U.
S. SECURITIES AND EXCHANGE COMMISSION


WASHINGTON,
D.C.  20549





FORM
10-K


(Mark
One)





[X]
            ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934


For the
fiscal year ended December 31,
2008





[  ]
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934


For the
transition period from ___________ to _____________





Commission
File Number: 000-53372





AVT,
INC.


(Name of
small business issuer as specified in its charter)





Nevada
            11-3828743(State
      or other jurisdiction of
              incorporation
      or organization)
            (I.R.S.
      Employer
              Identification
      No.)341
      Bonnie Circle, Suite 102
              Corona,
      CA 92880
              ________________________________________________________________________
              (Address
      of principal executive offices, including zip
  code)





Registrant’s
telephone number, including area
code:                                                                                                           (951) 737-1057


Securities
registered pursuant to Section 12(b) of the
Act:                                                                                                None


Securities
registered pursuant to Section 12(g) of the
Act:                                                                                                common stock, $.001 par
value


___________________





Indicate
by check mark whether the registrant is a well-known seasoned issuer, as defined
in Rule 405 of the Securities Act Yes [  ] No[X]





Indicate
by check mark whether the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes [ ] No [X]





Note – Checking in the box
above will not relieve any registrant required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act form their obligations under those
Sections.





Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the past
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days.  Yes [X]  No
[  ]





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment of this Form 10-K.  Yes [ ]





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule12b-2 of the Exchange
Act.





Large
      accelerated filer  [   ]
            
            Accelerated
      filer    [    ]Non-accelerated
      filer    [   ] (Do not check if smaller
      reporting company)
            
            Smaller
      reporting company    [X]





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).


Yes
[  ] No [X]





State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant’s most recently completed second fiscal
quarter:  $16,157,962.





Note - If a determination as
to whether a particular person or entity is an affiliate cannot be made without
involving unreasonable effort and expense, the aggregate market value of the
common stock held by non-affiliate may be calculated on the basis of assumptions
reasonable under the circumstances, provided that the assumptions are set forth
in this Form.





APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY


PROCEEDINGS
DURING THE PRECEDING FIVE YEARS





Indicate
by check mark whether the registrant filed all documents and reports required to
be filed by Section 12, 13, or 15(d) of the Exchange Act of 1934 after the
distribution of securities under a plan confirmed by a court. Yes
[  ]  No [  ]





(APPLICABLE
ONLY TO CORPORATE REGISTRANTS)





Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date:  As of April 14, 2009 ,
there were 22,140,973 shares of our common stock were issued and
outstanding.





DOCUMENTS
INCORPORATE BY REFERENCE





List
hereunder the following documents if incorporated by reference and the Part of
the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
incorporated: (1) Any annual report to security holders; (2) Any proxy or
information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933.  The listed documents should be
clearly described for identification purposes (e.g., annual report to securities
holders for fiscal year ended December 24, 1980).





PART
I





Item
1.   Business





Cautionary
Statement Concerning Forward-Looking Statements





The
following discussion and analysis should be read in conjunction with our audited
consolidated financial statements and related notes included in this
report.  This report contains “forward-looking statements.” The
statements contained in this report that are not historic in nature,
particularly those that utilize terminology such as “may,” “will,” “should,”
“expects,” “anticipates,” “estimates,” “believes,” or “plans” or comparable
terminology are forward-looking statements based on current expectations and
assumptions.





Various
risks and uncertainties could cause actual results to differ materially from
those expressed in forward-looking statements.  Factors that could
cause actual results to differ from expectations include, but are not limited
to, those set forth under the section “Risk Factors” set forth in this
report.





The
forward-looking events discussed in this report, the documents to which we refer
you and other statements made from time to time by us or our representatives,
may not occur, and actual events and results may differ materially and are
subject to risks, uncertainties and assumptions about us.  For these
statements, we claim the protection of the “bespeaks caution”
doctrine.  All forward-looking statements in this document are based
on information currently available to us as of the date of this report, and we
assume no obligation to update any forward-looking
statements.  Forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause the actual results to
differ materially from any future results, performance or achievements expressed
or implied by such forward-looking statements.





The
Company





AVT, Inc., is a public
company.  Our common stock is quoted on the Pink Sheets in the
over-the-counter market.  Our primary focus is on the manufacture of
vending and product dispensing systems which utilize an innovative approach of
development, integration of technology and advertising media.  Our
products define the cutting edge of the vending industry and position us as an
industry innovator.  We are also a vending operator having
approximately 1,000 vending systems throughout the Los Angeles, Orange and
Riverside, California counties.  It is our vending operation
experience over the past years that adds to the distinctive advantage and
overall success as a manufacture and leader of technology based vending
products. Ourexecutive offices, engineering and manufacturing facility and warehouse
are located at 341 Bonnie Circle, Suite 102, Corona, CA 92880.  Our
telephone number is (951) 737-1057.





We were originally incorporated under
the laws of the State of Delaware on February 25, 1969 as Infodex,
Incorporated.  In October, 2005, we acquired Automated Vending
Technologies, Inc., a Nevada corporation and began focusing our business on
vending operations. In December, 2006 we merged our operating wholly owned
subsidiary into the parent company and in January of 2008, we changed our state
of domicile to the State of Nevada and renamed the company to “AVT,
Inc.”  We operate in the State of California as “AVT Vending,
Inc.”





We have received a going concern
opinion from our auditors.





The
Business





AVT, Inc. is an innovative vending
operator and manufacturer of technology based vending solutions and
equipment.  We currently employ a workforce of approximately 25 people
and services approximately 300 commercial and government vending accounts in
Southern California.  We use ourpatent
pending  technologies to drive our vending innovations which are in
various stages of development.  AVT’s technology staff ranges from
electrical and mechanical engineers to software programmers and IT specialists
thereby enabling us to design and control all of our unique products while
keeping the “edge” on all of our developed products





Our
business currently focuses on the following:





·
            Manufacturing
      of the RAM 4000 vending machine, a refrigerated beverage/snack combination
      vending machine containing more sophisticated technology then our
      competitors and offered at competitive
pricing.





·
            Manufacturing
      of the RAM 5000 vending machine, a high capacity non-refrigerated
      snack/chip/pastry combination vending machine containing more
      sophisticated technology then our competitors and offered at competitive
      pricing.





·
            Manufacturing
      an attractive, built-in, secure access vending cabinet for hotels that do
      not have on-site food service. Our AEMTM cabinet incorporates patent
      pending touch-screen to vend or TSVTM which replaces both stand-alone
      machines and in-room locked mini-fridges while providing controlled access
      and a range of direct customer billing
options.





·
            AVT
      has developed a variety of ‘high end” PC based product dispensing
      systems.  These systems are derivatives of the AVT RAM 4000 or
      5000 base housing having front panels which are unique or customized to
      end customer’s needs for digital signage or large color touch
      screens.  These systems allow a variety of AVT designed
      technologies to be integrated into the system to meet specific customer
      needs for a custom dispensing system.  Our current high end
      product dispensing includes the Ivend, 24Hr. Vend Mart, and Tech-Store. We
      manufacture Patent-Pending, affordable, wireless VMSTM technology enabling
      vending machine owners/operators to remotely manage their vending systems
      and receive real time information via the Internet.  This system
      also utilizes a cashless payment system enabling patrons to use credit
      card or membership card for completing vending
    transactions.





·
            We
      offer advertising via our highly visible, remotely-programmable, AVTI
      MediaTM Network video panels which are integrated into vending machine
      signage that creates a new opportunity for advertisers to reach consumers
      in a captive setting.





Our goal is to be the leader in
technology based vending and product dispensing solutions that are reflective of
today’s “got to have it now” consumers. Serving international vending owners and
operators whose desire is to have a better experience with vending equipment. We
strive to grow our business by developing superior customer solutions, adapting
new technologies, and pursuing appropriate mergers and
acquisitions.  Our growth is dependant upon the development of new
technology, the incorporation of advertisement on the vending machines, the
sales of our RAM 4000 and RAM 5000 systems, the introduction of the next
generation Product Dispensing Centers, and the development
of   revolutionary vending technologies.





Vending
History





Vending machines had been introduced to
Americans over 70 years earlier by Thomas Adams, who installed them on New York
City's elevated train platforms to sell his Chicklets gum. After World War II
the vending industry grew twice as fast as the gross national product, driven by
three primary factors: rising labor costs made machines an attractive
alternative to human laborers; technological advances in food preservation and
dispensing equipment permitted service of hot meals, sandwiches, coffee, and
soft drinks; and technological advances were made in money-changing equipment.
Vendors targeted "captive" markets in factories, offices, schools, and other
institutions--a huge market with plenty of potential for growth and competition.
The vending industry had achieved $2.5 billion in annual sales by 1960, and with
statistics showing that Americans ate one in four meals away from home, vendors
and stockbrokers foresaw a fine future for vending.





Market
Information





The vending industry is a $42 billion
domestic market as reported by The Vending Times Census of the Industry
2004.  This figure represents the revenues generated by vending
owners/operators and excludes office coffee and manual food
service.  Manual food service represents an additional $10 billion in
annual demand for convenience food.  Vended Food Products, which
include refrigerated, frozen, can/bowl pack, and other meal items represents a
$3.1 billion segment. While data on vended frozen foods is not stated
specifically, industry sources including Vending Times and The Automatic
Merchandiser Magazine concur that frozen food is a growth category while fresh
foods are declining. Frozen food machines include ice cream machines as well as
frozen entree machines that require an adjacent microwave oven to heat the
item.





According to the Vending Times, there
are an estimated 1.4 million vending locations throughout the
United  States situated in manufacturing plants, factories, offices,
government buildings, schools, colleges, hospitals and other public locations.
These are served by approximately 9,000 vending operators.  In
addition, there are approximately 52,000 hotels in the United States and 300,000
worldwide according to the American Hotel & Lodging Association
(www.ahma.com). There are approximately 6,000 business-oriented hotels with more
than 150 rooms, and approximately 14,000 hotels with 75 to 150 rooms. The growth
rate for the overall vending market is 5% annually.





Products
and Services





We have a family of products which are
geared towards improving the experience of consumers, establishments, and
operators in the convenience food, digital signage and product dispensing
industry.   Our current line of products and services are
described below.





Automated Express Market





We have developed and created our
Automated Express Market (AEMTM) system which is Controlled Access Cabinet
system. These custom built wood and steel based cabinets are PC based and
designated for use in specialized locations such as hotels, Inns, c-stores,
malls and retail stores that are limited in the ability to effectively sell and
market food, convenience items or higher priced items which are subject to
pilfering. The cabinets can be merchandised to dispense more than seventy-two
selections including snacks, hot meals, ice cream, alcoholic and non-alcoholic
beverages as well as personal amenities such as sunscreen, toothpaste, and
brushes.  They can also be configured for high ticket items such as
cell phones, digital cameras mp3 players personal electronic devise and more.
The AEMTM system gives the hotel’s customers the convenience of billing directly
to their room through touch screen pin technology so they do not have to carry
cash or coin to make purchases. The system automatically posts the charge to the
guest’s account by utilizing touch screen vending (TSVTM) and multi-payment
capabilities. AEMTM cabinets have multiple payment options built in that include
touch screen payment technology, credit/debit acceptors and smart card
readers.   We are currently exploring opportunities with many
limited service hotel chains in the U.S., a market that totals more than 50,000
establishments as well as c-stores and retail stores and shopping
malls.





Media Advertising





We have developed AVTi MediaTM which
allows for an advertising medium to be added to virtually any of AVT designed
systems including AEMTM cabinets and all ofour next generation vending
machines.  By incorporating AVTI Media, we allow the consumer to view
the media, advertising or hotel messaging while they make their
selections.  AVTi Media can generate advertising revenue for owners
and operators in many settings such as conference rooms, hotel lobbies, airport
terminals, restaurants, car rental outlets and surgery center waiting
rooms.  By having vending machines in prominent locations within major
companies, the vending operator “owns” the valuable space that can be used to
generate advertising revenue through the Digital TV Message Board or (DTVMB)
technology.  Our Vending Management System software allows for the
management of machine inventory, repairs, collections and advertising through
remote access. VMSTM enables owner/operators to reduce costs and increase profits
by enabling real time access to inventory levels, system status, machine service
and daily receivables with little to no machine down time.





Vending Management SystemTM
(VMS)





Our VMS systems allow us to view item
information for each machine to help plan for daily replenishment, sales
statistics and alerts us of defects to operators as well as defect history for
each machine. This technology increases operational efficiency of vending
operations and helps to prevent inventory shrinkage and skimming, both major
control issues in the vending industry. A key differentiator relative to the
offerings of other established players in the vending machine management space
is that our VMS solution works via a DSL line cellular modem or Internet Wi-Fi
and be substantially less expensive to own and operate than competing systems
who do not use the internet for bi-directional transmission of vending system
data..





Vend Sensing System (VSS)





We have developed and have a patent
pending on our VSS product to provide a surefire solution for detecting all
vended items.  The VSS was developed specifically to detect that a
vending type of product has dropped from one of the dispensing columns directly
above the sensing system and has fallen into the customer delivery bin at the
base of the vending system.





The VSS is coupled directly with the
vending system control electronics in such that the VSS circuitry is disabled
until the vending system control electronics has received
payment.  Once payment has been received and the vending system starts
the dispensing process, the control electronics enables the VSS circuitry to
detect product which has been dispensed and has dropped into the delivery bin
below.  During this sensing period, the VSS circuitry is only enabled
for the empirical time period it takes to detect any one of the vendible
products to fall into the delivery bin.





