The Hamza Express - SKB.V Report
Topics:
1) Overview
2) Chart
3) Comparisons
4) The Market
5) What's next
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1) OVERVIEW:
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SECURED COMM CDA 95 (Vancouver:V.SKB)
Volume: 42,500
Open: 0.950 High: 0.950 Low: 0.850
Last: 0.930 Change:-0.02
Chart: secured.com
Qoute: secured.com
Website: secured.com
Email: MAILTO:info@secured.com
Telephone: (416) 798-9600
Toll Free: 1-800-390-5833
Fax: (416) 798-9633
Headquarters:
87 Skyway Avenue, Suite 200
Etobicoke, Ontario, Canada M9W 6R3
Canadian, founded in 1984
Public company since May 1995
Outstanding shares: 8.3 Million
Fully diluted shares: 10.1 Million
Market capitalization: $8.5 Million
Public float: ~2 Million
STAN T. ZAWADOWICZ APPOINTED AS CHIEF EXECUTIVE OFFICER
TORONTO, Nov. 26 /CNW/ - Chairman, W. Ernest Miller of Secured
Communication Canada 95 Inc. announced today the appointment of Stan T.
Zawadowicz as Chief Executive Officer. Mr. Zawadowicz holds a BSEE from the
New Jersey Institute of Technology and an MBA from Harvard University.
Stan Zawadowicz comes from the Bay Area with a wide experience having
spent many years in Silicon Valley working as a well respected CEO with the
technology and computer based industries of that region. He has held senior
executive positions including CEO at Luma Telecom Inc., an American subsidiary
of Mitsubishi Electric Corporation, in the field of video telephony and the
use of freeze-frame imaging systems for industrial and residential security
applications. Mr. Zawadowicz led the Lucas Control Systems, an American
subsidiary of Lucas Industries PLC, in its integration with the parent
organization, achieving annual sales in excess of $112 million during such
transitional integration phase. During that time, he instituted rapid new
product development programs aimed at large markets with IBM-compatible
products. Earlier in his career, Mr. Zawadowicz developed distribution
channels and new product programs for analytical instrumentation markets with
Honeywell Inc.
We are pleased to have Mr. Zawadowicz join SCI. He brings with him a
sound track record of adapting technology to commercially viable products
across diverse fields. His experience and success in small start-ups and
large technology corporations will be applied to growing SCI into its next
phase of corporate development and maturity.
W. Ernest Miller is pleased to announce that SCI has entered into an
alliance agreement with Oscan Electro-Optics Inc., an Ottawa-based private
fingerprint scanner manufacturer, to jointly develop secure distributed data
processing systems.
Patented fingerprint biometrics developed by Oscan combined with
effective cryptography of the patented ''Session Key'' developed by SCI are
perceived by the alliance parties to provide an effective means to protect the
distributed computing environment and Internet electronic commerce.
Biometrics, a little known but rapidly growing technology involves the
use of physical or biological characteristics to identify individuals.
According to trade sources, fingerprint biometries has globally commanded an
annual revenue of at least $22 million in 1996 and will increase exponentially
with the US market potential capturing over $1 billion in fingerprint
biometrics in the next decade.
Oscan, known for its fingerprint biometric pioneer technique, developed
one of the first optical scanners for rolled print impressions compatible with
AFIS standard for law enforcement/criminal justice applications. Oscan also
developed the use of smart cards for storage of templates. One of the areas
of interest that the alliance parties will focus on is the feasibility of
adding fingerprints into the data of Digital Certificates and the extension to
cross-certification in conformance to industrial standards. SCI aims to
become a competitive leading edge global corporation in the field of security
systems. It will broaden its marketing charter and distribution relationships
and, in addition, seek strategic alliances, acquisitions and potential joint
ventures with complementary partners in both domestic and international
markets. Under the new management, SCI will seek to pursue market
opportunities in such areas as electronic commerce, virtual private networks
and intellectual property messaging protection systems.
