AIAdvertising Inc (AIAD)

[Outvester101]

40 thousand feet: AIAdvertising (AIAD) is a tiny company with a huge potential upside. As I write this, their market Cap is around 15 million. I believe it could get as high as 1 billion within the next 2 years. The company’s board and key employees have been rapidly acquiring stock / options / warrants / preferred stock. And they raised around 10 million this year from an “investor”. They are set to release a SAS program focused on marketing/advertising and using AI/machine learning. This will allow them to grow revenues rapidly without having to increase overhead nearly as much as their traditional marketing/advertising competitors.

Who is AIAD:
In August of this year, a company called CloudCommerce changed its name to AIadvertising to better align with their business model. This move likely cost them tens of thousands to do, but when you are setting up a business to go big, it’s a small cost.

Brad Parscale: In 2016 Brad became Donald Trump’s Digital Media Director and later became the Campaign Manager in 2020. In 2017 Brad sold his company to AIAD in exchange for 225,000,000 shares of preferred stock. Brad has held onto his shares with the exception of around 10,000,000 shares sold in October 2021 (Form 144 10/22/2021). Currently, his shares (if converted) would allow him to control around 20% of the business.

Andrew Van Noy: The current CEO of AIAD. He has been with the company since 2015 and holds around 124,540,000 of shares/options. In addition, since March 2021 he holds all of the Series H Preferred stock which gives him 51% of voting rights. These shares along with his majority voting rights will be dissolved (Form 8-K - 3/18/2021) as soon as the company trades on any national securities exchange.

Gregory Boden: Greg is the president of a venture capital company called Bountiful Capital. As of 12/31/2020 he owned 37,230,164 shares/options as well as Series C preferred stock which can be converted into around 144,250,000 in common stock. In February 2021 he/Bountiful Capital lent the company $840,000 with a 1 year term at 5% interest. In October 2021 he stepped down as CFO of AIAD and received 115,000,000 options. On December 3, 2021 his company Bountiful Capital acquired 26,000,000 more share of the company.

Kevin Myers: Kevin is the Chief product & marketing officer and a board member. As of October 2021 he owned 44,411,872 shares/options.

Zachary Bartlett: Zach is the VP of corporate Communications. As of October 2021 he owned 67,533,393 shares/options.

Jerry Hug: Jerry is the Director of Operations. As of October 2021 he owned 114,840,183 shares/options.

Isabel Gongora: Isabel is the CFO. She received 12,000,000 options on 10/12/2021.

Investor X: In January 2021 AIAD filed an S3 to allow them to raise additional funds for the company. A month later was announced that they found “AN Institutional Investor” who invested around 10 million in to the company. In exchange for this investment, the investor received 85,000,000 common shares. 171,428,564 of warrants with an exercise price of 4.54 cents, and an additional 57,857,143 shares of prefunded warrants. These prefunded warrants are important. The are prefunded so can be converted to common stock at any point, but allow investor X to not pass the threshold to become a “Beneficial owner” which would force them to be identified. Investor x could have easily invested that 10 million in the S&P with minimal risk and around an 8% return per year. However, they saw a huge upside and worked to minimize risk (at 4.54 cents per share). Anyone who can inject 10 million cash into a company and wants to stay anonymous to the public would have financial planners, CPAs, and Lawyers to ensure that their investment is as safe as possible with regard to the potential reward. Investor X could be anyone with millions of dollars laying around. Below I give two potential people who Investor X could be.

Placement agency: AIAD paid a placement agency (think investment bank) with warrants to close the deal with Investor X. Investment banks are in the business of making money, for them to accept warrants with a 8.75 cent exercise price in lieu of cash, it tells me that they think this will be big. Especially, when the warrants are from a penny stock with not enough volume to absorb a “quick” sale.

Dr. Aqeeb – He is a PHD with a focus on Data Science. I believe that he was brought on to assist in filing Patents to protect AIAD’s use of AI and Natural Language Processing. https://www.globenewswire.com/news-release/2021/06/29/2254439/0/en/CloudCommerce-Moves-to-Protect-Its-Unique-Invention.html


Employees:
Based on LinkedIn, there appears to be around 36 employees at least 24 of them were hired in 2021. Of these 24 employees hired in 2021, 12 are in sales. Typically a tech company does not make sales hires until the product is on the verge of being complete. Of these 12 sales employees hired in 2021, 6 were hired in October or November. This tells us that they are ready to make a push and revenue is set to jump.

Product:
According to their website their main product, SWARM, works like this.
1. upload your CRM data and have them analyze who your customers are and group them into "Personas". Like grouping people in a Myers-Briggs but more precise.

2. Have the AI tell you how to design a "Creative"

3. Upload a creative and have the AI tell you how to refine

4. The AI tells you where to place the ad

5. the AI takes the data from the new customers and makes its suggestions more accurate

6. You log in and use the software to get a better idea of your customers and potential customers

The use of AI allows them to provide much better data as to what works and to do it without hiring a huge staff to do studies such as an A/B test or bringing people in and asking them what their feelings on x,y,z are.

Their product is geared toward businesses what are either in a competitive landscape (Car Dealerships) or with new products/services (Segway 20 years ago). Based on their financials/website it appears that they control the ad-spend for customers, with around 65% of revenue going to “cost of revenue”.

