Hi MiriamsSon...
I thought it was a different report, which is why I didn't even check it. I still haven't read the whole article, but while taking a break I copied it for the thread...it's a long one:
George T. Schlieben, Publisher SPECIALÿRESEARCH REPORT June 30, 1998c1998. GLOBAL PENNY STOCKS, PO Box 372, Yardley PA 19067. Information contained herein is based on sources we believe to be reliable but we do not guarantee its accuracy. Prices and opinions concerning the composition of market sectors included in this report reflect the judgments as of this date and are subject to change without notice. This report is for information purposes only and is not intended as an offer to sell or a solicitation to buy securities. Global Penny Stocks or persons associated with it may own securities of the issue described herein and may make purchases or sales while this report is in circulation. The publisher, George Schlieben, received a fee from the company to write this report. The publisher WILL NOT take a postion in a recommended security featured in this report.
ADVANCED GAMING TECHNOLOGY, INC.
Price: (OTC BULLETIN BOARD):AGTIUS 10›BALANCE SHEET (Interim: 3/31/98)Yearly Range:US $1.96 - 2›Net Working Capital:NilShares Outstanding:27 millionLong Term Liabilities:$3,150,620Estimated Float:20 millionShareholders Equity:($3,194,038)Market Cap:US $2.7 millionBook Value Per Share:NilSuitability:SpeculationEstimated Growth Rate:200% - 300%%Recommendation:BUYDividend:NilOne-Year Target:US 50› to 75›Return on Equity:NilTwo-Year Target:US $1.25 to $1.75Marginable:NilAverage Daily Volume:500,000Location:Vancouver, B.C., Canada
Las Vegas, Nevada
INVESTMENT CONCLUSION
Note: After reading this report, please visit the company's web site by CLICKING HERE or call 310-827-4950, for further information.
Speaking from personal experience, we have no doubt about how successful a company in the bingo industry can be. At the end of 1996, we wrote a report on American Bingo when the stock was trading at $1.75. Eight months ago, BNGO's stock spiked at over $10. It is no small wonder, for the bingo industry is massive. Nearly one million North Americans play bingo each week at over 35,000 Native American and charity gaming halls. The game boasts annual revenues of $5 billion in North America, and as high as $50 billion worldwide.
As we approach the third millennium, it is astonishing to think that over 90% of bingo games are still played manually on paper cards. However, the game is making a major change to electronics, and investors have a ground floor opportunity to invest in the company that has the cutting edge technology to be a major player in this transition. We say "ground floor" because the stock is ridiculously low.
The company is ADVANCED GAMING TECHNOLOGY, INC. (OTC BULLETIN BOARD: AGTI). To be blunt, Advanced Gaming Technology, Inc. (AGT) has had a troubled history, but has managed to survive. However, within the last six months alone, the company has restructured and tightened its belt to the point where it expects to be cash flow positive by early 1999. It also has a new CEO, the former vice president of marketing for Bally Gaming, and a new Director/Corporate Development, a former principal of Oppenheimer and Company.
Along with the new corporate makeover are rather significant agreements with name gaming concerns to market AGT's electronic bingo devices in North America and overseas. These pacts with such powerhouses as Sega Gaming, Bingo Technologies, and the Edward Thompson Group promise to add immensely to AGT's revenue stream. In 1997, the company posted $1.3 million in revenues. It is projecting about $2.3 million this year, and a whopping 250% to 600% increase in 1999 of between $7 million to $15 million in revenue.
Accordingly, we rate the shares of Advanced Gaming Technology, Inc. a BUY with SPECULATION. Forget AGT's previous problems and staggering loses. To all intents and purposes, this is a new company that has restructured and retooled. Yes, it will need some bridge financing over the short term, but AGT's new management, armed with those new marketing agreements, should instill much confidence with the investment bankers. The main question investors should be asking. "Is it worth a flyer to see if AGT can meet its 1999 projections, or even half of that?" At the current stock price, one finds it difficult to see much of a downside risk. Our one-year target on share price is 50› to 75›; two-year target is $1.25 to $1.75.
COMPANY BACKGROUND
Incorporated in 1963, this Wyoming corporation underwent several name changes before assuming its current identity as Advanced Gaming Technology, Inc. in 1991. AGT designs and markets electronic bingo games, which many analysts believe are about to revolutionize the game. The company's core gaming products are its MAX Bingo Systems. AGT is also developing Parti Max and Sonic Bingo, both of which should be in players' hands early next year. The company has been issued multiple patents on its proprietary gaming technology. A description of AGT's products is as follows:
MAX Plus gives players the opportunity to electronically play up to 300 bingo cards simultaneously, as opposed to the maximum 18 paper cards an average bingo player can manually daub (cover). Obviously, MAX Plus is designed to greatly increase revenue at bingo halls while also reducing administrative costs, intensifying the excitement of the play, and giving bingo players more chances to win. The electronically operated system keeps track of each card and gives the player the option to display on the screen those most likely to reach bingo first. As numbers are called they can be entered manually or automatically. The automatic setting lets players relax, enabling them to visit the concession stand more often and therefore generate even more income for the bingo operator. In addition, MAX Plus lets the operator track necessary financial and analytical information by providing a fully integrated accounting package. There are about 150 units currently installed in numerous bingo halls across the U.S.