SCI, based in Toronto, develops, markets and sells encryption
technologies for secure storage and transmission of sensitive data. One of
its principal technologies is a plug and play PC card which retains all of the
encryption functionality in a credit-card sized token to protect confidential
data on laptop and desktop computer platforms. ''Session Key'' meets the
standards of Industry Standard Cryptoki, Application Program Interfaces, is
adaptable to emerging Cryptographic Application Program Interfaces presented
by RSA Data Security Inc, Microsoft and Netscape, and is compliant with the
NIST (Fortezza) Digital Signature Standard utilized by US government agencies
and contractors. SCI, in expending over $16 million in its research and
development costs over the past 13 years, is ready to actively launch on the
marketing and sales of its software and hardware encryption products.
Three of the most exciting things about SKB I'll mention next.
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2) The Chart:
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First off is the 2yr chart secured.com which shows the stock was trading as high as $4.00 in early '96. The company chose to focus it's time on research and development of it's products and consequently the lack of news allowed the stock price to drift to an all time low of .25 on Oct.28 and Oct.30 . The stock really turned around in the beginning of Nov showing increased volume and price. The resistance levels of .40, .60, and .80 were broken with little trouble. Investors began noticing the abnormal volume and consistent price increases and the stock seemed to have a life of it's own as it shot up to $1.15 on Nov.25 on volume of 219,700! Just one month earlier the stocks volume averaged only about 20-30,000 a day.
This brings us to where we are now. The stock retreated to .85 on profit taking and end-of-month selling this past week.
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3) The Comparisons:
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So we know the stock was valued @ $4.00 by investors as recently as Jan/96. But is this the upside price that we can expect for this stock?
I'd like to introduce briefly two other companies involved in security and encryption software. SKB has a lot in common with them but also has some differences. The biggest difference is that SKB's story has yet to be properly told to the market.
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CERTICOM CORP COM (Toronto:T.CIC)
Volume: 61,100
Open: 38.500 High: 39.000 Low: 38.500
Last: 39.000 Change:+0.25
Company Website certicom.com
Profile
Certicom's lines of business include the provision of security components to leading computing and communications companies (OEMs) and large end-users who want to incorporate security into their products or networks. Certicom also develops and markets an advanced line of fax security products, utilizing the company's core cryptographic research and development capabilities.
Certicom's History
Certicom was founded in 1985 as M™BIUS Encryption Technologies by professors Scott Vanstone, Ron Mullin and Gordon Agnew from the Data Encryption Group at the University of Waterloo. The University of Waterloo is one of the world's most important mathematics and computer science schools and has played an instrumental role in the development of the Company.
Initially, Certicom focused on high speed cryptographic ASICs and partnered with Newbridge Microsystems to develop the CA34, the fastest public-key processor available at the time. The CA34 was an integral part of Certicom's hardware until succeeded by the Elliptic Curve Cryptosystem (ECC).
The development of a fax encryptor, called FaxSecrets and a PC based asynchronous communications encryptor called TRADESECRETS were the first commercial products shipped by Certicom. Early customers included the Canadian and chartered banks.
Certicom continues to concentrate on fundamental cryptographic research, building on the Company's core strength. Certicom believes that ECC offers critical improvements in cryptographic technologies, enabling the use of cryptography in devices and platforms previously thought to be impractical.
Certicom's early development was financed by its development contracts, government grants, and venture capital. In 1993, the Company received additional capital from a group of private investors led by Philip C. Deck. Mr. Deck became President and CEO in 1994 to lead the expansion of the Company's activities and to channel resources into the Elliptic Curve Cryptosystem.
In December 1995, Certicom completed an initial public offering raising $8.2 million (plus over-allotments). The IPO has allowed the company to substantially increase its commitment to research and development and to broaden its activities.
In November 1996, Certicom completed two equity placements resulting in an aggregate of CDN $18 million. One of the placements was a common share issue to Vulcan Ventures Inc., the investment organization of Paul G. Allen, and the other issuance of Special Warrants to a Canadian institutional investor. The capital is being used to accelerate the deployment of Certicom's ECC technology in OEM components and fund ongoing development and marketing expenses. These components are being developed, marketed and licensed under the brand name (CE)2. Certicom's current shareholders include its management and employees as well as a wide range of private and institutional investors. Large shareholders include Vulcan Ventures Inc., Motorola, Sahara Corporation and several large institutional investors.
