Shifting gears: accustomed to the entertaining world of theme parks, AVG Inc. is trying to adapt its robotics technology to the serious business of homeland security. (Small Business).

THINGS are not as much fun as they used to be at AVG Inc.

After a quarter century making friendly robots for theme parks and museums, the company is pursuing a more hostile market.

Shaken by postponed orders from the fall-off in theme park attendance and sensing a chance to venture into the homeland security business, AVG is developing bomb-detecting robots and other anti-terrorist products.

"Since Sept. 11, it has been pretty bad," said Alvaro Villa, the company's president and founder. "But it brings new opportunities for us."

The warehouse behind the company's Chatsworth offices is filled with a stripped-down version of Disneyland. Naked robots--a mess of circuits and wires--lay scattered across the hangar-sized room. In the back of the warehouse is a motorcycle-sized dragon's head. Its body, no doubt the size of a school bus, is nowhere to be seen.

This is one of AVG's more menacing creations, though it doesn't appear to be the kind of thing that will thwart a terrorist plot.

Which is why, after years servicing the entertainment industry, moving into homeland security could be an uphill battle.

"There are a lot of good ideas out there, and a lot of good technology, but accessing the federal government requires different skills," said Victor Hwang, chief operating officer of Larta, a technology think tank in Los Angeles. "It's a little more than meeting people and tapping into networks."

Besides leveraging its core technologies to develop security products, the company has hired lobbyists and consultants in the pursuit of Washington money.

Muscle control

Meanwhile, its engineers are busy designing new products Villa said would be ready for sale in six months. The bomb-detecting robot, one of two homeland security products, is an attempt to leverage the proprietary actuators--the engineering that gives robot arms and phalanges the ability to grab and manipulate. While the actuators appear to be no more than a linear-moving rod attached to a cylindrical power source, they are more complicated--a system of gears and motors which took two years to develop.

Thus far, the application has been limited to such things as a troop of dancing frogs at an amusement park. But Villa has in mind other purposes, such as allowing an explosives expert to disarm a bomb from a safe distance.

AVG is so protective that it hasn't tried to patent its technology. To do that would require disclosure of its operating structure--and perhaps reverse engineering by the competition. Villa said he is confident that the competition, which includes L.A.-based Northrop Grumman Corp. and Foster-Miller Inc., a Boston-based engineering and technology firm, would have little luck cracking open an actuator and trying to figure out how it worked.

It's not the first time AVG has had to branch out from its core amusement park business. Seeking to cushion itself from the cyclical theme park industry, the company two years ago made a move into the "retailtainment" space--building interactive kiosks to entertain shoppers.

One of its more successful projects was the "Retailtainment Interactive Coca-Cola Kiosk," or RICK. The $40,000 robot travels between Wal-Mart stores entertaining shoppers and encouraging them to buy soda.

The kiosk is another bit of technology AVG wants to get wider use in malls and airports. A robotic character would give passers-by information such as the location of emergency exits and bio-terror tips.

Hwang said that coming up with prototypes is a step in the right direction, though he cautions patience. "Companies that have technologies like this need to take what they have and put it in a form the government will pay for," he said. "They may have a good chance at getting (federal money), but it requires a lot of groundwork."

Wild ride

A native of Colombia with an engineering degree in control systems from USC, Villa started AVG (Alvaro Villa-Galvis is the full Spanish structure of his name) in 1978 when he left Walt Disney Co., where he was head of electronic animation research and development. "I didn't see too much future for me over there," he said.

He started doing consulting work for Universal and was soon asked to build a robotic attraction for the company's theme park. AVG's first project was a ride inspired by "Battlestar Galactica"--the 1970's television show where futuristic humans fight a race of hostile robots.

The reliance on tourism, however, has made it tough to manage the company's finances.

AVG's revenues have oscillated from a high of $7 million to less than $1 million last year. Its staffing levels also have fluctuated, from as many as 80 or more employees to aid in the production process during boom times, to as few as the current 15--including four animation technicians and four machine shop technicians.

"We'd like to diversify to smooth all that out," said David Hall, AVG's executive vice president. The company said it expects increased retail and security business to push revenues to $4.5 million for the year ending next June.

RELATED ARTICLE: PROFILE

AVG Inc.

Year Founded: 1978

Core Business: Robots for the theme park industry

Revenues in 2001: $685,000

Revenues in 2002: $850,000 (projected)

Employees in 2001: 20

Employees in 2002: 15

Goal: To diversify into homeland security

Driving Force: Using robotic technology to enhance people's lives.