During the sensing period of time, the
VSS circuitry uses an auto-calibrated ultrasonic beam to detect if an object of
just about any size, form or shape (designed for detection of any object that
can be vended) has fallen into the detectable space of the customer product
delivery bin.  If an object (vended product) enters the detectable
vending space, the VSS circuitry detects the object and in turn sends a
“detected” signal to the Control Electronics.  If the VSS circuitry
does not detect an object has entered the customer delivery bin space within the
allotted empirical time frame, the VSS circuitry returns a command signal to the
control electronics that a “no vend object detected”.  It is the
control electronics responsibility to determine the next appropriate action to
take.





This invention for product detection
provides many distinct and exciting advantages over conventional
detection.  First and foremost, the VSS is calibrated to “look” across
the entire cross-sectional area of the delivery bin.  This is a
primary advantage over the conventional light beam detection
method.  The detection system is compatible in cost to that of
traditional vending detection systems.  The “self calibration mode
allows the system to be able to retrofit into other vending systems with minimal
modification needed.





Vending Machine Manufacturing, Sales
and Placements





We currently manufacture next
generation refrigerated and high capacity snack machines as well as standard and
customized product dispensing systems. These machines have been designed to meet
or exceed our specific performance specifications and give us the ability to
minimize costs traditionally associated with purchasing new
equipment.  The manufacturing of our own equipment also allows us to
incorporate our technology into the systems during at the time of production
reducing the costs associated with retrofitting units. We sell these systems
directly to distributors, vending operators and end users located primarily
throughout the United States, Canada and Mexico. We believe that we are
currently the only manufacturing entity with this capability in the vending
industry, giving us a tremendous lead and advantage over our
competition.





The major competitive advantages of
AVT’s next generation machines is they all have the capability of being
configured with an integrated PC.  The integrated PC allows for a
variety of additional functions which include but are not limited to, cashless
vending, remote sales management and media advertising for creating additional
revenue through the sale and display of advertising play loops.  The
feature of playing multiple looping advertisements yields the possibility of
adding additional stream of revenue which may exceed that of the sales of vended
product.  Another significant advantage is the  ability to
plug into a standard 120 VAC household power outlet. As an operator, AVT’s
experience is that the unit price of a machine and sometimes the required 220VAC
circuits for the units represent major constraints to growth of a vending
company.  Our next generation machines will cut machine acquisition
cost by greater than 50% and eliminate expensive power outlet upgrades for
establishments and operators increasing placement and sales
opportunities.  Through the design and manufacturing of vending and
product dispensing systems using new technologies, we have become a vendor of
equipment for the entire gamete of food and high priced consumer electronics and
dispensed items. With capabilities to produce machines that are far less
expensive, less power demanding and having multi-pay options other than the
traditional market standard, we have the opportunity to grow the mainstream as
well as specialty segment of vending machine manufacturing and operations to
become a major equipment provider to other distributors, all without a heavy
capital investment.





Business
Strategy





Manufacturing Capabilities





Our goal is to become a full service
developer and manufacture of highly integrated vending systems.  Over
the past several years, AVT has assembled an integral team of experienced
engineers and qualified technicians to develop vending solutions comprised of
original and inventive technology and integrating this technology into a line of
sophisticated self service products.





Our engineers use creative tools such
as “Solid Works” to develop and generate CAD drawings used by our local
manufacturing partners as well as our OEM manufacture in China to produce our
state of the art vending systems components which are shipped to our 30 thousand
square foot facility in Corona, California for integration, assembly, final
testing and deployment.  A multitude of electrical and software tools
are also used to create AVT’s proprietary control boards, sensors, and firmware
used by all AVT branded product.





Fabrication / Assembly





We fabricate the housing for our
vending machines utilizing offshore contract manufacturers.  Our final
fabrication and assembly is based in Corona, California at our main
facility.  Local manufacturing includes approximately 10,000 sq/ft of
sheet metal fabrication and 15,000 sq/ft of assembly.  In-house
Fabrication Capabilities include; Sheet Metal Forming, Welding, NC Punching, pot
Welding, Machining and Fab Win (Fabrication Programming
Software).  In-House Assembly Capabilities include; Line Assembly,
System Integration, QC Testing, Silk Screening, Operational Testing





Our Current Products





The RAM4000 Vending
Machine





Our RAM4000 is a refrigerated vending
system..  This is a refrigerated snack/beverage combo machine that
uses all of our current technology to vend 4 rows of food, beverage, snack and
candy or any combination thereof .  The RAM4000 is ideal for smaller
populated vending accounts, OCS locations and the school segment.  The
RAM400 uses our optional Multi-Pay system allows the machine to accept Cash,
ATM, and Credit Cards.  The system also accepts AVT’s optional AVTi
Media product and VSS product drop detection system.





The RAM5000 Vending
Machine





Our RAM5000 machine is our answer to
the industry’s need for a higher capacity non refrigerated snack machine which
utilizes all of our current technology.  The RAM5000 vends 5 rows of
non-refrigerated snack and candy or any combination thereof. RAM5000 is ideal
for smaller populated vending accounts needing a high capacity vending machine,
OCS locations and the school segment. Like the RAM4000, the RAM5000 uses our
optional Multi-Pay system allows the machine to accept Cash, ATM, and Credit
Cards.  The system also accepts AVT’s optional AVTi Media product and
VSS product drop detection system.





Kiosk Systems





In addition to our vending machines, we
have incorporated a line of computer and technology based kiosk
systems.  These kiosks will be deployed in conjunction with our line
of RAM vending systems as well as being sold as self service or control center
kiosks systems.  All kiosks have the ability to be fitted with digital
signage which runs our media software products to be come a part of AVTi Media
Network.





AVTi Media





AVTi Media is an advertising medium
option available basically all AVT products including our next generation
vending RAM 4000/5000 vending systems.  AVTi Media displays media,
advertising, or hotel messaging on video screens located on the vending machine
or product dispensing systems..  Consumers may view the media while
they make their selections at the vending machine.  AVTi Media can
generate advertising revenue for owners and operators in many settings. Our
target market are surgery centers, health clubs, dentist offices, retail sites,
and any organization that has a high-traffic, captive audience that is striving
to enhance the experience of their customers.





Competition





There are several vending companies in
Southern California and the United States.  These competitors offer
machine sales and vending route operations much the same as we do.





Route Competition





Our  route and vending
operations serve as our core business structure.  Our route and
vending operations utilize approximately 10 service trucks to service
approximately 650 placed systems in 250 locations.  Our service
operation is based in Corona California and covers the primarily the areas of
Riverside, Orange and Los Angeles counties.   We currently
compete in these counties with several other competitors.  Although
these are our competitors from the sense that they have offer similar route and
vending services, they do not manufacture machines as we
do.   These competitors are as follows.





•  Take a
Break:                                       Primary
operations in Corona having about 20 trucks to service their
routes.





•  Continental:                             Primarily
operations in Orange County having have about 30 to 35 trucksservicing their
routes.





•  Complete:                                       Primarily
operations in Riverside and San Bernardino Counties havingapproximately about 19
trucks.





Manufacturing Competition





We primarily manufacture two vending
systems; a refrigerated low capacity machine, the RAM 4000, and a
non-refrigerated high capacity vending machine, the RAM 5000.  Both of
these base models systems can house a variety of AVT designed and integrated
technology making either the RAM 4000 or RAM 5000 or any one of the several
derivative systems unique with the vending industry.  Several of our
pending patents may present a potential monopoly within the vending industry
thereby forcing other manufacturing competitors to pay us for royalties or
licenses fees for use of our patented technologies.





Many of our manufacturing competitors
have been in business for many years building base line types of traditional
vending systems. We believe that these companies are competitors for our RAM
4000 and RAM 5000 base line systems.  Several of these competitors are
described below.





•  Crane:                  Which
also owns Dixie Narco, AP (Auto Products) and National Vendors is the
largestmanufacture of traditional baseline vending systems.





•  USI:                  A
seasoned vending manufacture having many years in the manufacturing of
traditionalbaseline vending systems.





•  AMS:                  A
large manufacture which designs its own traditional baseline systems and has
been nthe vending business for many years.





•  Zoom Systems:
            A
      manufacture which does design vending systems which integrate high levels
      of technology.    Because Zoom Systems integrates high
      levels of technology into its systems, it would be considered one of AVT’s
      primary competitors.





Although we have competition with
vending routes and vending machine sales, we believe that as a technology based
company, we are unique to the vending and kiosk industries in that we have the
ability to design, develop then integrate our technology into our premium line
of vending systems.  Due to this specialized approach, we believe that
other than Zoom Systems,  we currently do not have any significant
competition which is capable of integrating current technologies in the form of
PC based operation, RF wireless control or similar technologies seamlessly into
vending systems or products.





Patents,
trademarks, licenses, franchises, concessions, royalty agreements or labor
contracts, including duration.





We currently have four pending patents
for our technology.  These pending patents are summarized
below.





Multimedia System, Method
for Controlling Vending Machines


Serial Number 11-588,422


(Filed:  October 27,
2006)





Conventional control of vending systems
is typically done by using a system control board consisting of a PWB (printed
circuit board) and a microcontroller supported by a group of discrete electronic
components.  These system components are used to control the various
system functions of a vending machine i.e. spinning of auger motors, control of
bill and coin acceptors, LED display feed back etc.





Our invention of Touch Screen Vending
or TSV has redefined the conventional method of vending machine
control.  TSV empowers the use of a multimedia PC and a color touch
LCD display to virtually control the complete operation of the vending
machine.  The PC stores a data base software program of all desired
products to vend with an associated color digital image of each
item.  A second application program displays the color image of the
intended items to vend in the exact format as seen through the glass front of
the vending machine.  The PC also controls the collection of currency
(i.e. bill acceptor, coin acceptor, credit card reader) in place of the vending
machines control board.  I/O (input/output) ports from the PC are used
to interface to the vending machine control board and all aspects of operation
of the vending machine is under complete control by a multimedia PC coupled with
the touch screen LCD.





This invention for the control of
vending machines provides many distinct and exciting advantages over
conventional control such as the universal language of using a touch display to
select desired products to vend in place of an alphanumeric
keypad.  The system can generate virtually any type of report to
combat money or product shrinkage while providing exact control of
inventory.  The LCD provides a means of generating additional revenue
through advertising displayed products or other services while the system in
idle mode.





Vend Operating
System


Claims to be amended to the Multimedia
System, Method forControlling Vending Machines – Serial Number
11-588,420


(Filed:  October 27,
2006)





Our Vend Operating System (Vend OS) is
a next generation vending and product dispensing system utilizing a personal
computer (PC) to drive the system components and utility
software.  The uniqueness in the system lies in that the vending
system uses a PC to control the vending system as compared to the prior art in
the vending industry which typically uses discrete component controllers for
overall system operation and control.





Our Vend OS is broken up into two
sections hardware and software. The hardware consists of the following devices:
Virtual Sensing System (VSS), a USB Omni-pattern scanner, a USB Magtek Card
Reader, a USB Pyramid Bill Acceptor, a MDB Coinco coin machine, a 7 inch LCD
screen built-in with the Nano-ITX PC, and a portable mpeg player (allowing
static media files to play in a continuous loop).   The software
consists of the following applications: Vending Management System (VMS), Touch
Screen Vending (TSV) and AVTI Digital Signage Media.





Our Vend OS is extremely flexible in
its capabilities because the product is installed in our RAM bases systems
without any peripheral devices and a Nano-ITX computer that includes a freeware
developed by our engineering department running as a Windows’ service allowing
vending by conventional ways. This freeware allows sales data and records to be
stored in a secure database and has the capability of manipulating a machine’s
state remotely through internet connectivity, memory stick, cell modem or phone
line.





With our Vend OS we
can:  manipulate product prices; turn the machine off and on, turn the
compressor off and an, manipulate the change returned, manipulate the system
clock, and read the machine’s state from the MDB interface and motor/auger
control.  Our Nano-ITX computer includes an optional 7” touch wide
screen LCD, a flash ROM that runs Microsoft Embedded System, a MDB to RS-232
interface board that connects from a VMC board to the PC serial port, motor
driver printed circuit board and a PCMCIA modem that allows wireless internet
connection as a typical system but control for any variety of input or out put
devices are part of the scalable system.





Wireless Management of
Remote Vending


Serial Number
60-730,369


(Filed:  October 27,
2005)





Conventional methods for managing the
inventory of vending machine product, price selection and for checking the daily
sales numbers are typically performed by a route driver who manual checks the
vending machine on a frequent basis by driving to the vending machine/s location
and performing a variety of manual operations which include interrogation of the
vending machine’s control board.





The invention of “Wireless Management
of Remote Vending” defined as VMS (Vending Management System) is a method for
performing the management on many of the above listed vending machine
functions.  Information on vending activity is stored in the vending
machine’s electronic control board which is then wirelessly transmitted out
through the VMS module to a wireless cell phone network.  The
information received on wireless network is downloaded then transmitted over the
internet to one central PC server/s located at AVT.  The information
stored on AVT’s server/s can be accessed via a secure log-in function (user’s
account) to review and manage any specific vending machine in the network (which
has been equipped with a VMS module).  The flow of VMS information and
data is a bi-directional operation.  Users can also upload data,
changes and control function out from their secure account to any of the vending
machines in their specific network.





VMS was designed to be a low cost
solution with high tech performance.  Vending route operators with as
little as one or and many as one hundred (or more) vending systems in the field
and equipped with VMS can now remotely and effectively control and managed their
vending operations from a single PC located at the home
office.  Remote VMS management controls money and product shrinkage,
manages inventory by letting the vending operator know exactly what has sold and
what needs to be replaced and monitors and transmits systems critical
information such as machine temperature, system errors and failure modes and
alerting the vending operator instantly for expeditious disposition on any
vending system in the field equipped with a VMS telemetry module.