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For the three months ended July 31, 1997, for CIC the revenues totaled only $0.4 million ($400,000CDN) and trades at $39 (high of $46.50!!) with approximately 30 million shares outstanding (market cap: $1.1b CDN) vs the $1 price tag and $8.5 million market cap of SKB. Secured Communications has already had contracts worth $450,000 with the Canadian government!!
Now before you say that I'm getting dreamy eyed with my $40 price tags and $1.1 billion market cap comparisons let me just note that the initial public offering for CIC was 2,666,667 common shares at a price of $3.00 per share only 2yrs ago!
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Identix Incorporated
Exchange: AMEX
Symbol: IDX
Website: identix.com
Recent Activity for November 28th, 1997.
Open $9 15/16
High $10
Low $9 7/8
Close $10
Volume 14,400
Shares Outstanding: 25,010,000
Market Capitalization: $250,100,000
52-Week EPS: $0.07
P/E Ratio: 142.86
52-Week High: $13 7/8 on February 11th, 1997
52-Week Low: $7 1/16 on December 11th, 1996
As low as $1 in the early 90's and $3 in '95 with a high of about $19 reached last year.
Identix designs, develops, produces, and markets personal verification terminals (PVTs) for a wide range of security applications. The company also markets optical fingerprint scanners and fingerprint analyzing systems for law enforcement markets. The company's TouchLock and TouchSafe PVTs determine access based on what a person has, such as a card or key, or knows, such as a password or personal data. It also makes systems that utilize biometric identity techniques, such as fingerprints, retina blood vessel patterns, hand geometry, voice, or signature, to determine access. Identix also makes TouchClock fingerprint identity verification time clocks for use by businesses to keep track of hourly employees.
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4) The Market
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SCI's products - primarily at notebooks (laptops) but also applicable for standalone, network desktops. Interesting to note that US notebook sales in 1997 are estimated to reach 8 million units. Second time
computer purchases are notebooks replacing desktops at 50% per annum.
No compatible security products (publicly traded company) out there with security aimed at notebooks in the market.
Microsoft's new Internet strategy for Windows NT 98 (Version 5.0) creates an instant market (platform/operating system) for SCI's products:
(1) Crypt-It (software only) products;
(2) The ultimate product by merging Oscan fingerprint technology with Session Key for positive authentication (cannot break code like password with fingerprint - impenetrable), for Internet security use.
Windows NT 98 features remote dial-up strategy, firewall replacement strategy and security concepts that serves to legitimize market requirements and security concepts advanced by SCI and the data security industry.
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5) Where do we go from here?
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The price of SKB has risen quickly over this past month but still sits @ only 30% of it's yearly high. There will be a stream of news releases over the next few weeks with many of them very significant developments. Expect a listing on an the Nasdaq OTC in the next month or two. Also I wouldn't be surprised if there was news of new contracts, technologies, strategic partnerships, and financings just around the corner.
I expect the stock to continue developing new, and higher, price bases as the public becomes aware of the potential of this stock. The stock should increase in price as early as next week on anticipation of a news release identifying a key development. There is very few if any formal, widely read newsletters that have followed the stock of as yet but I'm sure they will get on the band wagon as it rolls along.
One new tech newsletter that I sent out last week has placed SKB on their first issue.
stockhouse.com
Also many of the institutional buyers should come into the stock once the stock reaches mutual fund capitalization levels and begins trading on other exchanges.
Of course with any stock there is downside risk. Maybe the BIG stock market crash is around the corner. Then again how much lower could the VSE really go?
I think it's reasonable to put the short term downside for the stock @ .60 from the current .93 level or about -30%. The upside on the otherhand is tougher to guess at but I would be comfortable saying 50%-100% short term gain is very reasonable. But I must make this very clear that this is not a short term play. I consider this stock a RRSP type investment with the intention of accumulating and holding. CIC was a great flip when it went from $3 to $6 but imagine all those traders now looking @ the $40 price tag today.
Having said that I think it's always wise to take out your risk by selling half at double your initial investment. Let the rest ride and enjoy the show comfortably.
I consider this report only as a brief overview of Secured Communication Canada 95 Inc and what the stock has to offer. I expect to follow the stock in the days, weeks, and months ahead as new developments arise.
Good Luck,
Essam. |
