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.

Bon Voyage merry travellers.

:-)

The IGE AGM and Open Day

I caught the 07.30 train from Kings Cross to Grantham because I was determined to attend the AGM. Most people were encouraged to arrive on a train that guaranteed they couldnt make the AGM . That was the train Image Scan arranged taxi transport for and as Grantham Station is a good 25 minutes and a 25 taxi ride from Melton Mowbray, this was a strong incentive for most people to take up the offer.

However, two of your representatives WERE at the AGM. But the formal process was over in exactly FIVE minutes and there was no opportunity to ask questions. Those of you who know me from other threads know that I always have questions for the directors, but today I encountered some novel obstacles. Firstly, while the shareholders all had badges to identify them, the directors didnt and nobody introduced themselves during the formal proceedings. Thus how was I supposed to know who was the Finance Director or what his name was, for example? Indeed, who was the Chairman? All he wanted to tell us was that where we were holding the meeting was once a secret meeting place for the former Prince of Wales and Mrs Simpson.

There was no trading statement which I found particularly disappointing as this is (normally) one of the set pieces of the year when shareholders get to know what has been happening since the year end, in this case 30 Sep 2003. Nothing. Not a word. I would have asked this and many other questions, but the directors left the room like scalded cats six minutes after the AGM began, and most of them did not come back for a considerable time. Indeed, the Finance Director, we were later told, had gone to take one of the AGM brethren back to Grantham Station so that was him absent for nearly an hour, given that it is 25 mins in each direction. So precisely when was I supposed to pose any questions I had lined up for him? Questions such as; why did the Cost of Sales increase over the year from 262,840 to 389,016 whilst the turnover stayed almost the same during the same period? Whether he saw the possibility of additional fund-raising in the foreseeable future (2 years)? Etc..

Now I worry when directors dodge questions and I cannot believe somebody less senior couldnt have driven whoever-it-was to the station so the Finance Director could make himself available to shareholders. Nick Fox also scampered off and never came near the two people he knew had made a considerable effort to be there. So I was unable to ask when the directors now believed the company would reach break-even or why we didnt get a trading statement or who-what-when-why any other questions either!

Anyway, once the folks had been collected from the station and settled into the meeting room, Nick Fox started a presentation, which was, for the most part, a shade too tecchie for ordinary shareholders. But this is a key point. These guys are techies. They are highly qualified experts in their fields, interested in research and development. PR, marketing, financial detail and sales projections are not subjects they did Ph.Ds in at university. So therefore, we heard nothing on these points. Nothing.

After 10-15 minutes from Nick Fox, Simon Godber (Security Techincal Director) and their Industrial Technical specialist (who, interestingly, is not a director) we were split into small groups and taken over to the research site to look at the products they are developing. But a quick resume would be to say Nick Fox explained ISH does not manufacture on site. Production is sub-contracted. They are purely research and the company is effectively divided into two main divisions, Security and Industrial. There is a medical branch but they were mainly focused on those two. Their main focus is on making X-Ray cameras to get 3D data. They put their cameras in other peoples machines, such as those of Rapiscan. Hence their main focus on the security side is hand baggage and getting a better image at a fast speed which would be acceptable to airport authorities who do not want long queues of people waiting to be processed when they could be in the shops, airside, spending money.

The Industial aim is to produce a machine that identifies rejects or potential problems - such as bones in fish fingers, bolts in production-line pizzas, faulty syringes etc.

Anyway three of the threadies were in one group that set off for the look-seeand guess what? We had the Finance Director as our guide! An opportunity we did not waste.

We did the tour or the various bits of kit and got to ask questions of the people demonstrating the relevant machines but I dont think I was the only person to start wondering whether these machines had a ready market of buyers, champing at the gates to buy them. Some were not ready to sell and were still being developed or tweaked but nobody said they were working on any orders for specific customers, except in the case of a rather nifty bit of kit that could X-Ray a small vehicle which would help security officers check what could be inside any suspiciously parked car somewhere. Maybe a government department might be wanting that sharpish, but how many of these were the company likely to produce? Profit margins?

