markets that have been overlooked by larger competitors. These markets can benefit substantially from our software-driven advanced digital ad insertion technology. Our continued commitment to advancing technological development and establishing new and innovative business models allows us to deliver services more effectively and more economically than other companies. The proprietary technology we develop and deploy continues to drive our market expansion, revenue growth, and profitability.
PROFITS FOR 22 QUARTERS IN A ROW
Our business model is focused on the utilization of our advanced technology, ease of use for clients and maximum profit generation for us and our clients alike. Our model enables advertisers across the US to purchase ad time to be inserted into a large group of cable systems they typically would not be able to reach. Sharing revenue with our clients, while at the same time aggressively expanding our system installations, resulted again in the generation of a net profit for the fiscal year 2019 and again the first quarter 2020 for the 22nd time in a row.
FINANCIAL DISCIPLINE – CONTROLLED ORGANIC GROWTH
Based on our increasing revenue and tightly controlled overhead, we have been able to create solid cash reserves with total assets over $8.8 million on March 31, 2020. We have been able to grow our revenue organically without external funding and have kept our outstanding common stock to a very low 48.6 million shares. We currently expect our financial discipline and unique business model to have a continuing positive impact on revenue and profit development for 2020.
MARKET OUTLOOK IS STRONG
We believe that the outlook for the Cable TV advertising market remains strong, especially the Tier 2 and Tier 3 markets served by our proprietary DDIA technology. Adaptive is one of the few digital ad insertion providers for major advertisers in these underserved markets. Our technology allows us to serve these markets dynamically and on an economical basis, accelerating our efforts to establish Adaptive Ad Systems as a market leader for this sector of the industry. Considering our financial performance in 2019 and our expectations for 2020, we believe our business model remains strong.
SUMMARY OF CRUCIAL ACHIEVEMENTS
- Accelerated our disruptive approach with our proprietary Adaptive technology.
- Established and maintained a unique revenue-sharing model with our clients.
- Began operation of our advanced “Cue-Tone” technology facility in Arizona.
- Added over 70,000 additional subscribers to our network in the National TV cable market.
- Serving over 75 designated marketing areas in 34 states.
- Provide more major ad inventory than most of our competitors.
- Nation-wide system virtually managed from our central software hub through software-driven operations.
- Automation of operation with 90% fewer employees than other companies of similar size.
- One stop shopping for clients.
- Manage all ad-related activities, provide all technical support, sales, scheduling, and billing.
- Maintain complete technology ownership.
- Utilize underserved markets to drive revenue growth, profitability, and expanded market position.
- Maintained low overhead and continued profits for the 20th quarter in a row ending September 30, 2019 and a profitable year 2019.
- Substantially increased assets and cash reserves without external funding
- Strict control of outstanding common stock at a low 48.6 million shares.
PERFORMANCE GUIDANCE IN THE WORLD OF COVID 19
Due to the unprecedented negative economic and financial impact caused COVID 19, many public companies have pulled guidance regarding prospective operations. While we are similarly situated in not having a clear view at this point as to the total impact the pandemic will have on operations, we nonetheless remain bullish on our industry and especially our niche. This year 2020 being a presidential election year, we previously expected to reach new revenue highs in 2020. To date, however, major spending on political ads for the 2020 elections have not fully commenced. Even so, we currently anticipate that those ad-buys will commence in the third quarter and continue into the fourth quarter of 2020. Consequently, we currently expect Adaptive 2020 revenue to exceed that of 2019 and, possibly, the election year 2018.
Our focus for 2020 is to continue expansion of our business through increased installations of our proprietary hardware at cable head-end facilities. Despite the social and economic impact of the pandemic, we remain optimistic about our business plans for the foreseeable future. Further reports to follow. We appreciate your loyalty and support.
Michael J Heil
Chief Executive Officer
Adaptive Ad Systems Inc. is a digital media and video communications company that, together with its subsidiaries, manufactures, develops and deploys Dynamic Digital Ad Insertion (DDAI) and video streaming media hardware and proprietary processing software for the Cable TV, Satellite and IPTV markets. The Company targets and serves the often-over-looked 2nd and 3rd tier US markets. Its digital ad insertion technology and unique profit-sharing model with its system customers overcomes barriers that typically prevent the insertion of national and local cable TV advertising on major cable TV networks. Adaptive exclusively sells all available advertising space in each market it has contracted, while maintaining complete technology ownership. Currently, the Company’s technology and business model allows it to dynamically serve over 75 designated marketing areas in approximately 34 states in the United States economically. Adaptive also provides broadband and cable TV services in some niche major markets. For additional information, please visit: www.adaptiveadsystems.com.
Any statements contained in this press release that do not describe historical facts constitute forward-looking statements. Forward-looking statements may include, without limitation, financial projections, statements regarding the plans and objectives of management for current and future operations, the development, regulatory approvals and commercialization of the Company’s products, or any of the Company’s proposed services, systems, services, partnerships or acquisitions. Such forward-looking statements are not meant to predict or guarantee actual results and performance and actual events or results may differ considerably. Factors that may cause actual results to differ materially from any projections may include, without limitation, the Company’s delays in the development of its products, the inability to obtain additional financing, the impact of significant new or changing government regulation on the industry, existing or increased competition, results of arbitration and litigation, stock volatility and illiquidity, and the Company’s general failure to implement the Company’s business plans or strategies. The Company assumes no obligation to update any forward-looking statements to reflect any change in events or circumstances that may arise after the date of this release.