DD on INTACTA (ITAC)
*************Intacta Technologies***********
Closing Price, June 5: 3.87
Shares Outstanding: 17.8 Million
Float: 13 Million
52-Week High: 6 1/8
52-Week Low: 1 13/16
Employees: 27
Working Capital: 2.6 Million
Total Assets: 4.1 Million
Institutional Holdings: 48.5 %
A. Cybermind 1.5 Million
B. MFC Merchant Bank 1 Million
C. Value Investment Ltd. 830,000
D. Mandate Management Ltd. 820,000
E. EuroSwiss Securities 810,000
F. Finter Bank 800,000
G. Rahn and Bodmer 785,000
H. Affaires Financieres S.A. 750,000
I. Peinsbreigh Holdings Ltd. 640,000
J. Valor Investment Ltd. 538,000
K. Gestibroker Consulting 117,000
Listing: OTC
Market Makers: 16
Main Technology: Intacta.Code
Main Partnerships: Fujitsu Limited, NTT Communications,& DataLode
CEO: Altaf Nazerali, MBA
BOD Director: Joshua Sagi
Investor Web-site: intacta.comcompany
Web-site: intacta.com
Introduction to technology: intacta.com
Recent Press Coverage:
A. Featured on CNNfn through Digital Jam on May 17
B. Featured in an article on Beyond.com beyond2000.com
C. Featured on "Tomorrow's World", a leading BBC program beyond2000.com
D. Featured in Daily Express on May 17
Upcoming Trade Shows:
A. SuperComm WAP Forum: wapforum.org
June 4-8, Atlanta
B. Nexpo: naa.org
June 16-17, San Francisco
C. PC Expo: 192.215.73.55
June 26-29, New York
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Orionpicks is very bullish on ITAC because they have both a great stocksituation and a valuable, patented technology. Because one must understand the full Intacta Story to comprehend the potential of thiscompany we have elected to initiate complete coverage of Intacta through this comprehensive report. Our report will follow a set framework:
I. Introduction to Intacta Technologies
II. Stock History and Stock Situation
III. Overview of Management
IV. Technology and Market Overview
A. Intacta.Code
B. Mobile CE
C. In-process products
V. What to expect from Intacta in the future
VI. Conclusion
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I. Intacta Technologies, Introduction:Intacta Technologies (ITI) develops and markets software products andbusiness solutions for the management and secure transmission ofcompressed data for corporate users over any medium. In addition to astrong presence in the fax-modem sector, ITI is currently focusing on the mobile communications market through such products as the MobileCE. They have developed a thorough suite of products that offer document
management and media transport solutions for all levels of business; this suite includes the Intacta.SmartBar, the Intacta.Compactor, theIntacta.DocManager, the Intacta.SmartForm, the Intacta.Bridgeway, and the. Each of these products uses the Intacta.Code system which a patented technology that creates a compressed graphic representation of binary information through a small pattern of black and white and color dots. This I.Code is not
platform-specific and is translatable into alllanguages; in addition, this information is highly secure andself-correcting. The I.Code enables its users to compress music files,program files, text documents, and color images into small, printableboxes of dots. This technology has most recently been used through apartnership with Fujitsu Limited ($43 Billion in Revenues) to includeIntacta Code in its newspapers, namely the Yomiuri Shimbun, a
dailyJapanese newspaper with over 10 million readers. Since the release of the I.Code in this newspaper and the initiation of worldwide media coverage, Intacta has received many phone calls from interested parties in various industries such as Medical, Law Enforcement, Identification Technology, and Advertising.
ITI, led by a strong team of researchers and marketers in both Israel and the U.S., is now positioning itself to become a strong force in theInternet and business communications sector. They hold a worldwide patent on their technology and the current demand for this product is very strong. ITI is currently expanding management and employees to deal with the demand that they are both currently experiencing and expect to experience with the coming
release of some other key technologies. ITI plans to seek application for the NASDAQ Small Cap in late 2000. ITAC, with its low float, major media coverage, and strong technology, is poised for gains in the coming days and thus we state a short-term price target of $7-10 and a mid-term target of $25-$30.
II. Stock Information and History:
There are approximately 17M shares of ITAC outstanding; of this 17M, 48.5% of the shares are held by institutions at entry levels between $3-4 and around 28% are locked up in management. The current float is 13.1 MillionThe stock began trading in 1998 at around 3.00 on fairlylight volume. The PPS sunk down to around 2.00 for the next few monthsuntil ITAC began to gain attention in early February 2000; this newattention brought the price up to around
3.50. On February 29 unexpected volume sent the price to a peak of 5.75 over the next two days; the tech sell-off brought the price down to around 3.00 and the addition of the E brought the price down further to the mid 2.00 range. ITAC became fully reporting in late May and the price has been increasing steadily. ITAC was up 9% on Monday.
