Well, this is my share for 2004.

The grounding of BA flight 223 to Washington has been all over the news this week. Along with the pictures of police armed with semi-automatic weapons and demands for armed rangers on planes the question of flight security is firmly back on the agenda.

Enter 7m British company Image Scan Holdings whose 3D X-ray baggage handling technology represents a 'Best of Class' solution to problems of baggage screening.

The advantage of Image Scan's machine over convential 2D machines is that it provides a 3D view of a scanned bag - providing psychological depth clues which have been shown to be important in identifying threat objects. 3D views are currently provided by CT scanners but these are slow and expensive. Image Scan's machine provides comparable results using X-ray. It is much less expensive and involves no loss of speed over conventional 2D scanners



Contracts are being signed and some major OEMs are trialling Image Scan's cameras in their own systems.
Broker forecasts are for EBITDA breakeven this year and eps of 6p in 2005 (shares are currently 39p to buy). The market Cap is just 7m

The FAA (now TSA) are swimming in grants with $Millions and $Millions being awarded to security companies. They have purchased two machines from Image Scan (machines are also on trial at Heathrow and Midlands airports) and have paid ISH for the development of 3D Image Threat Projection software which has been installed in beta form on these machines. Threat Image Projection(TIP) software should become compulsory on all machines during 2004. It trains bagage handlers and screens their performance by introducing threat images (knives, guns etc) into the image captured by the X-ray scanner.

What is better, they are not a 1 product company. The pipeline is exciting. They have a range of 3D solutions for industrial non-destructive testing available now, medical applications are ivolved in development of an automated system related to cervical smeer test screening expected 2005- currently the only unautomated major screening programme in the UK... And they are developing a 3D scanner for examining occluded electrical components post-assembly. Key IP is in the area of X-ray examination of plastic and non-magnetic components.

Image of an all-plastic inhaler pump
using ISH's DEX camera for industrial/medical
non-destructive testing:

(Key IP is in the area of x-ray imaging plastics and non-magnetic metals)

Look a very interesting prospect for 2004, IMO. The share price slid relentlessly last year but enjoyed a bounce last month. That trend re-commenced last week. Sitting on 1.4m cash (having raised fresh funds in the summer) and having now transitioned from pure r&D into a company actively marketing its commercial products there appears little downside in the price (the FD was buying at 35p). Upside looks considerable.

Durlacher published a research note in November - well worth getting hold of a copy. A couple of snippets:

"International legislation has delivered the security sector its most significant boost for almost a decade with the entire security industry looking set to become a hot sector for the next couple of years"

"We believe the Image Scan instrument to be 'best in class' and currently the only real time 3D X-ray device in the industry"

"Growth in the security sector has been in excess of 50% pa over the last 2 years....with equipment replacement cycles falling from an average 6 years to nearer 4."

Order potentially worth 1m from Scanna expected shortly...

"We believe Image Scan presents an immediate and unique opportunity to invest in the rapidly expanding global security markets"


To take just one element of what ISH are involved in, the importance of the 3D TIP software is conveyed in this extract:

p.32-33
"Following the September 11th attack, Dillinghams testimony [22] was provided before the Committee on Commerce, Science and Transportation, US Senate to discuss security concerns with:
i) aviation-relatedcomputer systems;
ii) airport access controls and
iii) passenger andcarry-on luggage screening including how the USA differs from other countries.

This committee had earlier reported in the year 2000 that there were several weaknesses found with screeners in tests in the USA. In 1987, screeners missed 20% of potentially dangerous objects and recent tests approximating real threats showed that the performance degrades even further.

The main problem is because of less experienced staff, large turnover because of low wages, limited benefits, and repetitive nature of the work. In addition, the amount of work at airports makes it impossible to check every bag (over 2 million passengers and their bags must be checked per day in USA alone).

Air carriers can use their own employees to conduct screening activities but mostly they hire security companies to perform screening. In the USA, Federal Aviation Authority (FAA) monitors the performance of screeners by periodically testing them with FAA special agents posing as passengers.

Two important reasons explain why screeners fail: rapidscreener turnover and inadequate attention to human factors.
From May 1998 to April 1999, screener turnover averaged 126% in 19 major airports in the USA, 200% at five airports andone with a turnover of 416%.

FAA has been recommended to use threat-projection systems that place images of dangerous objects on the monitors of X-ray machines to keep scanners alert and monitor their performance and a certification program to make screening companies accountable for the training and performance of the screeners that they employ.

The threat-projection systems are useful as they monitor screener performance, and help train them to identify more diffcult objects for the future.
It is expected that FAA will deploy this technology in airports by 2003 and also more FAA security screeners will be used."


This represents my opinions only and is not advice to buy or otherwise. Do your own research!