We then went upstairs for a very pleasant buffet lunch, yes with pork pies, before you ask! Your threadies soon bolted off upstairs though when we heard there was a chance of seeing another piece of equipment, a sort of train set they had devised to show a simulated moving production line and screen results of the X-Ray images. This is the sort of demo they take to trade shows, exhibitions and the like and we learned that the big boys in the industry, such as Smiths Hyman and GE were prepared to put their equipment into high profile locations, such as the Athens Olympic Games AS A LOSS LEADER. That is going to be a bit of a problem for IGE who need to make a decent return on their sales and may find it hard to undercut their competitors where they exist.

All too soon, we were told that those wanting to catch the 14.21 train had better start moving and three of us travelled together, swapping observations all the way back to Kings Cross.

My conclusions. Firstly, I dont know why we didnt get a trading statement or opportunity to ask questions of the directors. They disappeared so fast, I was uneasy.

Secondly: No mentions of financials, marketing strategies, sales or PR to promote the company or its products. The figures in the accounts to the year end make it possible their cash-flow could become stretched in many possible ways within the immediate next 2 years.

Thirdly: Great scientific products and brains behind them, but that is where the assets of the company are. The people. Such as the Techincal Wizard in charge of the Industrial division. But he isnt a director and I couldnt see that he has been locked in by share options. He could leave and so could many other talented people. Now, I freely admit I could have missed an RNS where he was appointed a director.but I dont think I did and I never got a chance to ask Nick Fox why one division merits a director and the other doesnt.

The financials offered in the Report and Accounts promise profit in year 2005. Based on orders received? negotiations in progress? Market research? A kindly house broker? I have no idea but having spent a day at the company, I should have some idea, surely?

They kept us moving at a goodly pace but were the directors dodging us? If so, why?

I shall not be adding to my holding in the immediate future. But if I hear from the directors to answer any of the points above, I will certainly update you

Sorry, Garth. More questions than answers on this day out.

Vasey....

Thanks for the detailed report.

Just for interest, there is a major security exhibition in June at Sandoown Park: INTERSEC

Website here:
http://www.intersec.co.uk/ise/index.html

You can pre-order free passes to the conference by following a link from that page.

As far as I am aware Image Scan are not exhibiting directly themselves (although Rapiscan are), but I have heard a little rumour that they will be there. Surprised it wasn't mentioned on thursday actually. :-)

"Exhibition & Conference Security
Due to the nature of our event, all exhibition visitors and conference delegates must pass themselves through metal detectors and all their belongings through x-ray equipment prior to entering the site. Our security operatives are DfT accredited and trained to Level 3."

G.

The 3D20 is now featured on the Rapiscan website:

http://www.rapiscan.com/3d20.html

"The 3D20 is the only checkpoint screening system that enables operators to view three-dimensional images of scanned baggage."

G.

With the revelation that both QuinetiQ and Sharp are working with IGE to put 3D X-Ray baggage scanners into airports; orders for critical software components for training staff in next-gen baggage screening techniques, todays news of further industrial orders, a compelling CBA due towards the end of the month and the US launch by Rapiscan of the 3D20 next week, how long till these hit people's radars?

The 3D20 scanner was the product of choice to scan the baggage of everyone entering the major INFOSEC Security conference and expo last week.

Todays announcement of a sale of the kit for industrial NDT to a blue chip auto component manufacturer hinted at future global roll-out of the scanners at their factories and represented a commercial break-through:

"Image Scan offers a technical solution that hitherto had not been considered commercially viable.

The technology, which offers a very rapid return on investment, also opens up a clear opportunity for our customer to employ more of these systems in their
facilities on a global basis."

DYOR. Still my share for 2004. Price 36.5p, House broker forecasts of 6p eos next year. Do the sums.

G.

Is it any wonder that the Durlacher note on IGE called this an "increasingly hot sector" and Image Scan a "unique and immediate investment opportunity"?

Found this very interesting piece on TIP software. Has some pages about stereoscopic x-ray imaging (for which read 'as in AXIS-3D'). If there is any doubt that Image are a significant player in this arena, just skip down to pages 21-22.

http://www.ece.utk.edu/~lme/TIP.pdf

And then there is that recent software order to add to the equation....

Regards,

G.

Now, 18 months after some brilliant early posts from Garth and others, the SP is on the floor and may have bottomed. It has come up on my radar as a possible recovery stock following significant directors buys and some encouraging news about orders. Is anyone else watching?
sd.