Vend Sensing
System


Serial Number 11-976,311


(Filed:  October 23,
2007)





Historically, the vending industry has
typically used the conventional method of breaking or impeding a light beam for
detecting when a product which has vended (dropped from a column above delivery
bin).  In most cases, the light beam consists of an infrared
transmitter and infrared detector which are mounted in a direct “line of site”
of each other.  When a product has dropped across the light beam, the
product will momentarily break the path of the light beam which sends an
interruption signal to the vending system’s control board for
processing.  Because a focused light beam is inherently narrow, this
often causes the light beam to miss narrow items such as a thin candy
bar.  Our Vend Sensing System (VSS) has redefined this conventional
method for detecting a vended product utilizing ultrasonic sound.





During the sensing period of time, the
VSS circuitry uses an auto-calibrated ultrasonic beam to detect if an object of
just about any size, form or shape (designed for detection of any object that
can be vended) has fallen into the detectable space of the customer product
delivery bin.  If a vended product enters the detectable vending
space, the VSS circuitry detects the object and in turn sends a “detected”
signal to the control electronics. If the VSS circuitry does not detect an
object has entered the customer delivery bin space within the allotted empirical
time frame, the VSS circuitry returns a command signal to the control
electronics that a “no vend object detected.”  It is the control
electronics responsibility to determine the next appropriate action to
take.





The VSS is coupled directly with the
vending system control electronics so that the VSS circuitry is disabled until
the vending system control electronics has received payment.  Once
payment has been received and the vending system starts the dispensing process,
the control electronics enables the VSS circuitry to detect product which has
been dispensed and has dropped into the delivery bin below.  During
this sensing period, the VSS circuitry is only enabled for the empirical time
period it takes to detect any one of the vendible products to fall into the
delivery bin.





This invention for product detection
provides many distinct and exciting advantages over conventional
detection.  First, the VSS is calibrated to “look” across the entire
cross-sectional area of the delivery bin.  This is a primary advantage
over the conventional narrow light beam detection method.  The
detection system is compatible in cost to that of traditional vending detection
systems and because it is self calibrating, it can readily retrofited into other
vending systems with minimal modifications.





System and Method for
Interactive Advertising


Serial Number 60-935,045


(Filed:  July 24,
2007)





Our System and Method for Interactive
Advertising is a unique solution for potential clients or users to interact to a
specific network of supplied information such as advertising and branding via a
secure or unsecured network.  The system is designed to allow for
direct customer interaction through existing telephone switch based
infrastructure such as pay phones.





The new system essentially takes our
base advertising hardware/software products and adapts them for the telephone
industry.  This adds a level of customer interaction based upon touch
or other interactive means such as a keyboard or a display
message.  Customers using the system may be rewarded either with
discounts and/or promotional deals depending upon the touched advertisement
after responding to simple instructions displayed on the screen.





In addition, the smart technology
integrated into each system telephone may also be fitted with the appropriate
hardware to make that specific location a “Hot-Spot.”  Each Hot-Spot
provides customers with another means  of interacting with the ATV
network through free of fee-based connectivity using the customer’s portable
device such as a smart phone or laptop computer, or any other portable
electronic device capable of linking to the Hot-Spot by means of cable,
wireless, or infrared radio frequency.  Each Hot-Spot location allows
customers to use wireless internet within the location’s range to aid them in
acquiring their discounts and/or rewards more quickly and specific
advertisements may be downloaded and displayed on the phone touch
screen.  Ideally, customers may form a dependency for the Hot-Spot’s
use and become a habitual user of the AVT technology and services.





Effect
of existing or probable governmental regulations on the business





The effects of existing or probable
government regulations are minimal.





Research
and Development





AVT is dedicated to the development of
technology enriched vending and product dispensing systems.  Our
research and development team is staffed with software, electromechanical and
firmware engineers, and information technology specialists with the primary
responsibility of developing and integrating new technology into our vending
systems.





Our Primary Research and Development
Efforts





Our research and development team uses
creative tools such as “Solid Works” to develop and generate CAD drawings which
are used by our local manufacturing partners and OEM manufacture in China to
produce our state of the art vending systems, components and retrofit
designs.  These machines are shipped to our facility in Corona,
California for integration, assembly, final testing and deployment.





One of our primary R&D concerns is
the continuous development of our RAM 4000 and RAM 5000 vending
machines.  Our team continuously develops a variety of software
application programs, administrative and database programs and embedded firmware
for these systems.





Another ongoing R&D effort is the
design and enhancement of our AVTi Media products.  The AVTi Media
products are integrated into our base systems and also sold to other vending
manufactures.  The following is a summary of our current AVTi
products:





•  AVTi Media
Administer:  This is a program designed to manage and
administer all aspects and features of our digital signage
program.  The Media Administrator allows a remote operator to create,
manage, update and scheduled ads that will play on LCD displays which have been
integrated into vending systems.





•  AVTi Media Client: This is a
program designed be located on the vending system’s integrated PC and has the
priority of playing the ad “play list.”  This client software also
uses prescheduled times to monitor the server to “update” the playlist as
required.





•  AVTI Media
Server:  This is a server based program which coordinates the
efforts, changes and directives from the administrator program with the schedule
efforts of all the multiple clients located in the field and connected via the
internet.





Our Secondary Research and Development
Efforts:





Our secondary R&D efforts run
concurrently with our primary R&D efforts to support ongoing systems and to
develop new products.  These products are summarized as
follows:





•  TSV:  Touch Screen
Vending is an ongoing software development effort which is our primary flagship
software product.  This is a modular program designed to evolve with
the changing technologies supporting our vending and dispensing
products.





•  IVend:This is an
ongoing development design that features a high-end dispensing center which
combines our base RAM 4000 cabinet with a creative front door design which
includes interactive touch screens and a variety of other supported
hardware.  The IVend also has its own software application program
which is designed to provide a high degree of interactive and intuitive
application to the user.





•  Tech Store: This system is
similar to our IVend system designed for middle priced systems.





•  Vend Mart: This system is
similar to our IVend system designed for entry level priced
systems.  The Vend Mart also has its own software application program
which is design to provide  a high degree of interactive and intuitive
application to a base line vending systems equipped with TSV.





In additional, we have a variety of
ongoing hardware and software R&D projects which are at various stages of
development.  The following is a brief list of some of our
non-confidential R&D efforts:





MDB
      – PC Software Interface
            
            VMSII
      – Hardware/Server/Software ProjectDEX
      to PC software Interface
            
            VMS
      – Drop Sensing effortsMDB
      to USB Hardware Device
            
            AEM
      Cabinet DesignDEX
      to Radio Controller PCB
            
            Multiple
      All-In-One PC/LCD Displays designsX –
      Y Dispensing Center Design
            
            Multiple
      Custom Dispensing Projects





Costs
and effects of compliance with environmental laws





The expense of complying with
environmental regulations is of minimal consequence.





Number
of total employees and number of full time employees.





We currently have approximately 20 full
time employees and 5 part-time employees.  We also utilize the
services of independent contractors.





Item
1A.  Risk Factors





Item 1a.  Risk
Factors





An investment in our common stock
involves a high degree of risk.  You should carefully consider the
following risk factors and the other information in this registration statement
before investing in our common stock.  Our business and results of
operations could be seriously harmed by any of the following risks.





We
have a limited operating history and may not succeed.





We have a
limited operating history and may not succeed.  Our plans and
businesses are “proposed” and “intended” but we may not be able to successfully
implement them.  Our primary business purpose is vending operations
and manufacturing.  We expect that unanticipated expenses, problems,
and technical difficulties will occur and that they may result in material
delays in the operation of our business.  We may not obtain sufficient
capital or achieve a significant level of operations and, even if we do, we may
not be able to conduct such operations on a profitable basis.





Our
common stock is a “Penny Stock” which trades on the Pink Sheets on the
over-the-counter market, as a result, there are additional risks associated with
stock and you may be unable to liquidate your investment in our stock
quickly.





Our common stock is considered a “Penny
Stock” which trades on the Pink Sheets on the over-the-counter
market.  As a result, there are additional risks associated with our
common stock and you may be unable to liquidate your investment in our common
stock quickly.





Our
common stock is subject to the “Penny Stock” rules of the SEC.





The Securities and Exchange Commission has adopted Rule 15g-9
which establishes the definition of a “penny stock,” for the purposes relevant
to us, as any equity security that has a market price of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require:





•           that
a broker or dealer approve a person's account for transactions in penny stocks;
and





•
            the
      broker or dealer receive from the investor a written agreement to the
      transaction, setting forth the identity and quantity of the penny stock to
      be purchased.





In order
to approve a person's account for transactions in penny stocks, the broker or
dealer must:








•           obtain
financial information and investment experience objectives of the person;
and





•
            make
      a reasonable determination that the transactions in penny stocks are
      suitable for that person and the person has sufficient knowledge and
      experience in financial matters to be capable of evaluating the risks of
      transactions in penny stocks.





The broker or dealer must also deliver,
prior to any transaction in a penny stock, a disclosure schedule prescribed by
the Commission relating to the penny stock market, which, in highlight
form:




•           sets
forth the basis on which the broker or dealer made the suitability
determination; and





•
            that the broker or dealer
      received a signed, written agreement from the investor prior to the
      transaction.





Generally, brokers may be less willing
to execute transactions in securities subject to the “penny stock” rules. This
may make it more difficult for investors to dispose of our common stock and
cause a decline in the market value of our stock.





Disclosure
also has to be made about the risks of investing in penny stocks in both public
offerings and in secondary trading and about the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have to be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks.




We
require substantial capital requirements to finance our
operations.  Our inability to obtain financing will adversely impact
our business.





We will require additional capital for
future operations.  We plan to finance anticipated ongoing expenses
and capital requirements with funds generated from the following
sources:





§
            cash
      provided by operating activities;


§
            available
      cash and cash investments; and


§
            capital
      raised through debt and equity
offerings.





The uncertainties and risks associated
with future performance and revenues will ultimately determine our liquidity and
our ability to meet anticipated capital requirements.  If declining
prices cause our anticipated revenues to decrease, we may be limited in our
ability to replace our inventory.  As a result, our production and
revenues would decrease over time and may not be sufficient to satisfy our
projected capital expenditures.  We may not be able to obtain
additional financing in such a circumstance.





Our
stock price has been extremely volatile and, as a result, you may not be able to
resell your shares at or above the price you paid for them.





The stock price of our stock as has
been extremely volatile and an active public market for our common stock may not
develop or be sustained.   Further, the market price of our
common stock may decline below the price you paid for your shares.





Among the factors that could affect our
stock price are:





§
            industry
      trends and the business success of our
vendors;


§
            actual
      or anticipated fluctuations in our quarterly financial and operating
      results, including our comparable store
sales;


§
            our
      failure to meet the expectations of the investment community and changes
      in investment community recommendations or estimates of our future
      operating results;


§
            strategic
      moves by our competitors, such as product announcements or
      acquisitions;


§
            regulatory
      developments;


§
            litigation;


§
            general
      market conditions;


§
            other
      domestic and international macroeconomic factors unrelated to our
      performance; and


§
            additions
      or departures of key personnel.





We
have substantial indebtedness.





As of December 31, 2007, we had
outstanding indebtedness of $1,547,804 which includes $1,471,580 convertible
notes which require us to make quarterly cash interest payments.  Our
ability to meet our debt service requirements will depend upon achieving
significant and sustained growth in our expected cash flow, which will be
affected by our success in implementing our business strategy, prevailing
economic conditions and financial, business and other factors, some of which are
beyond our control.  Accordingly, we cannot be certain as to whether
or when we will have sufficient resources to meet our debt service obligations.
If we are unable to generate sufficient cash flow to service our indebtedness,
we will have to reduce or delay planned capital expenditures, sell assets,
restructure or refinance our indebtedness or seek additional equity capital. We
cannot assure you that any of these strategies can be effected on satisfactory
terms, if at all, particularly in light of our high levels of indebtedness. In
addition, the extent to which we continue to have substantial indebtedness could
have significant consequences, including:





-
            our
      ability to obtain additional financing in the future for working capital,
      capital expenditures, product research and
      development,  acquisitions and other general corporate purposes
      may be materially  limited or
  impaired,





-
            a
      substantial portion of our cash flow from operations may need to be
      dedicated to the payment of principal and interest on our indebtedness and
      therefore not available to finance our business,
  and





-
            our
      high degree of indebtedness may make us more vulnerable to economic
      downturns, limit our ability to withstand competitive pressures or reduce
      our flexibility in responding to changing business and
      economic      conditions.





The
vending industry is a competitive industry and we may not be able to compete
with our competitors.





The vending industry is highly
competitive. We compete in both the vending manufacturing and vending operations
segment of the industry with companies that offer the same services that we
do.  Many of our competitors have significantly greater resources than
we do.  Although we believe we have an competitive advantage based
upon the lower pricing of our products, a substantial decline in price could
adversely affect consumer demand for our products and reduce our competitive
advantage.  Although we believe that there are significant barriers to
entry to new competitors in the vending market due to, among other things, the
substantial capital outlay required to purchase the number of machines needed to
achieve competitive operating efficiencies, a competitor with significant
financial resources may be able to compete with us.  There can be no
assurance that any competitors will not be able to raise the required capital to
effectively compete with us.





In addition, we may face new
competition as we seek to expand into international markets and develop new
products, services and enhancements. Many of the competitors have greater
experience than we do in operating in these international markets. Moreover, new
products that we intend to develop, such as advertising, may subject us to
competition from companies with significantly greater technological resources
and experience.  Many of our potential competitors have longer
operating histories, greater name recognition, larger customer bases and
significantly greater financial, technical, marketing and public relations
resources than we have. These competitors may be able to undertake more
extensive marketing campaigns, adopt more aggressive pricing policies and make
more attractive offers to consumers and businesses. Our competitors might
succeed in developing technologies, products or services that are more
effective, less costly or more widely used than those that have been or are
being developed by us or that would render our technologies or products obsolete
or noncompetitive. We cannot be certain that we will be able to compete
effectively with current or future competitors.  Competitive pressures
could seriously harm our business, financial condition and results of operations
and our ability to achieve sufficient cash flow to service our
indebtedness.