We feel that ITAC is poised for solid gains in the coming week as investor confidence returns to the OTC and various media outlets continue to focus on the I.Code technology. International exposure that will come with the three upcoming trade shows will also likely boost the PPS in the short-term. The existing float is held very tightly and this allows for easy price movement on buying pressure. Thus, we expect that ITAC will experience
significant gains in the coming days and weeks and thus we set a short-term price target (4-8 weeks) of $7-10.
III. The Management: In order to gain a full appreciation of ITI and its potential we must take a close look at its management team:
1. Mr. Yehoshua Sagi -- Chairman of the Board Mr. Sagi previously headed Israeli Military Intelligence and was President of Tadiran Systems. We looked into Tadiran Systems and found out that this was Israel's largest technology and electronics company and has a strong presence in nearly every communications sector; in addition to this, they have offices in quite a few different countries. This man knows both the market for communications equipment
and the politics behind delivering a product to a world-wide market.
2. Mr. Altaf S. Nazerali -- President, CEO Mr. Nazerali is a dynamic leader with leadership positions in corporations across the world. In addition to his stake in ITI he is serving a number of other positions at very successful corporations. First, Mr. Nazerali is CEO of Multivision Communications; this is the largest subscription television company in Bolivia. This company has revenues of over 12M and has an impressive presence in Bolivia; please
see mtvision.com for more information. Second, he is Director of CTF Technologies in Brazil which deals with refueling technologies. Third, he is President and CEO of Canbras Communications Corp. While one may initially think that these positions would detract from his leadership of ITI, one must also consider the other directors before making this assumption. The CEO has a tremendous team in management and research.
3. Mr. Noel Bambrough -- Executive VP and COO Mr. Bambrough also brings a great deal of experience to the ITI table. He has served as Interim CEO of Microcell Telecommunications and continues to serve on its Board; Microcell has over 1,400 employees and its stock price has soared from 6.24 to 56.00 in the past year. Mr. Bambrough has also served as COO of Triax Telecommunications Company and Senior VP of Shaw Communications.
4. Mr. Menachem Tassa -- VP, Research and Development Mr. Tassa is invaluable to the company in that he heads the R&D center in Beer Seva, Israel. He has three PhDs in applied mathematics, physics, and chemistry and has been with the company since its early beginnings in 1994. Mr. Tassa has occupied various senior positions with the Israeli government scientific technology sector.
5. Mr. Marco Genoni -- VP, Marketing Mr. Genoni brings an excellent combination of consulting experience andproduct knowledge. He has served as President of a large consulting firm in addition to his former position as CEO of Memotec Communications. We did some research and found that Memotec memotec.com is an established company in the market of data, voice, and video-convergence solutions for telecommunications carriers and ISPs. Check
out their web-page and you will see how much experience Mr. Genoni brings.
6. Amnon Shai -- a Director Mr. Shai has been with the company since May, 1998. He has served as the Director of the European Division, Foreign Trade Administration at the Ministry of Industry and Trade. He completed his Masters in Business Administration at Columbia University in New York in 1969. He graduated from the Hebrew University in Jerusalem, majored in Political Science and Economics.
IV. Technology and Market OverviewA. Intacta.Code: I.Code is a proprietary and patented technique forcreating a graphic form of binary information that is non platform orlanguage specific and enables both secure transmission and highlyeffective information management and storage. This code is used with most of the Intacta suite of communications products. The I.Code is currently used by one of the largest newspapers in the world, the Yomiuri Shimbun;
this paper has over 10 Million readers daily. The deal is with Fujitsu and will bring in revenues that will continue into the coming year. Please read the following PR for more information:
fujitsu.co.jp
While it is very important to consider the actual products of Intacta it is most important to understand the capabilities of the I.Code. Let us share a few examples.
1. Music and Advertising: First, let's say that Coca-Cola (another Atlanta-based company) forms a partnership with a specific singer, let's say Billy Joel, for instance. Coca-Cola would like to include an MP3 file of one of his new songs in its advertisements in newspapers and magazines. They call up Intacta and the technology could be liscensed to Coca-Cola so that these songs could be translated into a small box of dots. These dots are scanned
into a computer by the reader and the MP3 files come right out onto the computer.
2. Large Corporations for Information Management: The I.Code is ideal for secure data transmission and storage. Here is an example. Let's say that GM wanted to improve their information management systems. They could buy a version of the I.Code technology and could have a personalized information management system. For instance, if a top member of management wanted to share a proposal for a major deal with a ASP, the proposal (50-pages), could be
scanned and compressed into one page of Intacta Code. This one page could be faxed to the concerned parties and then transferred back into the text document using any scanner. In addition, if the sender wanted to ensure that only one particular party could view the information, a password could be encoded along with the code and thus only the correct party could view the information. From here, the I.Code provides an excellent method of
information storage. This 50-page document could be stored as one page!
3. Identification, Law Enforcement: Intacta is currently working on a number of applications for identification in the realm of law enforcement. For instance, let us assume that at some point in time a state chooses to adopt the use of I.Code on driver's licences. This would take the form of one small box of dots. A police officer, equipped with a small portable scanner, could instantly have access to an individuals entire criminal history with
one swipe of the I.Code. Beyond Law Enforcement applications it is possible that I.Code be used to have all general identification information including criminal history, credit history, various ID photos, etc.
