To OTC Journal Members:
 

Don't Forget to BLOG

Lots of comments are starting to come through the BLOG. You might want to revisit some of the BLOG entries, and read the questions people are asking and the subsequent responses. Go the the home page and check out the BLOG. At www.otcjournal.com it just scrolls down on your screen. The most current BLOG entries are found in the middle of the page.

I also have been getting emails on individual stock volatility. When we have big up and down days, visit the home page and check for at BLOG entry if you want some feedback.
 

Aegis Assessments (OTC BB: AGSI): Getting Back on Track

Aegis Assessments was featured rather unflatteringly in our year end wrap up. AGSI held the unfortunate distinction of being the only one of four homeland security companies covered by the OTC Journal which did not make a big move to the upside. The winners include IRSN, VTSI, and GEPT. Since publishing that edition on December 29th, I have added Markland Technologies to the list. It's a little too early to make a call on MRKL one way or another.

Sometimes problems can turn into opportunities. In the second half of 2004 AGSI had some problems. It's worth reviewing AGSI, and taking a fresh look at the stock now that it seems to have bottomed and the company appears to be headed in the right direction.

Aegis Assessments has developed a simple and elegant solution to a problem which plagues our nation's first responders. The term "First Responder" refers to emergency services that show up and the scene of an accident, fire, or some other crisis requiring immediate attention. Fire Fighters, Police, and Paramedics are all considered First Responders.

The shear number of First Responders required at the World Trade Center brought a huge problem into focus. As it turns out, First Responders from various agencies cannot talk to each other at the scene of an emergency because they are all using different two way radio frequencies and hardware. 

The problem is pervasive nationwide, and well chronicled in many government reports. If you visit the archive section at the home page and read some of the past editions on AGSI, you can review the data on the problem.

In the spring of last year, AGSI completed the testing phase and introduced the product you see pictured here. It is called a Radio Bridge, and is a simple and elegant solution to a major problem that many believe can only be solved by spending hundreds of millions of dollars on a major infrastructure overhaul.

The Radio Bridge is about the size of a large briefcase. It operates on rechargeable batteries or D Cells. It fits easily into the trunk of a police car, on a fire truck, or in an ambulance.

When a First Responder arrives at the scene of an emergency with a Radio Bridge, each subsequent responder need only take a hand held radio and plug it into the device. Everybody can then talk to each other on their existing radios.

The Radio Bridge sells in the range of $12,000 to $20,000, and AGSI enjoys very high margins on the product.Even on the higher end of the price scale, the Radio Bridge is easily affordable for just about any agency. A number of emergency agencies are now considering multi unit orders of the product.
 

In early June of '04 AGSI announced a major breakthrough. The company received a purchase order for its first 200 units from a NY based distributor who was then expected to handle the nationwide sales and distribution.

At the end of August the first units were completed and ready for shipment. About 25% of the order was shipped. The remainder of the order was never shipped as it became clear to AGSI that their distributor was ill equipped to manage a nationwide roll out.

That distribution arrangement has now been severed, and the company is taking control of the sales process. AGSI is starting to get sales traction.

I liked this product from the moment I saw it demonstrated at SPAWAR (Space and Naval Warfare Systems Center) in San Diego.

SPAWAR has been assigned the task of assisting the ODP (Office of Domestic Preparedness), in evaluating technologies which solve the daunting problems facing the Homeland Security Department. 

I can visualize this product in police cars and fire trucks all over the US. Each First Responder wants to take control at an emergency site. The entity with the Radio Bridge will take control. I expect a lot of units to be sold as this product becomes known.

If AGSI can manage to sell 2000 units nationwide, it translates to $24 million in sales at the low end of the pricing range. I don't know where the stock would be valued, but it would be considerably higher than today's levels.

Just after the market closed today, AGSI announced it has begun receiving orders for the Radio Bridge from the military, law enforcement, and fire departments. AGSI also disclosed it made a sale to WinTec Arrowmaker, Inc of Tampa. While WinTec is not a household name, it is the company that makes most of the unique purchases for United States Special Operations Command (Special Forces).

AGSI was first featured by the OTC Journal at about $3.80, and subsequently made a high of $4.50. It was all downhill from there until the stock hit bottom in December. It only traded below $1 for one day, and then rebounded sharply. The stock was no doubt victimized by year end tax selling.

The rebound took the stock all the way back to the $2.05 level before stair stepping back down. In a classic Fibronacci Retracement, the stock lost 62% of its gain ($1.245), then began another rebound phase.

The stock has now made two higher lows, and one higher high. We would hope to see the next surge make a higher high than $2.05 to establish an uptrend. 

At the end of last year I was on the fence as to whether to abandon this company. They simply didn't deliver sales. I am very pleased to report the tide has now turned and I'm optimistic about their future. I believe they have developed a very elegant and inexpensive solution for a very difficult and widespread problem. 

Accumulate AGSI in the current $1.60 range. Stop Loss $1.25. Upside: Back to the old highs in the $4 range. Check the BLOG in the morning in case the stock gaps up.

Here is the complete text of today's press release for your review:
 

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