The
success of our potential new services and products is uncertain.





We have committed, and expect to
continue to commit, significant resources and capital to develop and market
existing product and service enhancements and new products and
services.  One example is our AVTi advertising
business.  These products and services are relatively untested, and we
cannot assure you that we will achieve market acceptance for these products and
services, or other new products and services. Moreover, these and other new
products and services may be subject to significant competition with offerings
by potential competitors in addition to companies that compete in our coin
processing business. Many of these potential competitors have significantly
greater technological expertise and financial and other resources than we do. In
addition, new products, services and enhancements may pose a variety of
technical challenges and require us to enhance the capabilities of our network
and attract additional qualified employees. The failure to develop and market
new products, services or enhancements successfully could seriously harm our
business, financial condition and results of operations and ability to achieve
sufficient cash flow to service our indebtedness.





Our
business is dependent upon continued market acceptance by
consumers.





We are substantially dependent on
continued market acceptance of our vending machines by consumers. Although
believe that the use of vending machines in the United States is gaining better
consumer acceptance, we cannot predict the future growth rate and size of this
market.





We
depend upon third-party manufactures and suppliers and the loss of such
third-party manufactures and suppliers would seriously harm our
business.





We depend, and will continue to depend,
on outside parties for the manufacture of our vending machines and its key
components. We intend to expand our manufacturing and such expansion may be
limited by the manufacturing capacity of our third-party manufacturers and
suppliers. Although we expect that our current third-party manufacturers and
suppliers will be able to produce sufficient units to meet projected demand, if
there is an unanticipated increase in demand for our units, we may be unable to
meet such demand due to manufacturing constraints.   Should our
third-party manufacturers and suppliers cease making our, we would be required
to locate and qualify additional suppliers. We may be unable to locate alternate
manufacturers on a timely basis.





Our
prior growth rates may not be indicative of our future growth rates and should
not be relied upon.





You should not consider prior growth
rates in our revenue to be indicative of our future operating results. The
timing and amount of future revenues will depend almost entirely on our ability
to obtain new vending routes and make vending machine sales.  Our
future operating results will depend upon many other factors,
including:





-
the level of product and price competition,





-
our success in expanding our business network and managing our
growth,





-
our ability to develop and market product enhancements and new
products,





-
our ability to enter into and penetrate new international markets, such as
Mexico and Canada,





-
the timing of product enhancements, activities of and acquisitions by
competitors,





-
the ability to hire additional employees, and





-
the timing of such hiring and the ability to control costs.





We
may be unable to adequately protect or enforce our patents and proprietary
rights.





Our future success depends, in part, on
our ability to protect our intellectual property and maintain the proprietary
nature of our technology through a combination of patents, licenses and other
intellectual property arrangements, without infringing the proprietary rights of
third parties. We currently have four pending patents relating to our
business.  We cannot assure you that these pending patents will be
issued or that any of our patents will be held valid if challenged, that any
pending patent applications will issue, or that other parties will not claim
rights in or ownership of our patents and other proprietary rights. Moreover,
patents issued to us may be circumvented or fail to provide adequate protection.
Our competitors might independently develop or patent technologies that are
substantially equivalent or superior to our technologies.  Since
patent applications in the United States are not publicly disclosed until the
patent is issued, applications may have been filed by others which, if issued as
patents, could cover our products. We cannot be certain that others will not
assert patent infringement claims or claims of misappropriation against us based
on current or pending U.S. and/or foreign patents, copyrights or trade secrets
or that such claims will not be successful.





In addition, defending our
company against these types of claims, regardless of their merits, could require
us to incur substantial costs and divert the attention of key personnel. Parties
making these types of claims may be able to obtain injunctive or other equitable
relief which could effectively block our ability to provide our services and
could result in an award of substantial damages. In the event of a successful
claim of infringement, we may need or be required to obtain one or more licenses
from, as well as grant one or more licenses to, others. We cannot assure you
that we could obtain necessary licenses from others at a reasonable cost or at
all.





We also rely on trade secrets to
develop and maintain our competitive position. Although we protect our
proprietary technology in part by confidentiality agreements with our employees,
consultants and corporate partners, we cannot assure you that these agreements
will not be breached, that we will have adequate remedies for any breach or that
our trade secrets will not otherwise become known or be discovered independently
by our competitors. The failure to protect our intellectual property rights
effectively or to avoid infringing the intellectual property rights of others
could seriously harm our business, financial condition and results of operations
and ability to achieve sufficient cash flow to service our
indebtedness.





We
depend upon key personnel, the loss of which could seriously harm our
business.





Our performance is substantially
dependent on the continued services of our executive officers and key
employees.   Our long-term success will depend on our ability to
recruit, retain and motivate highly skilled personnel. Competition for such
personnel is intense. We have at times experienced difficulties in recruiting
qualified personnel, and we may experience difficulties in the
future.  The inability to attract and retain necessary technical and
managerial personnel could seriously harm our business, financial condition and
results of operations and our ability to achieve sufficient cash flow to service
our indebtedness.





Our
management has broad discretion over the use of capital raised.





We plan on raising capital for working
capital and to help pay off the outstanding indebtedness and for general
corporate purposes, including financing the Company's expansion. Thus,
management will have broad discretion in allocating proceeds of any
offering.





Requirements
associated with being a reporting public company will require significant
company resources and management attention.





Prior to this offering, we had not been
subject to the reporting requirements of the Securities Exchange Act of 1934, or
the other rules and regulations of the SEC or any securities exchange relating
to public companies. We are working with independent legal, accounting and
financial advisors to identify those areas in which changes should be made to
our financial and management control systems to manage our growth and our
obligations as a public company. These areas include corporate governance,
corporate control, internal audit, disclosure controls and procedures and
financial reporting and accounting systems. We have made, and will continue to
make, changes in these and other areas, including our internal controls over
financial reporting. However, we cannot assure you that these and other measures
we may take will be sufficient to allow us to satisfy our obligations as a
public company on a timely basis.





In addition, compliance with reporting
and other requirements applicable to public companies such as Sarbanes Oxley
will create additional costs for us, will require the time and attention of
management and will require thehiring of additional
personnel and outside consultants. We cannot predict or estimate the amount of
the additional costs we may incur, the timing of such costs or the degree of
impact on our management's attention to these matters will have on our
business.





In
addition, being a reporting public company could make it more difficult or more
costly for us to obtain certain types of insurance, including directors' and
officers' liability insurance, and we may be forced to accept reduced policy
limits and coverage or incur substantially higher costs to obtain the same or
similar coverage. The impact of these events could also make it more difficult
for us to attract and retain qualified persons to serve on our board of
directors, our board committees or as executive officers.





Our estimates may
prove to be inaccurate and future net cash flows are uncertain.  Any
significant variance from these assumptions could greatly effect our
estimates.





Our estimates of both future sales and
the timing of development expenditures are uncertain and may prove to be
inaccurate.  We also make certain assumptions regarding net cash flows
and operating costs that may prove incorrect when judged against our actual
experience.  Any significant variance from these assumptions could
greatly affect our estimates of future net cash flows and our ability to borrow
under our credit facility.





Our preferred stock has rights senior to those of our
common stock which could adversely affect holders of common
stock.





Our charter documents give our board of
directors the authority to issue series of preferred stock without a vote or
action by our stockholders.  The board also has the authority to
determine the terms of preferred stock, including price, preferences and voting
rights.  The rights granted to holders of preferred stock may
adversely affect the rights of holders of our common
stock.  Currently, our board has authorized our Series A Convertible
Preferred Stock which has a liquidation preference – a pre-set distribution in
the event of a liquidation – that would reduce the amount available for
distribution to holders of common stock.  In addition, our Series A
Convertible Preferred Stock has voting rights which are superior to the voting
right of the holders of our common stock.  In addition, the issuance
of preferred stock could make it more difficult for a third party to acquire a
majority of our outstanding voting stock.  As a result, common
stockholders could be prevented from participating in transactions that would
offer an optimal price for their shares.





We
do not anticipate paying cash dividends on our capital stock in the foreseeable
future.





We do not anticipate paying cash
dividends in the foreseeable future. We currently intend to retain our future
earnings, if any, to fund the growth of our business. In addition, the terms of
the instruments governing our existing debt and any future debt or credit
facility may preclude us from paying any dividends.





Item
1B.  Unresolved Staff Comments.





We are currently in the process of
responding to staff comments relating to our Registration Statement on
Form-10.





Item
2.  Properties





Real
Property





At present, we do not own any
property.  Our retail operation is located in a leased facility. We
have local access to all commercial freight systems. The current retail facility
is approximately 30,000 square feet. This facility contains are administrative,
sales and manufacturing offices.  The current lease runs until
February 28, 2011.  The retail facility is located at 341 Bonnie
Circle, Suite 102, Corona, CA 92880.





Item
3.  Legal Proceedings





We
are not a party to any pending legal proceedings responsive to this
Item.





Item
4.  Submission of Matters to a Vote of Security Holders





None.








PART
II





Item
5.  Market for Registrant’s Common Equity and Related Stockholder
Matters and Issuer Purchases of Equity Securities.




Our
common stock is traded on the Pink Sheets (www.pinksheets.com)
under the trading symbol “AVTC.PK” The stock price of our stock as has been
extremely volatile and an active public market for our common stock may not
develop or be sustained.   In addition, the stock market has from
time to time experienced extreme volatility that has often been unrelated to the
operating performance of particular companies. These kinds of broad market
fluctuations may adversely affect the market price of our common stock. For
additional information, see “Risk Factors” above.





The
following table sets forth the quarterly high and low sale prices of our common
stock, as adjusted for the 1 for 3 reverse split occurring on January 17, 2008,
for the last fiscal year and most recent quarter.





High
      Sale
            Low
      SaleFiscal  Quarters
            Price
            PriceFirst
      Quarter 2007
            $1.48
            $1.11Second
      Quarter 2007
            $1.95
            $0.52Third
      Quarter 2007
            $0.95
            $0.72Fourth
      Quarter 2007
            $0.95
            $0.75First
      Quarter 2008
            $0.88
            $0.36Second
      Quarter 2008
            $1.01
            $0.80Third
      Quarter 2008
            $1.28
            $0.60Fourth
      Quarter 2008
            $1.28
            $.051





We have
never declared or paid cash dividends





As of
December 31, 2008, there are approximately 823 holders of record of our common
stock.





We have
never declared or paid cash dividends on our common stock.  We anticipate
that in the future we will retain any earnings for operation of our
business.  Accordingly, we do not anticipate declaring or paying any cash
dividends in the foreseeable future.





We
currently have no Equity Compensation Plans.  We issue shares of our
common stock to our officers and directors pursuant to employment and director
agreements.




Item
6.  Selected Financial Data.





As a smaller reporting company, we are
not required to provide the information required by this item.





Item
7.  Management’s Discussion and Analysis of Financial Condition and
Results of Operations





Management’s
Discussion and Analysis





The
following discussion and analysis should be read in conjunction with our audited
consolidated financial statements and related notes included in this
registration statement.  This registration statement contains
“forward-looking statements.” The statements contained in this report that are
not historic in nature, particularly those that utilize terminology such as
“may,” “will,” “should,” “expects,” “anticipates,” “estimates,” “believes,” or
“plans” or comparable terminology are forward-looking statements based on
current expectations and assumptions.





Various
risks and uncertainties could cause actual results to differ materially from
those expressed in forward-looking statements.  Factors that could
cause actual results to differ from expectations include, but are not limited
to, those set forth under the section “Risk Factors” set forth in this
registration statement.





The
forward-looking events discussed in this registration statement, the documents
to which we refer you and other statements made from time to time by us or our
representatives, may not occur, and actual events and results may differ
materially and are subject to risks, uncertainties and assumptions about
us.  For these statements, we claim the protection of the “bespeaks
caution” doctrine.  All forward-looking statements in this document
are based on information currently available to us as of the date of this
report, and we assume no obligation to update any forward-looking
statements.  Forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause the actual results to
differ materially from any future results, performance or achievements expressed
or implied by such forward-looking statements.





Critical
Accounting Policies





The Company’s policy is to use the
accrual method of accounting to prepare and present financial statements, which
conform to generally accepted accounting principles. The company has elected a
December 31 year-end.





The Company considers all highly liquid
investments with maturities of three months or less when purchased, to be cash
equivalents.





Inventories are valued at the lower of
average cost (which approximates computation on a first-in, first-out basis) or
market (net realizable value or replacement cost).





Revenue is recognized at the time of
sale.





The Company accounts for income taxes
under the provisions of SFAS No. 109, “Accounting for Income
Taxes.”  SFAS 109 requires recognition of deferred tax liabilities and
assets for the expected future tax consequences of events that have been
included in the financial statements or tax returns.  Under this
method, deferred tax liabilities and assets are determined based on the
difference between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.




Results
of Operations





We have historically financed
operations through a combination of cash on hand, cash provided from operations
and the sale of our securities.





For the
year ended December 31, 2007, we had revenues of $2,340,724 and total cost of
goods and general and administrative expenses of $2,100,428 for net income of
$240,296. For the year ended December 31, 2008, we had revenues of $2,956,645
and general and administrative expenses of $25,897 for net income of
$260,748.





Although
we had significantly increased revenues for the year ended December 31, 2008, we
had essentially the same net income primarily due to increased spending on the
research and development of our wireless vending technology platform and
operations of the AC Mexican Food restaurant.   We believe that
the increased spending on research and development is necessary for the company
to move away from vending operations and work towards increased machine sales
and the development of technology which allows for the sales of our electronic
payment, back end inventory control and advertising products.  We have
experienced unexpected expenses related to the restaurant operations relating to
unpaid back taxes and vendor costs.  We expect the restaurant related
expenses to be reduced during the next year.  Our general and
administrative expenses also increased for the year ended December 31, 2008,
primarily due to increased costs of goods and operating expenses relating to
increased vehicle expenses, fuel, rent for our facility, advertising, payroll
expenses and taxes.





