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- Image Sensing Systems has been driven down to deeply undervalued low levels due to temporary headwinds and overly aggressive short selling.
- Multiple positive developments prove a successful turn-around is underway.
- Key insiders are buying.
- Renewed product line-up could have huge impact on share price.
- Major short squeeze could amplify share price appreciation.
- Image Sensing Systems’ (ISNS) meteoric rise on the heels of DGLY is totally unwarranted. ISNS does not sell ANY body-worn cameras, a fact we confirmed after contacting its personnel.
- Managers of a special situation fund that disclosed ownership of 859,646 ISNS shares in July 2014 may agree with our conclusion, recently liquidating 57% of the fund’s position. (source 3).
- ISNS’s recent financial growth has been unexciting and the company is expected to lose money both in 2015, and for the next six quarters. (source 1).
- Shares of Vicon Industries, Inc. (VII) have also been riding the Digital Ally, Inc. (DGLY) hype. We also confirmed they have nothing to do with body-worn cameras.
- We think it is only a matter of time before investors send ISNS shares back to earth, and we caution that we believe there will be bag holders.
- Consolidated net sales down 6% year-over-year; extreme weather conditions partly to blame.
- GAAP earnings down, as royalty income stream is being reinvested in R&D for growth opportunities in software solutions -- Safe Cities.
- GAAP earnings pressured by continued professional services expenses with respect to an ongoing, albeit winding down, FCPA investigation and non-cash charges.
- High margin royalty income protects downside and provides upside potential.
- License Plate Recognition ("LPR") hardware/software solutions offer upside optionality.
- Management has multiple levers to drive cash flow generation and profitability.
- Ongoing FCPA investigation creates uncertainty; 2013 earnings results hampered by non-recurring professional services costs. Management believes all FCPA related expenses are finished except for potential fine.
- Image Sensing Systems is a takeover candidate; the company adopted a shareholder's rights plan in 2013 to avoid being acquired at a discount.