**DDSI*** .40 ask
DDSI makes products for the criminal justice, law enforcement, and
security markets, which help with fingerprinting, creating
crime sketches, creating ID badges and generating composite sketches of
suspects. These products cover a wide range of the
law enforcement and security markets.
The product we are most interested in is the Compu-Scan 3000, which is a
touchless fingerprint imaging device. Fingerprinting
for identification is approximately a $500 million field, which is
believed to grow to $1 billion during 2001.
THIS PRODUCT IS WAITING FOR FBI CERTIFICATION!
DDSI's Compu-Scan 3000 offers several advantages over their competition:
it is 1)
smaller, 2) less expensive (est. to cost
$30,000 vs $50,000 for competitor's products), and 3) is touchless. The
touchless
aspect of the Compu-Scan 3000 is important,
because it means an end or virtual end to smudged fingerprints.
Currently, many
locations currently use the old method of
taking fingerprints using ink and cards. Many criminals know this and
intentionally
attempt smearing the fingerprint. This is
where the Compu-Scan comes in to combat this problem as digital imaging is
responsible for taking a fingerprint. The FBI is
working toward requiring digital fingerprinting or imaging to improve the
quality and
is working on doing this by the year 2000.
The fingerprinting market is relatively untouched AT ONLY 6% PENETRATION,
which means
that DDSI has a good chance to
establish itself and position itself as A LEADER in fingerprinting.
We spoke to the FBI about where the Compu-Scan 3000 is in the certification
process. The FBI confirmed that DDSI is trying
to get the Compu-Scan 3000 certified and could be granted within 2-4
weeks.
DDSI recently landed a $4 million contract with IBM and the Metropolitan
Transit
Authority of New York City, and is working
on other contracts as well, which may be announced within the next two
weeks.
Additionally, investors are speculating that
earnings will be coming out positive and that the quarter will look good.
We believe this is more of a long-term play. It seems as though DDSI is
priced right
and has much less downside at this level.
The price target by year's end is $2, possibly higher.
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