We expect to increase sales over the
next 12 months due primarily to sales of our RAM4000 vending
machine.  Increased sales of the RAM4000 along with increased
advertising sales should increase our overall revenues for the next 12
months.





We believe that we sufficient available
cash and cash flow from operations to satisfy our working capital and capital
expenditure requirements during the next 12 months.  There can be no
assurance, however, that cash and cash flow from operations will be sufficient
to satisfy our working capital and capital requirements for the next 12 months
or beyond.





We expect our manufacturing costs to
increase approximately 15% due to the devaluation of the U.S. Dollar and the
exchange rates with our foreign manufactures.  Depending on the
strength of the U.S. Dollar, this trend may or may not continue.





Inflation and changing prices have
affected our business as related primarily to fuel and increased vehicle
expenses.  We anticipate that fuel costs will continue, thus
increasing our operating costs.  Our cost of goods and prices for our
products remain relatively stable and we expect this trend to continue through
the end of 2009.





Liquidity
and Capital Resources





At December 31, 2008, we had cash of
$56,547 compared to $145,012 at December 31, 2007.  We attribute the
decrease in cash for the year ended December 31, 2008, due to increased general
and administrative expenses.  At December 31, 2008, we has inventory
of $507,710 compared to $1,260,893 at December 31, 2007.  The decrease
in inventory is due to increased sales.





We are unaware of any known trends,
demands, commitments, events or uncertainties that will result in, or that are
reasonably likely to result in our liquidity increasing or decreasing in any
material way.





We have committed to purchase 2,500
production units of our RAM5000 machine from our manufacturer.  These
units will be used for inventory and we have established a line of credit as a
source of funds to fulfill the purchase commitment.





Total assets for the Company increased
from 14,597,810 at December 31, 2008, to $15,162,625 for the year ended December
31, 2008.  This increase is due primarily to the purchase of the AC
Mexican, Inc. restaurant.





Total sales for the three months ended
September 30, 2008 were $872,687 compared to total sales of 559,658 the three
months ended September 30, 2007.  This increase is due to increased
vending machine sales.





General and administrative expenses
increased for the year ended December 31, 2008, primarily to the additional
expenses associated with operating the AC Mexican, Inc. restaurant and research
and development costs.





Future
Goals





In the next 12 month, we will continue
our research, development and marketing efforts. We have entered into multiple
manufacturing agreements with offshore manufacturers to produce the housings for
our technology based RAM4000 and RAM5000 vending systems and have established a
line of credit to ensure payment and production of the systems.





Our goal
is to manufacture and sell as many systems as possible in the next 12 to 24
months through established distributors and direct sales to meet the anticipated
industry demand for a competitively priced vending system that is an energy
efficient, technology based,  “Green” system..





A
critical focus for sales over the next 12 months will be our Product Dispensing
Centers (PDCs).  Our PDCs are based on our RAM4000 or RAM5000 system
and integrates more sophisticated technology features and options such as full
face large touch screen displays, receipt printers, cashless payment options and
advertising displays.  In addition, our PDCs systems can dispense a
variety of  snack items and non-food items such as cell phones, MP3
Players, digital cameras, DVDs, consumer electronics and
accessories.  We will also focus on “Themed” systems to dispense
products such as tee-shirts, promotional items, perfumes, contact lenses and
just about any product our customers have a location and market
for.  Our “Themed” systems are of exceptional interest to our direct
end customers as the products these systems dispense result in higher profit
margins.





All of
our vending systems are capable of the inclusion of PC hardware and LCD
displays.  A future goal of AVT is to complete and continue to refine
application software that runs digital signage for the primary purpose of
displaying paid advertisements.  As we sell systems that are equipped
with a PC and LCD display, each system becomes a “node” on a digital
network.  As the network expands, many thousands of vending systems
and PDCs can be part of nationwide advertising network which we believe will be
of interest for national advertisers.  Our goal is to “own” the
network but not the systems.  All vending system owners will have the
option to join  the AVT nationwide network with our AVT based
advertising vending system to get an equitable share of revenue for allowing
advertisements from AVT’s server to be pushed-out onto their vending
system.





Future
goals and system refinements will include continued software and hardware
development and refinements to include even more efficient operating systems to
integrate more seamlessly with the internet, becoming Wi-Fi standard and
including SMS and email features. Our goal is that the AVT vending systems will
become the standard for intelligent self-service vending systems deployed
throughout the US and world markets.





In
addition, within the next 12 months, we will continue to work to become a fully
company and have our common stock trading on the OTC Bulletin
Board.




Off-balance
Sheet Arrangements





We maintain no significant off-balance
sheet arrangements





Foreign
Currency Transactions





None.





Item 7A.  Quantitative and Qualitative Disclosures
About Market Risk





We
currently do not utilize sensitive instruments subject market risk in our
operations.





Item
8.   Financial Statements and Supplementary Data.





Our
financial statements and related explanatory notes can be found on the “F” Pages
at the end of this Report.





Item
9.  Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure.





None.





Item
9A.  Controls and Procedures.





In
accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934,as of the
end of the period covered by this Report on Form 10-K, our  management
evaluated, with the participation of our principal executive and financial
officer, the effectiveness of the design and operation of the Company's
disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule
15d-15(e) under the Exchange Act). Disclosure controls and procedures are
defined as those controls and other procedures of an issuer that are designed to
ensure that the information required to be disclosed by the issuer in the
reports it files or submits under the Act is recorded, processed, summarized and
reported, within the time periods specified in the Commission's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed by an
issuer in the reports that it files or submits under the Act is accumulated and
communicated to the issuer's management, including its principal executive
officer and principal financial officer, or persons performing similar
functions, as appropriate to allow timely decisions regarding required
disclosure. Based on their evaluation of these disclosure controls and
procedures, our chairman of the board and chief executive and financial officer
has concluded that the disclosure controls and procedures were effective as of
the date of such evaluation to ensure that material information relating to the
company, was made known to them by others within those entities, particularly
during the period in which this Annual Report on Form 10-K was being
prepared.





Item
9A(T). Controls and Procedures.





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting. The Company's internal control over financial
reporting has been designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles generally accepted in the United States of America. The Company's
internal control over financial reporting includes policies and procedures that
pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect transactions and dispositions of assets of the Company; provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America, and that receipts and
expenditures are being made only in accordance with authorization of management
and directors of the Company; and provide reasonable assurance regarding
prevention or timely detection of  unauthorized acquisition, use or
disposition of the Company's assets that could have a material effect on the
Company's financial statements.





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Therefore, even those systems determined to be
effective can provide only reasonable assurance with respect to financial
statement preparation and presentation. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.





Management
assessed the effectiveness of the Company's internal control over financial
reporting at December 31, 2008.  In making this assessment, management
used the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission ("COSO") in Internal Control--Integrated Framework. Based on
that assessment under those criteria, management has determined that, at
December 31, 2008, the Company's internal control over financial reporting was
effective.





This
Annual Report on Form 10-K does not include an attestation report of the
Company's registered public accounting firm regarding internal control over
financial reporting. Management's report was not subject to attestation by the
Company's registered public accounting firm pursuant to temporary rules of the
SEC that permit the Company to provide only management's report in this annual
report.




Inherent
Limitations of Internal Controls




Our
internal control over financial reporting is designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally
accepted accounting principles. Our internal control over financial reporting
includes those policies and procedures that:




●
            
            pertain
      to the maintenance of records that, in reasonable detail, accurately and
      fairly reflect the transactions and dispositions of our
      assets;●
            
            provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with generally accepted
      accounting principles, and that our receipts and expenditures are being
      made only in accordance with authorizations of our management and
      directors; and●
            
            provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use, or disposition of our assets that could
      have a material effect on the financial
  statements.




Our
management does not expect that our internal controls will prevent or detect all
errors and all fraud. A control system, no matter how well designed and
operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Further, the design of a control
system must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs. Because of the
inherent limitations in all control systems, no evaluation of internal controls
can provide absolute assurance that all control issues and instances of fraud,
if any, have been detected. Also, any evaluation of the effectiveness of
controls in future periods are subject to the risk that those internal controls
may become inadequate because of changes in business conditions, or that the
degree of compliance with the policies or procedures may
deteriorate.







Item
9B.  Other Information.





None.








PART
III





Item
      10.
            Directors,
      Executive Officers and Corporate
Governance.





The
following table sets forth, as of the date of this registration statement, the
name, age and positions of our officers and directors.





NAME
            
            AGE
            
            POSITIONNatalie
      Russell
            
            40
            
            Secretary,
      Chief Financial Officer and DirectorJames
      Winsor
            
            46
            
            Chief
      Executive Officer and DirectorLoretta
      Vermette
            
            65
            
            Director





The
background of our directors and executive officers is as follows:





Natalie
Russell – Secretary, Chief Financial Officer and Director





Natalie
Russell joined the AVT in 2001 as corporate secretary and office manager,
bringing over 15 years of accounting and business operations
experience.  Ms. Russell currently serves as our Secretary, Chief
Financial Officer, Chief Executive Officer and one of our
directors.  Prior to AVT she was general office manager and accounting
manager at Thompson Building Materials. She was responsible for the overall
company’s finance, administration, and payroll for over 150 employees. Natalie
also has assisted in raising over 5 million dollars for Nu Gas Technologies in
the private venture capital.   Natalie holds a BS in Business
Management at the American International University of CA.





James
Winsor – Chief Executive Officer and Director





James
Winsor is our Chief Engineering Officer and one of our Directors.  Mr.
Winsor is primarily responsible for our manufacturing operations and research
and development having over 20 years of experience in manufacturing, project
management and engineering.  Mr. Winsor has been with us since
2006.  Prior to working for us, Mr. Winsor was employed with Pixel
Touch Inc. from February 2003 to April 2006 and for Arral Industries from
February 1992 to April of 2006.  Mr. Winsor has a Bachelor of Science
degree from California State Polytechnic University, Pomona.





Loretta
Vermette – Director





Loretta
Vermette is one of our Directors.  Ms. Vermette has been a successful
real estate agent for more than 30 years.  She established her real
estate career with the prestigious real estate broker Seven Gables Real Estate
in Tustin, California. At that time, she specialized in private golf communities
of Orange County and established herself by consistently placing in the top 10
percent of California Realtors every year.  Ms. Loretta then joined
REMAX Real Estate  marketing downtown condominiums in Orange County,
California and became nationally recognized as one of the nation’s top five
percent of Realtors as a Certified Residential Specialist in 2003, 2005, 2006
and 2007. Ms. Vermette is the mother of our founder, Shannon
Illingworth.





Information
about our Board and its Committees.





Audit Committee





We currently do not have an audit
committee although we intend to create one as the need
arises.  Currently, our Board of Directors serves as our audit
committee.





Compensation Committee





We currently do not have a compensation
committee although we intend to create one as the need
arises.  Currently, our Board of Directors serves as our Compensation
Committee.





Advisory Board





Effective
February 3, 2009, our board of directors created an advisory board to advise the
company in regard to ongoing business operations.  As of the date of
this Report, Mr. Shannon Illingworth has been appointed to the Advisory
Board.





Section
16(a) Beneficial Ownership Reporting Compliance





Section 16(a)
of the Securities Exchange Act of 1934, as amended, requires our directors,
executive officers, and stockholders holding more than 10% of our outstanding
common stock, to file with the Securities and


Exchange
Commission initial reports of ownership and reports of changes in beneficial
ownership of our common stock.  Executive officers, directors and
greater-than-10% stockholders are required by SEC regulations to furnish us with
copies of all Section 16(a) reports they file.  To our knowledge,
based solely on review of the copies of such reports furnished to us for the
period ended December 31, 2009, the Section 16(a) reports required to be
filed by our executive officers, directors and greater-than-10% stockholders
were filed on a timely basis.





Code
of Ethics





Our board
of directors has adopted the AVT, Inc. Code of Business Conduct and
Ethics.  The board of directors believes that our Code of Business
Conduct and Ethics provides standards that are reasonably designed to deter
wrongdoing and to promote the following: (1) honest and ethical
conduct, including the ethical handling of actual or apparent conflicts of
interest between personal and professional relationships;(2)
full, fair, accurate, timely, and understandable disclosure in reports and
documents that we file with, or submits to, the Securities and Exchange
Commission; (3) compliance with applicable governmental laws,
rules and regulations;the prompt internal reporting of
violations of the Code of Business Conduct and Ethics to an appropriate person
or persons; and(4) accountability for adherence to the Code of
Business Conduct and Ethics.  We will provide a copy of our Code of
Business Conduct and Ethics by mail to any person without charge upon written
request to us at:  341 Bonnie Circle Drive, Suite 102, Corona, CA
92880.