Happy new year.

G.

Priscilla,

I've changed my settings :-)

Thanks.

G.

message sent 22.53

Hello Vasey

Nice to see you have seen this one.

That Garth is great to have on a thread.

Bit more action on the other board Pricilla.

Good rise again today, lets hope for a few press tips on the back of the Rapiscan deal.
An IC tip would do wonders for the price, just wish I had bought more.......

8ball :")

G.

Thanks for all your amazing hard work Garth.

Priscilla,

Sorted. Thanks,

G.

Spoke to 'the-other-Nick' (CEO) and I'm down on the list of those attending the upcoming AGM on Thursday 25th March. Post your questions here!

Great. I'll get somequestions together :-)

G.

A little surprised we dropped back to 40p.
Lets hope this becomes our support level and we bounce back.

Vasey... I Would be interested in their opinion on competition.
Also if they have any need/plans to raise cash.

8ball, looks like it might be :-)

Yes Garth looks like it.

I was hoping for a bit more press coverage.
Still very pleased with my investment and happy to wait.

Is Vasey the only one here going to AGM.......

Vasey

Can you ask what their budget for Sales in the current year and next. Don't suppose they would tell you in open forum but may give you a pointer privately.

GE buying InVision, tragic events in Spain, security all over the news. Image are making an important contribution. AGM/open day coming up, CBA due out next month.....

G.

Image Scan Holdings PLC
17 March 2004

17th March 2004





Image Scan Holdings plc ('Image Scan')

Industrial Sales of Axis-3d(R) Technology



Image Scan, a leading provider of multi-view, 3D X-ray imaging technologies for
the security and industrial inspection markets, is pleased to announce its first
commercial sale of their Axis-3d(R) technology into the industrial sector. The
sale, through its trading subsidiary 3DX-RAY Limited is to Amersham, the world's
leading supplier of nuclear medicines for imaging and diagnostics. Amersham
have acquired two customised versions of Image Scan's three dimensional X-ray
imaging systems for use in their sophisticated waste and decommissioning
facilities. The units will be used to help Amersham more cost effectively and
safely comply with stringent regulatory and internal safety requirements for the
disposal of waste products.



Following several months of intensive evaluations in which Image Scan
consistently demonstrated the ability to clearly identify and localise items of
interest within sacks of waste, Amersham's Director, Liabilities Management,
said:



'Having fully evaluated this technology we believe it represents the next
generation of X-ray inspection equipment for our industry. Amersham have
researched and tested a number of techniques for this application and believe
that the Image Scan solution provides the best performance, value for money and
importantly, ease of use out of the systems available today. We are delighted
to take delivery of the two new Axis-3d(R) units.'



Nicholas Fox, Chief Executive of Image Scan, said:



'The sale of these industrial inspection units to Amersham represents a
significant endorsement of our 3D technology for the industrial sector.
Building on our core expertise developed within the security sector we are
delighted to see our novel technology beginning to take a foothold in the
industrial sector.'

I've been rummaging around doing my own research before I decide on how significant a holding I want to take in IGE. I thought I would share with you some of my notes.

Of course I began with the accounts that shareholders will vote on at the AGM. I started with the directors' holdings and was a little puzzled that as of the year end Raymond Gibbs, an Executive Director only owned 60,000 shares (approx 24k) and that Simon Godber owned no shares at all, despite being an Executive Director.

A bit of digging later, I found an RNS confirming that on 29th Oct Mr Gibbs increased his holding to 345,000 shares but Dr Godber, while having a number of share options, still doesn't own any shares in the company. However he has been with the company, originally as a consultant and then a full time employee, from the formation of the company, so he probably is pretty committed. I would like to see him buy some shares from his own funds though.

My second area of curiosity was to discover if IGE faced any major competition for their products. My trawl of the internet suggests there is no competitive product for the AXIS-3D unit or the MAXIS-3D unit and that they are at least competitive with all existing manufacturers for the 2D imaging systems.

The industrial sector appears much more fragmented but the 3D-X-Ray imaging seems to be unchallenged.

If they continue to make sales such as the ones announced today, there will be less pressure to raise cash and, depending on the value of the contract, which will doubtless come out at the AGM or even before, we should be clearer as to when break-even/profit it reasonable.

Thanks for the research V. Good day for Image. The RNS is a great endorsement of the technology!

G.

Agree Garth

A very encouraging RNS.
As we have already said, the great thing is the number of applications in many industries.

More than happy to hold long term......

Up 15% the last two days and rightly so. It'll be interesting to see at what point Shares Mag finally notice the story and do it some justice...

G.

Up 20% on the week and just the start. Not bad in the face of market movement the other way. 70p here we come. :-)

G.

Bon Voyage merry travellers.

:-)