Financial recap It is interesting to note that the company's debt has been reclassified as being corporate debt. If you notice in Q3, the segment liabilities for both Logixx Security and Avante Security has been moved over to corporate debt. This is a cash drain for existing shareholders and as of Q3, total indebtedness totalled $9,004,263.
Total lease obligations totalled $ 2,435,753 of which it is not clear how much of this would be classified as corporate. My guess would be that only property lease to corporate head office and vehicle lease belonging to Avante security is included only. I would safely say this number should be under $1m. Let's just say between corporate debt and lease obligations we're looking at around $10m
With a cash payment of $23.95m and debt plus lease obligations of around $10m we have about 0.526 cents per share in net cash. If we exclude the lease component then we're looking at 56 cents per share in net cash.
In the last 12 trailing months Avante Security has record net income before taxes of $1,014,593 which is an increase of just over 9% from the last fiscal year. Given a tax rate of 26.5% and a 15 times multiple conservatively puts us at around $11 m. If you give it a 30 times multiple then we get a value of $22m. I do not believe the company is worth a 30 times multiple so we're somewhere in between.
If Avante Security has a value of $11 m then this would add about 0.415 cents per share. Shareholders would potentially be currently valued at 52.5 cents + 41.5 cents or about 94 cents per share. Then you can add any residual working capital to that total.
There is safety in buying at current prices but it all depends what kind of returns they could achieve with all the remaining cash. Corporate expenses will be a big cash drain for Avante Security and unless they make an acquisition, net income will be negative in the foreseeable future.