TO SHAREHOLDERS OF BANTEC INC.
FISCAL YEAR ENDED SEPTEMBER 20, 2019
Our sales dropped from $18,389,568 in 2018 to $10,287,214 in 2019. The drop in sales stems from our inability to secure receivables financing which has restricted the amount of materials that we can purchase from our suppliers. We have approximately $3,000,000 in awarded purchase orders that we cannot act on. We believe that for every dollar we borrow or raise, we can turn that seven to eight times a year. For example, if we raise $5,000,000, we believe we can add $35 to $40 million in gross revenues. We are working to secure either debt or equity financing to increase sales and, ultimately, profits. On a more positive note, our gross sales profit percentage increased by 2%. We eliminated low-profit suppliers and added products that command higher profit margins. With proper financing and without additional expenses, we believe that Howco sales can increase to $30 million with a 12% to 14% gross profit margin.
Howco Distributing Co.
Under difficult circumstances, Matt Wiles, our COO and General Manager of Howco, is doing a tremendous job managing our Howco employee morale while deploying scarce resources to ensure that we capture the most profit possible. Due to the spread of the dangerous and deadly coronavirus, Matt recently implemented our COVID-19 action plan. Being a supplier to the US Government, our interaction with the general public is limited to delivery drivers. Here is a link to our plan. http://www.bantecinc.com/coronavirus
Drone USA LLC.
At Drone USA, we focused on developing a sophisticated e-commerce website and conducting an aggressive digital media promotion with the intent of generating nationwide drone sales at low acquisition costs. In addition, we established relationships with various law enforcement agencies in the tri-state area. We provide a one-stop-shop for police and fire departments where they can purchase drones, accessories, training, COAs, and waivers. As police and fire departments slowly gravitate towards implementing drone programs, we will be in a position to help and guide them.
Bantec ViroClean Division
In light of the COVID-19 outbreak, we decided to start a new division. We are anticipating widespread COVID-19 infections spreading throughout the United States. We see a demand for decontaminating hospitals, schools, government buildings, hotels, cruise ships, and so on. We intend to help our fellow citizens through this deadly pandemic. We possess extensive experience in the methods that will be employed to clean up this virus. As we decontaminate buildings, we will look to protect our employees with state art decontamination chambers, power air-purifying respirators, and the best personal protective equipment.
We recently started another division. Presently we are bidding projects for hospitals, city governments, universities, and major manufacturers. Due to the COVID-19 outbreak, we can offer our clients construction services with employees trained and equipped to safely perform services under virus-infected circumstances.
In addition to selling products to the US government through Howco, we intend to sell services to the US Government as well.
We intend to acquire companies in the manufacturing, distribution, and construction/service sectors. Our acquisition sweet spot consists of companies with sales of between $2 and $5 million where the owners are considering retirement. We expect to structure our details with a small amount of cash at closing with a three to four-year earnout. The companies we are currently speaking with like this structure rather than closing their businesses. Companies that sell to local, state governments and our US Government is a plus for us. We intend to acquire several companies in a particular industry. When the time is right, we will change their name and market them under the Bantec name. For example, we would look to acquire several mechanical contracting companies and ultimately change their name to our Bantec Air, our mechanical contracting division. We will repeat this for Bantec Electric, Bantec Manufacturing, Bantec ViroClean, etc. Presently, we are looking at three possible acquisitions.
IN TWENTY YEARS, WE INTEND TO BE THE LARGEST AND MOST PROFITABLE SUPPLIER OF PRODUCTS AND SERVICES TO THE LOCAL, STATE GOVERNMENTS AND OUR U.S. GOVERNMENT.
I borrowed the format for this shareholder letter from Warren Buffet’s March 8th,1968 letter to the shareholders of Berkshire Hathaway Inc.
Certain statements in this press release may be considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include projections of matters that affect revenue, operating expenses or net earnings; projections of growth; and assumptions relating to the foregoing. Such forward-looking statements are generally qualified by terms such as: “plans, “anticipates,” “expects,” “believes,” or similar words. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or qualified. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking information. These factors are discussed in greater detail in our Form 10 filed with the U.S. Securities and Exchange Commission.
Michael J. Bannon
Chairman of the Board