MAX Lite is the newest addition to AGT's product line, and has become its most popular game. It is a portable hand-held electronic bingo unit which stores up to 50 different games and, like MAX Plus, allows users to play up to 300 bingo cards per game. The unit measures 12" x 9" and offers many of the advantages of the MAX Plus system in a lightweight wireless package. Players are able to enjoy freedom of movement in the bingo hall, thus increasing revenue at the concession stand. There are approximately 550 units now in use. TurboMAX is an exciting, high energy pari-mutual bingo system. A percentage of player purchases can be selected and allocated toward a jackpot, which allows a jackpot to be offered on every game. It is played on the MAX Plus fixed base computer terminals usually before and after regular bingo sessions, as well as during intermissions. The energy level really picks up speed with a bingo call every 60 to 90 seconds. Units are in use today.
AGT's projected 1998 revenues of $2.3 million will come from its MAX Bingo Systems, which, it should be stressed, are not sold outright but are leased by bingo hall operators. Leasing assures the company of a continuous revenue flow. Helping AGT to reach its objectives are several licensing and distribution agreements, all signed just within the last nine months.
In February, AGT and Bingo Technologies Corporation (BTC) reached a definitive licensing and royalty agreement calling for BTC to distribute the MAX Plus and TurboMAX line of products in the U.S. BTC presently distributes gaming products to over 170 bingo halls. Over the next year, AGT is anticipating quantifiable gross benefits of about $5 million, including royalties, licensing fee, and reduction of costs.
In March, AGT completed a distribution agreement with K&B Sales, Inc., of Dallas, Texas for the exclusive distribution of the MAX Lite hand set in Texas. With a customer base of over 500 clients, K&B is one of the leading distributors in the Texas bingo industry. Texas is the dominant bingo market in North America, generating $500 million yearly in retail sales, or 10% of the continent's total take.
AGT is also in discussions or negotiations with other gaming companies for purposes of licensing its technology or product distribution. The company also has definitive agreements with Sega Gaming Technology, Inc. and the Edward Thompson Group, which are detailed in the below discussion about AGT's upcoming products.
Sonic Bingo will be one of the first games of its kind to be introduced to the gaming market. It is a multi-link progressive speed game whereby several remote locations are linked. Each location has a local jackpot for each game played and a progressive jackpot unique to the location. In addition, all locations are linked to three progressive jackpots, so players have five levels from which to win. The game is very colorful, very fast, and offers a potential "change of lifestyle" jackpot. In March, AGT entered into a joint venture agreement with Sega Gaming to jointly develop and market innovative software products to the gaming industry. The first such product will be Sonic Bingo. Commercial placement of Sonic Bingo is expected early in 1999 with the company expecting $2 million to $4 million in revenue from the product, and $10 million in 2000.
PartiMAX is the first ever bi-directional handset technology and was developed specifically for United Kingdom bingo, which has a $1.5 billion annual market. The game is structured similar to the MAX Bingo Systems. In October, 1997, AGT entered a definitive leasing and service agency agreement with the Edward Thompson Group (ETG), of Sunderland, England, calling for ETG to market, install, and service the product. ETG is a private well-established 100-year old company with 750 employees and supplies gaming products to 43 countries. AGT and ETG will split lease revenues from PartiMAX on a 50/50 basis. The product should be introduced sometime in the first quarter of next year, and the company believes PartiMAX could snare AGT $3 million to $6 million in revenues in 1999, and double in 2000. Besides the above products, AGT is developing a new state-of-the-art handset, a derivative of MAX Lite, for market introduction this year. This new product, combined with the current MAX Lite, is expected to bring AGT $2 million to $5 million in 1999.
As we alluded, AGT has suffered substantial losses over the years. Much of this is the $25 million the company has in R&D, product development, and corporate infrastructure. However, it appears that the new management, while capturing significant licensing and distribution agreements, has begun to turn the tide. Headed by a new CEO, Thomas Nieman, AGT has trimmed its monthly operating costs by 55%, from $400,000 to $180,000. By early 1999, management expects AGT to be cash flow positive.
This is a company that has withstood much adversity, but has somehow persevered. AGT has always had superior products, but was never properly focused to market them. Those days now appear to be over. Once the bane of investors, the new management is taking the necessary steps to make AGT a market favorite. Rubbing elbows with Sega Gaming, Bingo Technologies, and the Edward Thompson Group has brought AGT a long, long way. The company's address is Advanced Gaming Technology, Inc., 1566-650 West Georgia Street, P.O. Box 11610, Vancouver, BC, V6B 4N9, Canada. Telephone: 604-689-8841; fax: 604-689-2809. Web site: www.advancedgaming.com; email: agtl@direct.ca.
COMPETITION/RISKS
There are other companies that develop and market electronic bingo games, and it can be assumed that they are larger and better capitalized than Advanced Gaming Technology (AGT). This competition could adversely affect AGT in the marketplace. Changes in government regulations toward gaming could affect AGT's operations.