4. Print Media, Expanded information for media through hyperlinks, etc.: Say you are a newspaper editor and you are included a major story on the Boston Philharmonic in your daily newspaper. The story is incredibly complex and there simply isn't enough room for all of the information; thus, at the end of the story there is a box of I.Code which allows the reader to:
A. View expanded information through hyperlinks and additional references
B. Listen to two recordings of the last performance of the group
C. View a special photo essay on the conductor
The deal with Fujitsu is for three years and Intacta has been contacted by other papers expressing similar interest.
5. Wireless Data Transmission: This is one of ITI's main focusescurrently through their Mobile CE technology which will be discussedlater. I.Code is extremely stable through wireless transmission. Takethis example: You are a sales representative for a major company based in New York and you are on a trip to Florida. While in Florida you need to exchange large amounts of information with HQ concerning progress. Through the use of the Windows CE
with Mobile CE technology you could be driving across the state and simultaneously send a 40-page document through I.Code compression and receive a 10-page response in the next few minutes. This compression enables transfer effectively.
B. Existing Products:
1. Applications with Mobile CE. This software was developed in response to the need for "robust communications software" that enabled fieldcommunication and wireless activity. Thus, ITI jumped into the ICD market that involves devices such as the PALM OS and the EPOC OS. MobileCE facilitates reliable two-way transmission of communications and documents from field to office or office to field. This software is easily installed with Microsoft Outlook
and is compatible with all Windows CE based. This technology allows the user to:
A) fax documents from MS Word or other word processing programs such as Corel or Excel.
B) receive files as faxes
C) print directly from the PALM device without changingsoftware or plugging the OS device into a main computer. MobileCE has both calling card and unimodem support and is currently being evaluated by several US and Japanese manufacturers of Windows CE devices for possible future integration. In addition to this, ITI is currently evaluating conversion of MobileCE to the popular Palm Pilot systems.
2. Intacta.SmartBar. The I.SmartBar uses the Intacta.Code to allow fordigital authentication and verification information to complementfinancial, legal, and personal identification documents. This "Bar" ofinformation is able to store a great deal of data in group of dots smaller than the traditional bar code; this "Bar" is also able to store color ID photos. DataLode, Inc. has already used a version of the I.SmartBar in its Smart Registration Form
(SRF) for Hewlett Packard. Market applications for this technology include security applications, health documents, and various secured documents such as checks and bonds; this technology has been licensed for use in Japan's Ministry of Health.
3. Intacta.Docmanager. This software application decreases the need fordata storage by converting paper documents to digital documents. Thistechnology operates free from optical character recognition (OCR) andprovides document authentication, 100% accurate file recovery, and added compression efficiency. ITI is currently seeking "strategic industry partners to commercialize" this technology.
C. In-process Products:
1. Intacta.Courier. This software application is installed in a personal computer or server to enable the user to send and receive faxes via e-mail. ITI expects to release information and begin marketing of the product in late May or early June.
2. Intacta.Bridgeway. This is a hardware platform that supports all common protocols in commercial and residential networks while also embedding the functionality of the I.Courier and I.Code. This technology may prove very attractive to the B2B market.
3. Intacta.Compactor. The I.Compactor is a specialized compressionsoftware that will likely hit the market in the next two months.
V. What to expect with Intacta in the coming weeks and months: One of the reasons we are so bullish on ITAC is that they have quite a bit in the pipeline currently. Here are a few of the things we can likely expect with ITI in the coming weeks and months:
A. Financing: ITI is currently working with a major New York firm forfinancing; this deal should be announced shortly. In addition, management is planning a private placement that will raise an additional 10M.
B. Inclusion of ITI technology in Windows CE. ITI is currently workingwith existing OEMs to include Intacta software in the upcoming release of CE Version 3.0 which should be out before the end of 2000. This would be a major step-up for ITI.
C. Continued deals with Fujitsu. The current deal is only with a setgroup of newspapers and it is likely that this will continue to expand
D. Heightened media coverage. The appearance on CNNfn was a major stepforward for ITAC and it is likely that additional coverage of the samecaliber will continue
E. Expansion of management and employees.
F. Application for NASDAQ. Management is confident that they will be able to apply for the NASDAQ Small Cap late in 2000.
G. Expanded partnerships. It is very likely that ITI will release anumber of new partnerships in the coming months as demand for the I.Code technology has increased exponentially since the first deal with Fujitsu in mid April.
VI. Conclusion:We are very bullish on ITAC and feel that there will be significant short term gains in the coming days that will lay the foundation for continued gains into the mid and long-term. The I.Code technology is extremely valuable and has many applications that have yet to be used; thus, as ITI expands and coverage of the technology increases, it is likely that many new deals will be announced and thus increase revenues and profits. ITI
has the ideal combination of strong management, outstanding technology, and a great stock situation and thus we feel confident in our short-term price target of $7-10. |
