Adaptive Ad Systems, Inc. (OTC:AATV) is releasing its periodic shareholder letter to its current and potential future shareholders. Adaptive Ad Systems is a company that provides Dynamic Digital Ad Insertion (DDAI) via its streaming media hardware and proprietary processing software for the U.S. cable TV and Satellite markets martech news.
Dear current and future shareholders:
As January begins a new year and a new decade, we are providing you with an update on significant progress at Adaptive Ad Systems, Inc.
In addition to what has previously been reported in press releases and filings on the OTC Markets platform, this letter will further explain our substantially expanding product development and financial improving performance. Over the past five years, we have accelerated 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, which allows us to continue increasing our subscriber base martech.
Moving forward, we intend to improve our market awareness by informing our shareholders and the public more frequently about important developments in our company. We hope that in doing so, the market price of our stock will better reflect the improved value of the Company’s operations and growth.
ADAPTIVE TECHNOLOGY – A DISRUPTIVE APPROACH
Adaptive’s goal has always been to accelerate growth by developing our own proprietary hardware and software technology, expand its existing network and acquire new subscribers as economically as possible. By providing the content from major advertisers and distribute it over our own network run by our software and at the same time provide complete turnkey administration for our clients, we have proven to be more competitive than larger companies in servicing the underserved, but high-value, Tier 2 and Tier 3 cable-TV markets. Because our operation is centrally managed and cloud-based, with a high level of automation for the digital ad insertion process, we generate higher output with less personnel and accordingly, achieve lower overhead than other companies.
ADAPTIVE PROFIT-SHARING MODEL – ONE STOP SOLUTION
We have made considerable progress in the deployment of our proprietary technology and continue to refine our unique profit-sharing business model, the combination of which sets us apart from our competition. We continue advancing Adaptive’s 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 to our customers. Our model overcomes the barriers that typically prevent the insertion of National and Local cable TV advertising on major cable TV Networks in these markets. We provide our clients with a complete one-stop solution by exclusively selling all available advertising space in each market we have contracted, managing the entire process, while maintaining complete technology ownership.
ADAPTIVE STATE-OF-THE-ART “CUE-TONE” FACILITY PROVIDES 99% EFFICIENCY
We have completed the construction of our new and 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 into our ad network. By combining our proprietary software with our remote Cue Tone signals delivered from our state-of-the-art facility, we can exceed 98% efficiency in inserting video advertising content into all cable TV networks in a very economical way. This allows our company to grow at an even faster pace than in recent years.
NEW INSTALLATIONS OF DIGITAL AD INSERTION SYSTEMS INCREASE SUBSCRIBER BASE
During 2019 we have installed over 25 new Digital Ad Insertion systems throughout the US. Each Adaptive Ad Insertion system delivers local, regional and National advertising to subscribers living in the Adaptive network area via cable, fiber and IP systems, with 100 to 25,000 subscribers per each Adaptive system.
New installations of our proprietary ad-insertion equipment have added over 70,000 subscribers to our network this past year. We continue to improve our digital ad insertion technology for the National Cable TV markets and keep accelerating the installation of our Adaptive hardware and software systems for new cable television head-ends on a consistent basis. 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 for the benefit of our clients.
ADAPTIVE CENTRAL SOFTWARE HUB – REDUCED OVERHEAD
Many of our competitors struggle to operate profitably because their operations are capital intensive and not as software driven as we are. We strategically plan, develop and implement ever increasing automation through our central software hub, which requires fewer employees, resulting in substantially reduced overhead and improved profits. While we service three times as many cable systems as some of our competitors we are operating with 90% fewer employees. Our technology has been built by us for our specific business purpose, allowing a small team of experts to manage our expansive system from a central software hub, instead of having to manage many inefficient individual systems that require intensive manual engagement.
ADAPTIVE “ONE-STOP” SYSTEM
We are one of the only companies that allows advertisers across the US to purchase ads they typically would not have access to and insert them into a linked group of our digital TV advertising systems. We manage all ad-related activities, provide all technical support, sales, scheduling and billing and have established an innovative revenue share agreement with each individual system, in proportion to its number of subscribers.
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 competitors. These markets can benefit substantially from our software-driven advanced digital ad insertion technology. Our continued commitment to advancing technological development in this industry 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 20 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. We enable advertisers across the US to purchase ad time to be inserted into a group of cable systems. The business model of sharing profits with our clients, while at the same time aggressively expanding our system installations, resulted again in the generation of profit for the 20th quarter in a row at September 20, 2019.
FINANCIAL DISCIPLINE – CONTROLLED ORGANIC GROWTH
Based on our increasing revenues and tightly controlled overhead, we have been able to create solid cash reserves and our total assets have increased to over $9 million. We have been able to grow our revenue organically, have not required outside funding and have kept our outstanding common stock to a very low 48 million shares. We expect our financial discipline and unique business model to have a continuing and significant positive impact on revenue and profit development for 2020.
MARKET OUTLOOK IS STRONG
We believe that the outlook for the Cable TV advertising market is robust, 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’ media 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 underserved sector of the industry. Thus, we believe our business model remains strong.
SUMMARY OF CRUCIAL ACHIEVEMENTS
- Accelerated our disruptive approach with our proprietary Adaptive technology.
- Established and maintained a profit-sharing model with clients for underserved markets.
- Completed construction of advanced “Cue-Tone” technology facility in Phoenix.
- Added over 70,000 additional subscribers to our network in the National TV cable market.
- Serve over 75 designated marketing areas in 34 states.
- Provide more ad inventory than most of our competitors.
- System managed virtually from a software hub as a software driven operation.
- Automation through our central software hub 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.
- Underserved markets drive our revenue growth, profitability and expand our market position.
- Substantially increased cash reserves without outside funding.
- Relatively low overhead and continued profits for the 20th quarter in a row.
- Asset base of over $9 Million
- Outstanding common stock at a low 48 million shares.
Adaptive Ad Systems Inc. is a digital media and video communications company that together with its subsidiary 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 with its primary focus on the 2nd and 3rd tier US markets. Its digital ad insertion technology and unique profit-sharing model overcomes the 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. Adaptive has implemented a unique and advantageous profit-sharing model with its Cable TV Partners. The Company’s technology and business model allows to dynamically and economically serve currently over 200 designated marketing areas in approximately 34 states in the United States. Adaptive also provides broadband and cable TV services in some niche major markets. For additional information, please visit: www.adaptiveadsystems.com.