Size of market:
I assume that their target customers are businesses with over a million in revenue per year or entities (politicians or non-profits) that have a heavy focus toward “Marketing”. Based on the set up to get running, I assume that the starting price for their services would begin around $75,000. With a 35% Gross Profit Percentage, this would mean for the smallest clients they would make around 25k while 50K would be going toward the actual advertising. The more a client spends on advertising, the more precise they will be able to target potential clients.
Here are some potential customers:

Car dealerships – there is typically a few different dealers in each city all competing tightly for customers. They need to advertise, but ensure that they are not wasting money on ads that don’t work so that they can stay profitable.

Consumer product companies – Many of these companies spend big on advertising especially since instore sales make up a much smaller % of sales since the pandemic.

Finance/insurance companies – Financial planning and insurance companies spend tons of money in order to find and retain customers. By using a program like Swarm, they could target the appropriate customers in the correct ways.

Public Relations companies - they would love a tool to better understand and influence segments of the population.

Politics – They would use for the same reason as public relations companies. With Brad Parscale as a huge “share” holder (Preferred stock), it should not be a hard push to sign up a large segment of the republican party. 435 races for the US house, 100 for the senate, plus governors, and other races.

Non-profits – Unfortunately, most non-profits end up spending a huge percentage of the donations coming in on more advertising to get more donations. If they use Swarm, they could end up spending less on advertising as far as a percentage of donations coming in.

Universities – There is so much money to be made off of students, what is a few 100k to ensure that their ads land correctly. It would also help them attract a better quality of student.

Financials:
Balance sheet: It appears that they have done a good job with the $10 million investment from investor X. They have cleaned up the balance sheet reducing debt, and keeping cash on hand for the roll out of their new SAS. As of September 30, 2021 they had 4.5 million of cash and 3.2 million of liabilities.

Income Statement: Not all that impressive so far this year, however, we have to remember that they have hired 12 sales people this year, 6 of which were hired after Q3 had already ended. I expect that Q4 revenue will be slightly higher, and that their expenses will go up significantly. I do not expect revenue to go up much in Q4 because business to business sales cycles are typically much longer than B2C sales cycles. I think Q1 2022 we will begin to see a jump in their revenue without much of an increase in overhead.

Statement of Shareholders Equity: The large thing to note here is the significant increase in Common Stock. A large amount of this was due to the conversion of preferred stock to common stock, as well as warrants exercised and stock options exercised. This is likely because if they convert to common stock before prices increase they can avoid taxes that would be due when the stock price increases. As example of this would be if they had a warrant exercisable at 1 cent and convert to Common stock when it is valued at 1.5 cents, they would have a .5 cent gain, that they owe taxes on. If the price of common stock goes to 20 cents, they would owe, taxes on the 19 cent gain. When multiplied by millions of shares, it makes sense to convert before the price goes up.

Statement of Cash Flows: There is nothing to large to note here other than that they are burning cash as they now begin to sell. However, they have enough cash to give them a decent runway.

Potential for listing on major exchange:
AIAD has recently begun appointing independent members to its board to position itself to be listed on a major exchange.

In addition, on November 4th 2021 the Board of Directors created 3 committees. 1. Audit Committee 2. Compensation Committee 3. Corporate Governance Committee. The fact that AIAD is creating a Corporate Governance Committee shows that they are positioning themselves to up-list onto a major exchange… Currently, the CEO has 51% voting rights for the company. Why would a company need corporate governance it one person is solely in charge... This is because the CEO’s Preferred H shares will be “dissolved” as soon as it is listed on a major exchange.

In order for AIAD to list on a major exchange they need the share price to go up substantially. To do this, they would need to do a reverse stock split. On 11/1/2021 they announced that they had “approved” a reverse stock split between 1 for 100 and 1 for 1,000.

Other potential upsides:

Truth Social: https://nypost.com/2021/04/01/website-combating-cancel-culture-attracts-trump-gop-report/ It is unclear if AIAD owns Campaign Nucleus which is a company that Brad Parscale created in 2016. There have been posts online claiming that AIAD does, however, I am not able to confirm this as true or false. https://www.reddit.com/r/AIAD/comments/qghdzd/100_verifiable_proof_that_campaign_nucleus_is/


Who is Investor X:
Investor X could be a number of people. I think a key aspect is the desire of investor X to stay undisclosed to the public. I feel that this rules out any current board member, and any Private Equity/Bank. I do not think it is Brad Parscale, since he sold 10 million shares earlier this year, and was listed as a major shareholder in the 2020 10-K. Either way, there are not many people with 10 million of cash to invest. This person likely has some relationship to a board member/owner. My bet is a connection to Brad Parscale since his exposure to high profile people from the 2016 and 2020 campaign.

Investor X = Trump: This is possible, he has the money to be able to invest 10 million into a company. He could see it as a tool for his new company Truth Social, real estate, or backing candidates.

Investor X = Peter Thiel: Peter Thiel likely met Brad Parscale at some point during the 2016 campaign. Peter’s company Palantir specialized in analyzing data in order to make better decisions. Their main focuses are with governments and intelligence services. If he is Investor X, perhaps he wants in invest with the thought of purchasing it outright later on to become a small branch of Palantir.


Interview with AIAD’s Chief Product and Marketing Officer:
https://www.youtube.com/watch?v=wdfqfnlS3Zo