AGT will need more capital to finance operations and to meet obligations. One method of raising capital may be through the use of equity financing or issuing secondary stock. Should AGT be unable to utilize this method of financing, its operations could be severely affected and/or unable to continue.
Should any of AGT's future joint partners, licensors, or distributors experience financial difficulties, AGT could be critically hampered.
Since AGT is considered a penny stock, and, therefore, a high-risk investment, investors might lose a portion, or all, of their investment.
This is a company that has relied mostly on stock offerings to secure needed financing. As this new stock enters the public market, share price could be adversely impacted
MANAGEMENT
Thomas Nieman, Chairman, Chief Executive Officer. Before assuming his position with AGT in February, 1998, Mr. Nieman had various executive positions in the gaming industry during the last 25 years. He was a corporate Vice President for Shuffle Master, Inc. where he was responsible for the highly successful "Let It Ride" tournament that was a rage in Nevada, Connecticut, and Mississippi. Prior to Shuffle Master, he served as Vice President of Marketing at Bally Gaming in Las Vegas where he headed the new product development group, and was instrumental in the redesign and launch of Bally's "Pro Series" slot product line and for the rollout of the company's "GameMaker", which was the first multi-game touchscreen, interactive video slot machine in the casino industry.
Donald R. MacKay, Chief Financial Officer of AGT since August, 1995. Prior to joining the company, Mr. MacKay served as the Manager-Business Analysis at TCG Int'l, Inc. Prior to that, Mr. MacKay was the Controller of Attachmate Canada, Inc., and was a Senior Financial Accountant at GLENTEL, Inc.
Robert Hunziker, Director/Corporate Development since January, 1998. Mr. Hunziker has been employed in corporate relations and corporate finance with public companies since 1992. Previously, he was an associate director of Bear, Sterns, & Company, Inc., and a principal of Oppenheimer & Company, Inc.
INVESTMENT CASE AND OUTLOOK
New and Highly Experienced Management. The key to turning any company around rests with management that knows what it is doing. AGT's new leadership has depth and experience, and the good news is that they have hit the ground running. This company has always had superior products, but fell short in marketing. AGT's new CEO, Tom Nieman, is a proven innovator and marketer in the gaming industry. Bob Hunziker brings to the company his years of expertise honed at Bear, Sterns, and Oppenheimer & Co., which should greatly aid AGT in its quest for more financing.
Vast Market. One million North Americans play bingo each week at 35,000 bingo establishments. Over 90% of all bingo games are presently played on paper cards, making the market for electronic bingo almost limitless virgin territory. Superior/Proprietary Technology. AGT holds multiple patents on its proprietary gaming technology, considered by many to be the industry's best. Any doubts about AGT's techno superiority were erased when they entered agreements with Sega Gaming and Bingo Technologies, two of the biggest names in game making. Believe one thing - if those two companies could have built better mousetraps, they would have. This is not a case where investors must angst during the R&D phase. AGT's core business, the MAX Bingo Systems, have been developed and are now in operation. Additionally, its next two products, Sonic Bingo and PartiMAX are near completion and close to pilot programs.
Player Acceptance. The real genius of the AGT technology rests within the simplicity of its products. It is wonderful to have bells and whistles and things that make zap noises, but if people do not understand a product, it rapidly becomes an Edsel. The real testament to the popularity of AGT's products is that there are now over 700 units in the marketplace, and bingo players can't seem to get enough of them.
Key Agreements. With many small companies the only way to see their futures is to gaze into a crystal ball. With AGT, an investor needs only to gaze at the company's agreements with Sega Gaming, Bingo Technologies, the Edward Thompson Group, and K&B Sales to get an idea of where the company is headed. The joint venture with Sega calls for the two companies to develop and market new products under the SEGA brand name and using AGT technology and licensing, with Sonic Bingo being the first product of the new venture. The agreement with Bingo Technologies, giving BTC the exclusive U.S. rights to manufacture and market MAX Plus and TurboMAX, is anticipated to give AGT quantifiable gross benefits of about $5 million over the next year. The pact with the Edward Thompson Group to distribute PartiMAX will give AGT significant presence in the United Kingdom's lucrative bingo market, estimated to gross $1.5 billion annually. Lastly, the accord with K&B Sales places AGT's MAX Lite into Texas, North America's richest bingo market. All of these agreements were inked within just the last nine months, and AGT is currently in discussion or negotiating with other companies. This is concrete proof that the new AGT management knows how to sell the company's products.
Tremendous Revenue Potential. As of now, it appears that AGT will meet its 1998 revenue projection of $2.3 million. A year ago, no one would have given the company a rat's chance on a cat farm to meet that expectation. Can they achieve their 1999 revenue estimates of $7 million to $15 million? The key is how quickly all of the above agreements can be implemented. There is a growing sense that AGT will come close to these projections. However, investors should be elated if the company only garners half that.
Low Stock Price. At 10›, this seems to be the ideal play for you true penny stock sports fans. With what many would consider to be a ridiculously low stock price, new management, key contracts, and great products, it is difficult to see much of a downside risk. We feel comfortable with our one-year target on share price of 50› to 75›; two-year $1.25 to $1.75. |