Item
11. Executive Compensation





The
following table sets forth the cash compensation paid to our officers and
directors for services rendered, and to be rendered:





Summary
      Compensation TableNon-Equity
            
            Nonqualified
            AllName
      and
            
            
            
            
            
            
            
            
            
            
            
            Incentive
            
            Deferred
            OtherPrincipal
            
            
            
            
            
            
            
            Stock
            
            Option
            
            Plan
            
            Compensation
            CompenPosition
            
            Year
            
            Salary
            
            Bonus
            
            Awards
            
            Awards
            
            Compensation
            
            Earnings
            -sation
            TotalNatalie
      Russell
            
            2008
            
            65,000
            
            0
            
            100,000(2)
            
            0
            
            0
            
            0
            0
            $165,000(1)Secretary,
              Chief
      Financial Officer  and Director
            
            2007
            
            65,000
            
            0
            
            100,000(2)
            
            0
            
            0
            
            0
            0
            $165,000(1)Mike
      Ator
            
            2007
            
            52,000
            
            0
            
            0
            
            0
            
            0
            
            0
            0
            $52,000Former
      Interim Chief Financial
              Officer
            
            2006
            
            52,000
            
            0
            
            0
            
            0
            
            0
            
            0
            0
            $52,000James
      Winsor
            
            2008
            
            75,000
            
            0
            
            100,000(2)
            
            0
            
            0
            
            0
            0
            $175,000(1)Chief
      Executive
              Officer
      and
              Director
            
            2007
            
            75,000
            
            0
            
            100,000(2)
            
            0
            
            0
            
            0
            0
            $175,000(1)Kevin
      Illingworth
            
            2007
            
            18,500
            
            0
            
            30,000
            
            0
            
            0
            
            0
            0
            $48,500(1)Former
      President
            
            2006
            
            0
            
            0
            
            0
            
            0
            
            0
            
            0
            0
            0Loretta
      Vermette
            
            2008
            
            0
            
            0
            
            45,000
            
            0
            
            0
            
            0
            0
            $45,000(1)Chairman
            
            2007
            
            0
            
            0
            
            45,000
            
            0
            
            0
            
            0
            0
            $45,000(1)





(1)           Represented
by salary and the issuance of restricted shares of our common stock based on a
value of $1.00 per share.





(2)           Represented
by such number of restricted shares as is equal to $25,000 issued quarterly
based upon the average closing price of our common stock for the ten trading
days immediately preceding the first day of each quarter.





Employment
Agreements





On January 1, 2009, we entered into a
12 month employment agreement, at a compensation rate of $5,416 per month, with
Natalie Russell to serve as our Secretary, Chief Financial Officer and acting
President.  The agreement includes quarterly stock awards of such
number of restricted shares of our common as is equal to $25,000, based upon the
average closing price of our common stock for the 10 trading days immediately
preceding the last day of each quarter.  The agreement automatically
renews for an additional 12 month term unless terminated earlier by ether
party





On January 1, 2009, we entered into a
12 month employment agreement, at a compensation rate of $6,250 per month, with
James Winsor to act as our Chief Executive Officer.  The agreement
includes quarterly stock awards of such number of restricted shares of our
common as is equal to $25,000, based upon the average closing price of our
common stock for the 10 trading days immediately preceding the last day of each
quarter.  The agreement automatically renews for an additional 12
month term unless terminated earlier by ether party





Compensation
of Directors





We
currently compensate our chairman with restricted shares of our common stock
equal to $5,000 per month.  In the future, we may compensate our
directors with cash compensation and for reasonable out-of-pocket expenses in
attending board of directors meetings and for promoting our
business.  From time to time we may request certain members of the
board of directors to perform services on our behalf.  In such cases,
we will compensate the directors for their services at rates no more favorable
than could be obtained from unaffiliated parties.





Item
12.   Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters.





The
following table sets forth certain information regarding the beneficial
ownership of our common stock by the persons identified below.  The
table represents 34,147,150 issued and outstanding shares which includes, as of
February 18, 2009,   21,947,152 issued and outstanding shares of
our common stock and 12,199,998 shares of our common stock issuable upon
conversion of our outstanding Series A Convertible Preferred Stock assuming all
the Series A Convertible Preferred Stock is converted.





1.  Each
      person who is known to be the beneficial owner of more than five percent
      (5%) of our issued and outstanding shares of common
  stock;





2.  Each of our directors and executive officers; and





3.  All of our Directors and Officers as a group





Title
              Of
      Class
            Name
      And Address
              Of
      Beneficial Owner
            Amount
      and Nature
              Of
      Beneficial
              Ownership
            Percentage
              Of
      ClassCommon
      Stock
            Natalie
      Russell (2)(9)
            153,335
            (1)Common
      Stock
            James
      Winsor (2)
            128,038
            (1)Common
      Stock
            Loretta
      Vermette (3)
            118,770
            (1)Common
      Stock
            SWI
      Trading, Inc. (4)(7)
            17,436,195(6)
            51%Common
      Stock
            Illingworth
      Family Trust (5)(8)
            1,310,189
            3%Common
      Stock
            All
      Directors and Officers as a Group
            400,143
            1%





(1)           Less
than 1%





(2)           The
address is 341 Bonnie Circle, Suite 102, Corona, CA 92880





(3)           The
address is 2557 Old Windmill Court, Riverside, CA 92882





(4)           The
address is 2320 Whiteoak Lane, Corona, CA 92882





(5)           The
address is 1456 Elegante Court, Corona, CA 92882





(6)           SWI
Trading, Inc. holds 5,236,197 shares of our common stock and 2,033,333 shares of
our Series A Convertible Preferred Stock.  Each share of our Series A
Convertible Preferred may be converted into six shares of our common
stock.





(7)           SWI
Trading, Inc. is owned by Jon Illingworth, our founder’s father.





(8)           The
Trustor of the Illingworth Family Trust is Loretta Vermette, one of our
directors.





(9)           22,084
shares are held in Ms. Russell’s previous married name, Natalie
Bishop.





Beneficial
ownership is determined in accordance with the rules and regulations of the
SEC.  The number of shares and the percentage beneficially owned by
each individual listed above include shares that are subject to options held by
that individual that are immediately exercisable or exercisable within 60 days
from the date of this registration statement and the number of shares and the
percentage beneficially owned by all officers and directors as a group includes
shares subject to options held by all officers and directors as a group that are
immediately exercisable or exercisable within 60 days from the date of this
registration statement.





Item
13. Certain Relationships and Related Transactions.





Prior to
January 1, 2008, SWI Trading, Inc. had loaned us, via various transactions, a
total of $897,318 by extending its $1,000,000 line of credit to
us.  On January 1, 2008, we entered into an agreement with SWI
Trading, Inc. whereby SWI agreed to waive repayment of $500,250 of the $897,318
total in exchange for the issuance of $1,724,133 restricted shares of our common
stock.  In addition, SWI agreed to waive any claim it may have against
us for interest due upon the loan, and/or unpaid compensation due
for:  services rendered; research and development fees; technology
development fees; loan acquisition services and any other claims.





On
January 1, 2008, we entered into a consulting agreement with SWI Trading, Inc.
whereby SWI  Trading, Inc. agreed to provide us with corporate
structuring services, financing consulting services, research and development
and technology development services, loan acquisition services and the use of
its line of credit for a monthly fee of $11,620 and 100,000 restricted shares of
our common stock paid quarterly.





For purposes of this Report, we have
considered SWI Trading, Inc. a related person due to its lending and consulting
relationship with us.





Transactions with
Promoters





None.





Item
      14.  Principal Accountant Fees and
  Services.





Appointment
of Auditors




Our Board
of Directors selected Lawrence Scharfman & Co. as our auditors for the year
ended March 31, 2009.





Audit
Fees





Lawrence Scharfman & Co. billed us
$35,000 in audit fees during the year ended December 31, 2008 and $35,000 in
audit fees during the year ended December 31, 2007.





Audit-Related
Fees




We
did not pay any fees to Lawrence Scharfman & Co. for assurance and related
services that are not reported under Audit Fees above, during our fiscal years
ending December 31, 2008 and December 31, 2007.





Tax
and All Other Fees




We did not pay any fees to Lawrence
Scharfman & Co. for tax compliance, tax advice, tax planning or other work
during our fiscal years ending December 31, 2008 and December 31,
2007.





Pre-Approval
Policies and Procedures





We have
implemented pre-approval policies and procedures related to the provision of
audit and non-audit services.  Under these procedures, our board of
directors pre-approves all services to be provided by Lawrence Scharfman &
Co., and the estimated fees related to these services.





With
respect to the audit of our financial statements as of December 31, 2008, and
for the year then ended, none of the hours expended on Lawrence Scharfman &
Co.’s engagement to audit those financial statements were attributed to work by
persons other than Lawrence Scharfman & Co.’s full-time, permanent
employees.





Item
15. Exhibits, Financial Statement Schedules.





StatementsReport
      of Independent Registered Public Accounting FirmCondensed
      and Audited Balance Sheet for the years ended December 31, 2008 and
      December 31, 2007Condensed
      and Audited Statements of Operations for the years ended December 31, 2008
      and December 31, 2007Condensed
      and Audited Statement of Changes in Shareholders' Deficit for the
      Year  ended December 31, 2008 and December 31,
    2007Condensed
      and Audited Statements of Cash Flows for the year
      ended  December 31, 2008 and December 31,
2007Notes
      to Financial StatementsSchedulesAll
      schedules are omitted because they are not applicable or the required
      information is shown in the Financial Statements or notes
      thereto.Exhibit
            Form
            Filing
            Filed
      withExhibits
            #
            Type
            Date
            This
      ReportCertificate
      of Incorporation filed with the Secretary of State of Delaware on February
      25, 1969.
            3.1
            10
            8/14/2008Certificate
      of Amendment filed with the Secretary of State of Delaware on December 16,
      1985.
            3.2
            10
            8/14/2008Certificate
      of Amendment filed with the Secretary of State of Delaware on March 5,
      1987.
            3.3
            10
            8/14/2008Certificate
      of Amendment filed with the Secretary of State of Delaware on February 11,
      1991.
            3.4
            10
            8/14/2008Certificate
      of Renewal filed with the Secretary of State of Delaware on January 14,
      2005.
            3.5
            10
            8/14/2008Certificate
      of Amendment filed with the Secretary of State of Delaware on September
      22, 2005.
            3.6
            10
            8/14/2008Amended
      and Restated Certificate of Amendment of Incorporation filed with the
      Secretary of State of Delaware on April 28, 2006.
            3.7
            10
            8/14/2008Articles
      of Incorporation filed with the Nevada Secretary of State on September 24,
      2007.
            3.8
            10
            8/14/2008Certificate
      of Amendment filed with the Nevada Secretary of State  on
      November 30, 2007.
            3.9
            10
            8/14/2008Certificate
      of Merger filed with the Secretary of State of Delaware on December 11,
      2007.
            3.10
            10
            8/14/2008Certificate
      of Designation of Rights, Preferences, Privileges and Restrictions of
      Series A Convertible Preferred Stock filed with the Nevada Secretary of
      State on March 5, 2008.
            3.11
            10
            8/14/2008Amended
      and Restated Bylaws dated March 12, 2008.
            3.12
            10
            8/14/2008Consulting
      Agreement effective October 1, 2006 between Automated Vending
      Technologies, Inc. and Star Capital.
            10.1
            10
            8/14/2008Consulting
      Agreement effective January 1, 2006, Between Automated Vending
      Technologies, Inc. and SWI Trading, Inc.
            10.2
            10
            8/14/2008Employment
      Agreement effective May 1, 2006, by and between Automated Vending
      Technologies, Inc. and James Winsor.
            10.3
            10
            8/14/2008Employment
      Agreement effective as of January 1, 2006 by and between Automated Vending
      Technologies, Inc., and Natalie Bishop.
            10.4
            10
            8/14/2008Lease
      Agreement effective January 1, 2007 by and between AVT, Inc. and SWI
      Trading, Inc.
            10.5
            10
            8/14/2008Employment
      Agreement effective as of January 1, 2008 by and between AVT, Inc. and
      Natalie Russell.
            10.6
            10
            8/14/2008Employment
      Agreement effective January 1, 2008, by and between AVT, Inc. and James
      Winsor.
            10.7
            10
            8/14/2008Consulting
      Agreement effective January 1, 2008, by and between AVT, Inc. and Star
      Capital IR Corp.
            10.8
            10
            8/14/2008Consulting
      Agreement effective January 1, 2008, by and between AVT, Inc. and SWI
      Trading, Inc. (Attached as an exhibit to our Registration Statement on
      Form 10-SB filed with the Commission on August 14, 2008)
            10.9
            10
            8/14/2008Consulting
      Agreement effective March 1, 2008, by and between AVT, Inc. and SNI
      Innovations, Inc.
            10.10
            10
            8/14/2008Consulting
      Agreement effective September 1, 2008, by and between AVT, Inc. and Star
      Capital IR Corp.
            10.11
            10/A-1
            2/24/2009Agreement
      and Plan of Merger dated December 3, 2007 by and between Automated Vending
      Technologies, Inc. and AVT, Inc.
            10.12
            10/A-1
            2/24/2009Consulting
      Agreement effective January 1, 2008, by and between AVT, Inc. and SWI
      Trading, Inc.
            10.13
            10/A-1
            2/24/2009Employment
      Agreement effective as of January 1, 2009 by and between AVT, Inc. and
      Natalie Russell.
            10.14
            10/A-1
            2/24/2009Employment
      Agreement effective January 1, 2009, by and between AVT, Inc. and James
      Winsor.
            10.15
            10/A-1
            2/24/2009Code
      of Ethics
            14.1
            10
            8/14/2008Certification
      of Natalie Russell pursuant to Rule 13a-14(a)
            31.1
            
            
            XCertification
      of James Winsor pursuant to Rule 13a-14(a)
            31.2
            
            
            XCertification
      of Natalie Russell and James Winsor pursuant to 18 U.S.C Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002
            32.1
            
            
            X





SIGNATURES





In accordance with Section 13 or 15(d)
of the Exchange Act, the registrant caused this report to be signed on its
behalf by the undersigned, thereto duly authorized.





AVT,
      INC.
                
                /s/  Natalie Russell
                By:  Natalie
      Russell
                Its:   Chief
      Financial Officer





In accordance with the
Exchange Act, this report has been signed below by the following persons on
behalf of the registrant on the capacities and on the dates
indicated.




