By: Tomas Ronolski - AllPennyStocks.com News

Wednesday, February 12, 2014

According to IBISWorld, the security alarm services industry stagnated from 2008 to 2013, in part because of the Great Recession that crimped disposable incomes and slowed the growth in the construction industry. The research firm sees a shift in momentum coming, though, driven by the emergence of new technologies and rising disposable income levels that will bolster sales in the residential market. A company that apparently shares the sentiment of IBISWorld is Revolutionary Concepts, Inc. (OTCQB:REVO). The Charlotte, North Carolina-based company is the designer and developer of the “EyeTalk Communicator” technology, a mobile video, remote smart camera security technology. In short, it is like the traditional security systems of ADT Corp. (NYSE:ADT) or Brink’s Co. (NYSE:BCO), only on steroids. People approaching the system (at the front door of a house, for example) are informed that they have been acknowledged and that they are now being recorded. Subsequently, the camera provides video to the owner and allows two-way communication with the person outside. It also has the legacy offerings of security systems, such as contacting the fire department or police in the case of an emergency.

Revolutionary Concepts notched its first sale of the system in 2011, but it has been a slow growth curve, to say the least, and a lot of shares have hit the market in the last year as it aims to market its product.

On Wednesday, the company released news that it may be turning the corner. Revolutionary Concepts said that, after months of negotiations, it has penned an agreement with an unnamed company that buys and markets security systems and other technologies, giving that licensee exclusive global license to the patented EyeTalk Communicator System. Interestingly, the licensee intends to modify the system to deliver it in a cloud-based platform. This will allow users to monitor and control the system from any location in the world. A machine-to-machine surveillance system that permits two-way communication and video of that magnitude certainly has value and, according to the company, “could make many existing alarm security monitoring services obsolete.”

Per the multi-year definitive agreement, Revolutionary Concepts will receive a $900,000 payment upfront and ongoing royalties and licensing fees for the life of the agreement.

"We are very excited about forging this new relationship to license our patented technology security system. This represents a major milestone and an unparalleled precedent in the history of our company, as well as a tribute to the hard work and ingenuity of our team,” commented REVO's Senior Vice President Solomon Ali in a statement today.

The company followed the announcement news with another piece of press detailing its expectations from the contract. The company forecasts total annual revenue between $20 million and $30 million from the agreement. The licensee, whose name is said to be announced at a later date, will retain 60 percent of the total sales. Revolutionary Concepts will get the other 40 percent, equating to a range of $8 million to $12 million in revenue each year.

Understandably careful to say that no assurances can be given to future sales, Ali noted that if those sales goals are met, it would be fair to value REVO between $120 million and $180 million. REVO’s SVP is calculating that figure based upon a common 15x earnings valuation of S&P 500 companies. There is likely a hiccup in that equation because revenue is not all profit (or “earnings”), unless the company doesn’t plan to have any expenses going forward. Be that as it may, the forecast sales on their own are far above the market capitalization of REVO, which stood at $2.5 million market cap at the end of trading on Tuesday. Investors took note of the news, with shares surging a whopping 182 percent in Wednesday action to close the day at 1.41 cents for a market cap around $7 million.

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