YES, But to early to buy yet!!

F1: Entirely agree, and let's keep watching.
sd.

A very positive update on new orders today. Might be time to pile in at last.

Company Image Scan Holdings PLC
TIDM IGE
Headline New Orders
Released 10th January 2006
Reference TPXi_100106


BRITISH TRANSPORT POLICE ORDER NEW X-RAY SECURITY SYSTEM FROM IMAGE SCAN
HOLDINGS

Image Scan Holdings plc (AIM: IGE), a provider of real-time multi-view, x-ray
imaging solutions, today confirmed that its wholly owned subsidiary, 3DX-Ray
Limited, has secured orders valued in excess of 170,000 for its new portable x-
ray unit, the TPXi, all deliverable within the next 3 months. The orders include
units for the British Transport Police which intends to use TPXi to support
their fight against potential attacks on the British transport systems, such as
those seen in July of 2005.

The TPXi system, launched at Milipol on 22nd November 2005, is designed to give
the operator the greatest probability of detecting potential threats from
explosive, chemical or even biological sources concealed within suspect
packages.

Superintendent Phil Trendall, speaking on behalf of the British Transport
Police, commented:
`Our officers are in the front line protecting the transport infrastructure
against terrorist attack and it is very important that they have the best
equipment available to protect the public, help minimise disruption and keep the
rail system moving. The new TPXi product is one of the most advanced portable x-
ray systems available. Its exceptional image quality and robust wireless
capability are particularly important in terms of maintaining our ability to
manage the high levels of unattended items reported within the rail
environment. We believe this new capability will enhance significantly the
service we can provide the travelling public.'

Nicholas Fox, Chief Executive of Image Scan Holdings plc, added:

'Following on so rapidly from its official launch we are naturally delighted
with these initial orders, especially from such a prestigious customer as the
British Transport Police. These early sales signify another example of the
success of advanced x-ray imaging capability of our company, with the TPXi
system representing the latest tool in the fight against terrorism.

It is very encouraging to see that, at the end of our first quarter, orders in
the current financial year stand at over 870,000. This is in excess of the
turnover for the whole of the previous financial year and provides an excellent
start to the year.`

Share price has reacted very positively to this news - I just get the feeling that the renaissance for IGE has started. Jolly glad I took advantage of the placing last year.

The only thing that concerns me is that there is no large trades going through (ie those with a capital value exceeding 100,000) just private investors dealing. Could it be that the Mkt Cap is so small that the company doesn't feature on the majority of fund managers radar? Surprised that the fledgling funds haven't added.... but maybe they were approached at theplacing and have sufficient exposure and could be looking to realise capital.

Ah well - here's to 30p (in due course)!!

A very significant distribution deal announced this morning.

http://moneyam.uk-wire.com/cgi-bin/articles/20060509070000W2373.html

Posted yesterday........ Analysis selection from the "UPS" IGE 24p

IGE price 24p

A strong rising volume last Friday

A bullish scenario last November as it went into a Golden Cross in the chart following with a BREAKOUT and a retracement, now is on the bounce aiming for higher prices

The 3D and 2D X-ray imaging devices are gaining new business for the inspection of corporate and airport security, is ready for profitability in 2007 as the total order intake is at record levels

Has signed two distribution and a licence agreement within the security sector recently and could lead later to further opportunities for the special projects group

Golden Cross Chart for IGE


Golden Cross
"To form a Golden Gross, the 50 day moving average must cross from below the 200 day MA to above the 200 day MA, whilst the 200 day MA must also be rising".

IGE 25 - 26p +1.50p

up again and doing nicely

L2 ( Level 2) is 1 v 1

Could there be a new contract to be announced?? The sp has gone up by 73.53% this morning (though I hardly dare mention it, as it will inevitably drop now!).

sp climbed again today: up 12% to finish at 11.0-12.0p, with two big Buys going through at 13p later afternoon:
16:18:52 38,194 @ 13p
16:18:58 40,000 @ 13p

Today's RNS explains the recent rise in sp:

"Of particular interest is the sale to China which is a repeat order from an
existing client, following the purchase of their first Axis-3D(R) system last
year. The equipment will be used to provide heightened security measures for
key locations at next year's Beijing Olympics; delivery is scheduled for April 2008."

etc etc