Signatures
            
            Title
            
            Date/s/ Natalie Russell
              Natalie
      Russell
            
            Chief
      Financial Officer and Secretary
            
            May
      12, 2009/s/ James Winsor
              James
      Winsor
            
            Chief
      Executive Officer
            
            May
      12, 2009

















AVT,
      INC.PageAuditor's
      Report
            
            
            F-2Condensed
      and Audited Balance Sheet for the years ended December 31, 2008 and
      December 31, 2007
            F-3Consensed
      and Audited Statements of Operations for the years ended December 31, 2008
      and December 31, 2007
            F-4Condensed
      and Audited Statement of Changes in Shareholders' Deficit for the YearS
      ended December 31, 2008 and December 31, 2007
            F-5Condensed
      and Audited Statements of Cash Flows for the years
      ended  December 31, 2008 and December 31, 2007
            F-6Notes
      to Financial Statements
            
            F-7F-1













LAWRENCE
SCHARFMAN & CO., CPA PC
 Certified
Public Accountants
 
 18
      E SUNRISE HIGHWAY, #203
                Freeport,
      NY 11520
                Telephone
      (516-771-5900)
                Facsimile
      (516-771-2598)
              
              9608
      Honey Bell Circle
                Boynton
      Beach, FL 33437
                Telephone:  (561)
      733-0296
                Facsimile:    (561)
      740-0613
 
 AVT,
Inc.
 341
Bonnie Circle, Suite 102
 Corona,
CA 92880
 
 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 We have
audited the accompanying Balance Sheet of AVT, Inc. as of December 31, 2008 and
the related Statements of Operations, Changes in Stockholders Equity and Cash
Flows for the year then ended. These statements are the responsibility of the
company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
 
 We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and a significant estimates made by
management, as well as evaluating the overall financial
presentation.  We believe that our audit provided a reasonable basis
for our opinion.
 
 The
accompanying financial statements have been prepared assuming that the company
will continue as a going concern.  The company’s existence is
dependent upon management’ ability to develop profitable operations. Management
anticipates the Company will attain profitable status and liquidity through
continued developing, marketing and selling of its products and
services.
 
 In our
opinion, the financial statements referred to above present fairly, in all
material respects the financial position of AVT, Inc. as of December 31, 2008
and the results of operations and cash flows for the year then ended in
conformity with generally accepted accounting principles.
 
 /s/  Lawrence
Scharfman CPA
 
 Lawrence
Scharfman CPA
 May 7,
2009
 
 America
      Institute CPAS
              Member:
                
                
                Licensed
      in Florida and New York
              Florida
      Institute CPAS


AVT,
      INC.BALANCE
      SHEETAUDITEDFor
      the
              
              For
      theASSETS
              
              Year
      Ended
              
              Year
      EndedDecember
      31, 2008
              
              December
      30, 2007Current
      assets:Cash
              $
              56,547
              $
              145,012Accounts
      receivable
              
              451,930
              
              376,597Inventory
              
              507,710
              
              1,260,893Prepaid
      expenses
              
              77,767
              
              77,767Total
      current assets
              
              1,093,954
              
              1,860,269Property
      and equipment, net of accumulated depreciation.
              
              4,054,024
              
              1,032,499Other
      assets  (Note 1)
              
              10,014,647
              
              11,705,042TOTAL
      ASSETS
              $
              15,162,625
              $
              14,597,810LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilities:Accounts
      payable
              
              85,819
              
              46,504Other
      current liabilities
              
              33,088
              
              29,720Total
      current liabilities
              $
              118,907
              $
              76,224Long-term
      Liabilities:Notes
      payable
              
              874,731
              
              1,471,580TOTAL
      LIABILITIES
              
              993,638
              
              1,547,804STOCKHOLDERS'
      EQUITYCommon
      stock, 100,000,000 shares authorized, $.001 par value,21,149,620
      shares issued and outstanding
              
              45,434
              
              40,166Preferred
      Stock, 3,000,000 authorized, $.001 par value2,033,333
      shares of Series A Convertible Preferred Stock issued and
      outstanding
              
              2,200
              
              1,200Notes
      issued that can be converted to common stock
              
              1,901Dividends
      Paid
              
              (412,796)Additional
      paid in capital
              
              28,811,653
              
              26,170,341Retained
      deficit
              
              (14,398,882)
              
              (13,401,997)Net
      Income (Loss)
              
              119,478
              
              240,296TOTAL
      STOCKHOLDERS' EQUITY
              
              14,168,988
              
              13,050,006TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
              $
              15,162,625
              $
              14,597,810See
      notes to the financial statementsF-3







AVT, INC.STATEMENTS
      OF OPERATIONSAUDITEDFor
      The
            
            For
      TheYear
      Ended
            
            Year
      EndedDecember
      31, 2008
            
            December
      31, 2007Revenues:Sales
            $
            2,956,645
            $
            2,340,724Total
      revenues
            
            2,956,645
            
            2,340,724Expenses:Cost
      of Goods Sold
            
            969,790
            
            644,158General
      and administrative
            
            1,726,107
            
            1,456,270Total
      operating expenses
            
            2,695,897
            
            2,100,428Operating
      Income (Loss)
            
            260,748
            
            240,296Provision
      for Income Taxes
            
            156,798Other
      income & expensesGarnishments
            
            15,528Interest
      expense
            
            0
            
            0Loss
      on disposal of assets
            
            0
            
            015,528
            
            0NET
      INCOME (LOSS)
            $
            119,478
            $
            240,296Basic
      profit per common share
            $
            0.01
            $
            0.02Diluted
      profit per common share
            $
            0.00
            $
            0.00Weighted
      average common shares outstanding - Basic
            
            21,149,620
            
            13,343,138Weighted
      average common shares outstanding - Diluted
            
            36,128,884
            
            60,843,138See
      notes to the financial statementsF-4
















AVT,
      INC.AUDITED
      STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITYTotalPreferred
      Stock
            
            Common
      Stock
            
            Additional
            
            Retained
            
            Contract
            
            Stockholders'Shares
            
            Amount
            
            Shares
            
            Amount
            
            Paid
      In Capital
            
            Deficit
            
            Equity
            
            EquityBalance
      at December 31, 2004
            *
            $
            
            
            1,667,726
            $
            500
            $
            6,606,803
            $
            (5,373,022)
            $
            
            $
            1,234,281Common
      shares issued upon conversion of notes
            *
            
            
            
            6,610,192
            
            1,983
            
            3,795,736
            
            —
            
            
            
            3,797,719Net
      loss for the year ended December 31, 2005
            
            
            
            
            
            —
            
            —
            
            
            
            (1,807,705)
            
            
            
            (1,807,705)Balance
      at December  31, 2005
            *
            
            
            
            
            8,277,918
            
            2,483
            
            10,402,539
            
            (7,180,727)
            
            
            
            3,224,297Common
      shares issued as payment
            
            
            
            
            
            1,319,322
            
            26,309
            
            6,107,838
            
            (7,054,502)
            
            625,000
            
            (295,355)Net
      loss for the year ended December 31, 2006
            
            
            
            
            
            
            
            
            
            
            
            833,234
            
            
            
            833,234Balance
      at December  31, 2006
            *
            
            $
            
            
            9,597,240
            $
            28,792
            $
            16,510,377
            $
            (13,401,995)
            $
            
            $
            3,762,176Common
      shares issued
            
            
            
            
            
            3,291,191
            
            9,873
            
            4,034,964
            
            17,121
            
            (625,000)
            
            3,436,974Preferred
      shares issued
            
            1,200,000
            
            1,200
            
            
            
            
            
            
            
            
            
            
            
            1,200Common
      shares issued upon conversion of notes
            
            
            
            
            
            454,707
            
            1,364
            
            
            
            
            
            
            
            1,364Net
      income for the year ended December 31, 2007
            
            
            
            
            
            
            
            
            
            
            
            240,296
            
            
            
            240,296Balance
      at December  31, 2007
            *
            1,200,000
            $
            1,200
            
            13,343,138
            $
            40,029
            $
            20,545,341
            $
            (13,144,458)
            $
            
            $
            7,442,010Common
      shares issued
            *
            
            
            
            1,807,908
            
            160
            
            5,434,738
            
            0
            
            
            
            5,434,880Preferred
      shares issued
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            0Dividends
      Paid
            
            
            
            
            
            
            
            
            
            
            
            (90,146)
            
            
            
            (90,146)Common
      shares issued upon conversion of notes
            *
            
            
            
            46,667
            
            140
            
            
            
            
            
            
            
            140Net
      income for the period ended  March 31, 2008
            
            
            
            
            
            
            
            
            
            
            
            (186,593)
            
            
            
            (186,593)Balance
      at March  31, 2008
            *
            1,200,000
            $
            1,200
            
            15,197,713
            $
            40,329
            $
            25,980,079
            $
            (13,421,197)
            $
            
            $
            12,600,291Common
      shares issued
            *
            
            
            
            1,424,414
            
            1,423
            
            1,671,075
            
            
            
            
            
            1,674,698Preferred
      shares converted
            
            (166,667)
            
            
            
            
            
            
            
            
            
            
            
            
            
            0Perferred
      shares issues
            
            1,000,000
            
            1,000
            
            
            
            
            
            
            
            
            
            
            
            1,000Dividends
      Paid
            
            
            
            
            
            
            
            
            
            
            
            (169,963)
            
            
            
            (169,963)Common
      shares issued upon conversion of notes
            *
            
            
            
            175,400
            
            214
            
            
            
            
            
            
            
            214Net
      income for the period ended June 30, 2008
            
            
            
            
            
            
            
            
            
            
            
            (362,299)
            
            
            
            (362,299)Balance
      at June 30, 2008
            *
            2,033,333
            $
            2,200
            
            16,797,527
            $
            41,966
            $
            27,651,154
            $
            (13,953,459)
            $
            
            $
            $
      13,743,941Common
      shares issued
            *
            
            
            
            712,329
            
            3,189
            
            344,375
            
            
            
            
            
            345,364Preferred
      shares converted
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            0Preferred
      shares issued
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            0Dividends
      Paid
            
            
            
            
            
            
            
            
            
            
            
            (344,967)
            
            
            
            (344,967)Common
      shares issued upon conversion of notes
            *
            
            
            
            866,212
            
            866
            
            
            
            
            
            
            
            866Net
      income for the period ended Sept 30, 2008
            
            
            
            
            
            
            
            
            
            
            
            (100,338)
            
            
            
            (100,338)Balance
      at September 30, 2008
            *
            2,033,333
            $
            2,200
            
            18,376,067
            $
            46,021
            $
            27,995,529
            $
            (14,398,764)
            $
            
            $
            13,644,866Common
      shares issued
            *
            
            
            
            150,021
            
            546
            
            816,124
            
            
            
            
            
            816,790Preferred
      shares converted
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            0Preferred
      shares issued
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            0Dividends
      Paid
            
            
            
            
            
            
            
            
            
            
            
            (412,796)
            
            
            
            (412,796)Common
      shares issued upon conversion of notes
            *
            
            
            
            2,623,532
            
            648
            
            
            
            
            
            
            
            648Net
      income for the period ended December 31, 2008
            
            
            
            
            
            
            
            
            
            
            
            119,479
            
            
            
            119,479Balance
      at December 31, 2008
            *
            2,033,333
            $
            2,200
            
            21,149,619
            $
            47,215
            $
            28,811,653
            $
            (14,692,081)
            $
            
            $
            14,168,987*
      Shares restated to reflect 1 for 3 common stock splitSee
      notes to the financial statementsF-5
















AVT, INC.STATEMENTS
      OF CASH FLOWSAUDITEDFor
      The
              
              For
      TheYear
      Ended
              
              Year
      EndedDecember
      31, 2008
              
              December
      31, 2007CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      income  (loss)
              $
              119,479
              $
              240,296Adjustments
      to reconcile net income to
              
              (5,473)net
      cash provided by operating activities:Changes
      in operating assets and liabilities:Accounts
      Receivable
              
              (75,333)
              
              (266,631)Inventory
              
              753,183
              
              (153,335)Deposits
              
              0
              
              0Accounts
      payable and accrued expenses
              
              42,683
              
              (114,009)NET
      CASH PROVIDED BY OPERATING ACTIVITIES
              
              834,539
              
              (533,975)CASH
      FLOWS FROM INVESTING ACTIVITIES
              
              (1,331,130)
              
              (3,481,084)NET
      CASH USED IN FINANCING ACTIVITIES
              
              408,126
              
              3,903,156NET
      CHANGE IN CASH
              
              (88,465)
              
              128,392CASH
      BALANCESBeginning
      of period
              
              145,012
              
              16,620End
      of period
              $
              56,547
              $
              145,012SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATION:CASH
      PAID DURING THE PERIOD FOR:Interest
              $
              -
              $
              -Income
      taxes
              $
              -
              $
              -NON-CASH
      INVESTING AND FINANCING TRANSACTIONS:Debt
      converted to common stock
              $
              -
              $
              -Inventory
      acquired for debt
              $
              -
              $
              -See
      notes to the financial statementsF-6




AVT,
INC.
 Notes
to Financial Statements
 
 NOTE
1.                      SUMMARY
OF ACCOUNTING POLICIES
 
 a.           Organization
 
 The
Company was originally organized under the laws of the State of Delaware on
February 26, 1969, as Infodex, Inc. At that time, the Company was engaged in the
development, manufacturing and selling of various electronic devices, especially
in the preparation various types of oscilloscopes known as “CRT” display
modules.  In March 2005, the Company was renamed to Midwest Venture
Group, Inc. and In September 2005, the Company again changed its name to
Automated Vending Technologies, Inc. to better reflect the Company’s current
operations as a vending machine manufacturer and vending route
operator.  In January, 2008, the Company changed its state of domicile
to Nevada, changed its name to AVT, Inc. and completed a 1 for 3 reverse split
of its common stock.
 
