Sarasota, FL 3/27/2008 7:58:15 PM
Homeland Security Capital - Securing its Future
Pennycents Magazine Reports on Homeland Security Capital Corporation (HOMS: OTCBB)
Pennycents Magazine, the market’s most valuable research tool covering micro-cap, penny stock and otcbb equities, issued the following daily column by Priya Nigam.
Following the tragic terrorist attacks on September 11, 2001, there has been a growing focus on the Homeland Security Industry. This highly-fragmented industry has been attracting investments of hundreds of millions of dollars every year.
Homeland Security Capital Corporation (OTCBB: HOMS) is engaged in the acquisition, development and consolidation of homeland security-related businesses. The company has recently inked an agreement to acquire environmental services company Safety and Ecology Holdings Corporation (SEC) in a cash, stock and debt deal valued at approximately $20.4 million. The acquisition is part of Homeland Security Capital’s strategy to acquire companies that generate revenues, but have problems scaling their business. SEC has been growing at about 30% per annum and has a presence in the US, Europe and the Caribbean. The acquisition would boost Homeland Security Capital’s position in the global marketplace for nuclear remediation and detection products and services.
Homeland Security Capital’s CEO Thomas McMillen said, “Last summer we set out three broad goals for the company. One of them was to acquire a strong middle market company, which would serve as a platform company for us to consolidate the fragmented part of the homeland's security market place. Our second goal was to simplify our balance sheet, and third was to find a deal with synergy with our current holdings. I am pleased that we were able to accomplish these with Safety & Ecology Holdings, a company that generated approximately $50 million in revenues last year.” “…the combination of SEC’s deep industry knowledge and experience coupled with our proprietary nuclear detection technology of our current subsidiary Polimatrix, Inc. should create significant opportunities for growth and expansion,” McMillen added.
SEC reported revenues of $50 million for 2007 and is expected to cross $55 million in revenues this year. Revenue growth is expected to be coupled with healthy earnings growth. SEC’s prospects are supported by the renewed spending trends in the DoD (Department of Defense), the DoE (Department of Energy) and the FEMA (Federal Emergency Management Agency).
Homeland Security Capital’s sales in the three months ended September 30, 2007 rose to about $2.61 million, from approximately $2.21 million in the year-ago quarter, representing 18% growth. The company swung to the black, both in terms of net income from continuing operations and overall net income. Its net income from continuing operations and overall net income in the quarter stood at $197,324 and about $3.8 million, as compared to a net loss from continuing operations of $912,732 and an overall net loss of approximately $1.1 million in the three months ended September 30, 2006. This represents a more than 400% year-on-year jump in overall net income.
Homeland Security Capital’s shares have been on a downtrend since mid-November last year, when it reached almost $0.15. Currently, shares are trading significantly short of their 52-week peak of $0.51 in August, 2007. The company aims to continue to target emerging companies for driving its growth via acquisitions.
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