 The
Company has not paid significant dividends and any dividends that may be paid in
the future will depend upon the financial requirements of the Company and other
relevant factors.
 
 b.  Accounting
Method
 
 The
Company’s policy is to use the accrual method of accounting to prepare and
present financial statements, which conform to generally accepted accounting
principles (“GAAP”). The company has elected a December 31,
year-end.
 
 c.  Cash
and Cash Equivalents
 
 The
Company considers all highly liquid investments with maturities of three months
or less when purchased, to be cash equivalents.
 
 d.  Use
of Estimates in Financial Statement Preparation
 
 The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires the use of estimates
and assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. The Company's financial statements include amounts that are
based on management's best estimates and judgments. Actual results could differ
from those estimates.
 
 e.  Fixed
Assets
 
 In
accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-
Lived Assets, the Company evaluates the carrying value of long-lived assets for
impairment whenever events or change in circumstances indicate that such
carrying values may be recoverable. The Company estimates the future cash flows
derived from an asset to assess whether or not a potential impairment exists
when events or circumstances indicate the carrying value of a long- lived asset
may be recoverable. An impairment loss is recognized when the undiscounted
future cash flows are less than its carrying amount. If assets are considered to
be impaired the impairment to be recognized is measured by the amount by which
the carrying amount exceeds the fair value of assets. There can be no assurance,
however, that market conditions will not change or demand for the Company’s
products or services will continue, which could result in additional future
impairment of long-lived assets.  The financial statements do not
include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the classification of liabilities
that might result from the outcome of these uncertainties.
 
 f.  Other
Assets
 
 Contract
Equity
 
 Pursuant
to contracts with Coca-Cola Company and Pepsi-Cola North America, we utilize
approximately 141 vending machines in our operations.  We are not
required to pay lease or rent payments for the use of the vending
machines.  We have valued the use of these machines at an average
value of $4,500 per machine for a total of $625,000, including our vending
contracts.  The vending machines are owned by Coca-Cola Company and
Pepsi-Cola North America.
 
 Vending Route
Purchases
 
 Our
existing vending routes were originally purchased by SWI Trading, Inc. from Let
Me Know, LCC, dba Champion Vending Service.  We acquired the vending
routes from SWI Trading, Inc. via a Transfer Agreement effective December 31,
2006.  As compensation for the routes, we issued SWI Trading, Inc.
1,000,000 restricted shares of our common stock.  We have valued the
vending routes at $1,145,000 based upon the approximate annual revenues
generated from the vending route operations.  Our largest vending
route is with the County of Orange, State of California.  Our current
contract expires in April, 2009.  There is no assurance that we will
be able to extend our contract with the County.  In the event we are
unable to extend our County contract, we will no other option but to remove our
vending machines from the County locations and attempt to either relocate the
vending machines to new or existing route or attempt to sell the vending
machines to third parties at substantially discounted prices.
 
 Technology Research and
Development  and Intellectual Property
 
 Our
technology and intellectual property assets are valued and expensed at fair
market prices in accordance FSAB Statement No.2 (FAS-2) Accounting for Research and
Development Costs.  These assets include engineering research
and development valued at $2,391,359 and copyright and patents valued at
$6,492,815.  Our AVT developed proprietary software, product
dispensing systems and multiple designed or developed products are currently in
the state of “patent pending.”   Our developed products include
inventory control software, progress monitors, service logs, purchase order,
data base management, generators, touch screen vending, cashless payment
systems, and digital signage.  Hardware assets include our 24 hour
Vend Mart, Tech Store, Automated Express Market, Ivend and Vend Sensor
System.
 
 Inventory
 
 The year
ended December 31, 2007 referenced a change in inventory which contributed
$946,901 to positive operating cash flows. The revenues reported for the three
months ended March 31, 2008 were $394,365. On January 1, 2008 notes payable from
SWI matured and became payable. In the three months ended March 31, 2008, a
reclassification to Inventory was made. SWI notes were offset by inventory
contributed to SWI. Pursuant to FSAB Technical Bulletin No. 88-2, Definition of a Right of Offset, Inventories
are stated at fair market value. Inventories are stated at the lower cost or
market with cost determined using the first-in, first-out method. Inventories
consist of primarily of the food products that are sold in the vending
machines.  The current value of machine inventory has been adjusted to
reflect market value.
 
 Beginning
      Inventory
                
                $
      1,260,893.00Purchases
                
                $    216,607.00Ending
      Inventory
                
                $  (507,710.00)Total
      COG Sold
                
                $    969,790.00
 
 g.  Other
Current Liabilities
 
 Our other
current liabilities consist of accrued liabilities of $7,165, payroll
liabilities of $6,398, sales tax payable of $1,075, automobile liabilities of
$14,046 and equipment rental liabilities of $4,404.
 
 h.  Long
Term Liabilities
 
 Long term
liabilities include a loans payable to SWI Trading, Inc. in the amount of
$247,511, Natalie Bishop in the amount of $37,410 and investor notes in the
amount of $456,854.  We have long term equipment leases totaling
$96,480 and long term automobile leases totaling $19,239.  We have a
long term lease liability relating to the AC Mexican Food, Inc. in the amount of
$17,237.
 
 i.   Restaurant
Asset Purchase
 
 In April
2008, we purchased the assets of AC Mexican Food, Inc. dba Jalapenos Mexican
Food, for a purchase price of 1,000,000 restricted shares of our Series A
Convertible Preferred stock.  The asset was valued at $1,000,000
pursuant to the value of fixtures in the restaurant.
 
 j.  Property
and Equipment
 
 Property
and equipment are stated at cost, net of accumulated depreciation and
amortization.  Depreciation and amortization are provided using the
straight-line method over the estimated useful lives or the term of the lease of
the related assets, whichever is shorter. Estimated useful lives generally range
from 5 to 7 years.
 
 Maintenance
      and repairs are charged to expense as incurred.  Renewals and
      improvements of a major nature are capitalized. At the time of the
      retirement or other disposition of property and equipment, the cost and
      accumulated depreciation and amortization are removed from the accounts
      and any resulting gains or losses are reflected in
  income.
 
 k.
      Expenses
 
 The
Company expenses the cost of advertising as incurred.  Costs incurred
for research and development activities are expensed as incurred.
 
 l.  Earnings
per share
 
 Basic
earnings per share is computed by dividing income available to common
shareholders (the numerator) by the weighted-average number of common shares
(the denominator) for the period. The computation of diluted earnings per share
is similar to basic earnings per share, except that the denominator is increased
to include the number of additional common shares that would have been
outstanding if potentially dilutive common shares had been issued.
 
 m.  Income
Taxes
 
 The
Company accounts for income taxes under the provisions of SFAS No. 109,
“Accounting for Income Taxes”.  SFAS 109 requires recognition of
deferred tax liabilities and assets for the expected future tax consequences of
events that have been included in the financial statements or tax
returns.  Under this method, deferred tax liabilities and assets are
determined based on the difference between the financial statement and tax bases
of assets and liabilities using enacted tax rates in effect for the year in
which the differences are expected to reverse.
 
 n.  Recent
Accounting Pronouncements
  In December 2004, the FASB issued SFAS
No. 123 (R), “Share-Based Payment”. SFAS No. 123 (R) revises SFAS No. 123,
“Accounting for Stock-Based Compensation” and supersedes  APB Opinion
No. 25, “Accounting for Stock Issued to Employees”. SFAS No. 123 (R) focuses
primarily on the accounting for transactions in which an entity obtains employee
services in share-based payment transactions. SFAS No. 123 (R) requires
companies to recognize in the statement of operations the cost of employee
services received in exchange for awards of equity instruments based on the
grant-date fair value of those awards (with limited exceptions). SFAS No. 123
(R) is effective as of the first interim or annual reporting period that begins
after June 15, 2005 for non-small business issuers and after December 15, 2005
for small business issuers.  Accordingly, the Company has adopted SFAS
No. 123 (R) effective January 1, 2006. The Company has determined that the
provisions of SFAS No. 123 (R) did not have any significant impact on its
financial statement presentation or disclosures.
 
 
 In May
2005, the FASB issued SFAS No. 154 that establishes new standards on accounting
for changes in accounting principals.  Pursuant to the new rules, all
such changes must be accounted for by retrospective application to the financial
statements of prior periods unless it is impracticable to do so.  SFAS
No. 154 completely replaces Accounting Principles Bulletin (APB) Opinion 20 and
SFAS 3, though it carries forward the guidance in those pronouncements with
respect to accounting for changes in estimates, changes in the reporting entity,
and the correction of errors.  This statement is effective for
accounting changes and corrections of errors made in fiscal years beginning
after December 31, 2005.
 
 The
adoption of these pronouncements has not made a material effect on the Company’s
financial position or results of operations.  The Company has not
recorded any Compensations expense, as there have been no options issued to
employees as of September 30, 2008.
 
 o.  Investing
and Financing Activities
 
 The
Company received $1,409,230 in additional paid and capital and $456,854 through
the sale of convertible notes. Financing expenditures include payments relating
to principal and interest payments on outstanding notes, equipment lease
payments and dividend payments.  The Company had $1,325,570 in net
investing activities relating primarily to expenditures for design, fabrication,
and research and development.
 
 NOTE
      2.
              GOING
      CONCERN
 
 The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. The Company’s success is dependent upon
numerous items, among which are the Company’s successful growth of revenues from
its products and services, its ability to obtain new customers in order to
achieve levels of revenues adequate to support the Company’s current and future
cost structure, and its success in obtaining financing for equipment and
operations, for which there is no assurance. Unanticipated problems, expenses,
and delays are frequently encountered in establishing and maintaining profitable
operations. These include, but are not limited to, competition, the need to
develop customer support capabilities and market expertise, setbacks in product
development, technical difficulties, market acceptance and sales and marketing.
The failure of the Company to meet any of these conditions could have a
materially adverse effect on the Company and may force the Company to reduce or
curtail operations.  No assurance can be given that the Company can
achieve or maintain profitable operations.
 
 The
      Company believes it will have adequate cash to sustain operations until it
      achieves sustained profitability. However, until the Company has a history
      of maintaining revenue levels sufficient to support its operations and
      repay its working capital deficit, the Company may require additional
      financing. Sources of financing could include additional equity financing
      or debt offerings. The Company currently has a line of credit for
      $1,000,000 dollars with SWI Trading,
Inc.
 
 NOTE
3.       COMMITMENTS AND
CONTINGENCIES
 
 a.  Indemnities
and Guarantees:
 
 During
      the normal course of business, the Company has made certain indemnities
      and guarantees under which it may be required to make payments in relation
      to certain transactions. These indemnities include certain agreements with
      the Company’s officers, under which the Company may be required to
      indemnify such person for liabilities arising out of their employment
      relationship, agreements with financial institutions in connections with
      certain of the Company’s notes payable, and agreements with leasing of
      office space for certain actions arising during the Company
      tenancy.  The duration of these indemnities and guarantees do
      not provide for any limitation of the maximum potential future payments
      the Company could be obligated to make. Historically, the Company has not
      been obligated to make significant payments for these obligations and no
      liabilities have been recorded for these indemnities and guarantees in the
      accompanying balance sheet.
 
 b.  Leases:
 
 The
      Company has various operating lease commitments in connection with its
      office space and certain equipment.
 
 c.  Legal:
 
 The
      Company may be involved from time to time in claims, lawsuits, and
      disputes with third parties, actions involving allegations or
      discrimination or breach of contract actions incidental in the normal
      operations of the business. The Company is currently not involved in any
      such litigation or disputes which management believes could have a
      material adverse effect on its financial position or results of
      operations.
 
 NOTE
      4.
              STOCKHOLDERS’
      EQUITY
 
 The
stockholders’ equity section of the Company contains the following classes of
capital stock as of December 31, 2008:
 
 Common
stock, $.001 par value:  100,000,000 shares authorized: 21,149,620
shares issued and outstanding.
 
 Preferred
Stock, $.001 par value: 3,000,000 shares authorized as Series A Convertible
Preferred.  2,033,333 shares of Series A Convertible Preferred stock
issued and outstanding.
 
 Common
Stock
 
 On or
about January, 2008, a majority of the Company’s shareholders approved the
resolution of the Company’s board of directors to amend the Company’s articles
of incorporation to reverse split the Company’s common stock on a 1 for 3
basis.  All fractional shares were rounded up.  Shares
issued prior to January, 2008, have been retroactively restated to reflect the
impact of the stock split.
 
 As at
December 31, 2005, the Company had 8,277,918, shares of its common stock issued
and outstanding.
 
 As at
December 31, 2006, the Company had 9,597,240 shares of its common stock issued
and outstanding.
 
 As at
December 31, 2007, the Company had 13,343,138 shares of its common stock issued
and outstanding.
 
 For the
quarter ended December 31, 2008, the Company issued 2,773,653 shares of its
common stock.
 
 As at
December 31, 2008, the Company had 21,149,620 shares of its common stock issued
and outstanding.
 
 Preferred
Stock
 
 For the
quarter ended March 31, 2008, the Company cancelled all issued and outstanding
shares of its Series C Convertible Preferred stock and issued 1,200,000 shares
of Series A Convertible Preferred stock, $.001 par value.  As at March
31, 2008, the Company had 1,200,000 shares of its Series A Convertible Preferred
stock issued and outstanding.
 
 For the
quarter ended June 30, 2008, 166,667 shares of our issued and outstanding Series
A Convertible Preferred stock were converted into 1,000,000 shares of our common
stock.  The Company issued 1,000,000 shares of our Series A
Convertible Preferred stock as payment for the purchase of certain assets and
liabilities of AC Mexican Food, Inc., a California corporation.  As at
June 30, 2008, the Company had 2,033,333 shares of its Series A Convertible
Preferred stock issued and outstanding.
 
 As at
December 31, 2008, the Company had 2,033,333 shares of its Series A Convertible
Preferred stock issued and outstanding.