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GEOFFREY A. HELLMAN - SECURITY INTELLIGENCE TECHNOLOGIES, INC. (SITG)
CEO Interview - published 08/27/2007
GEOFFREY A. HELLMAN, Partner, Director and Executive Vice President of Global
Business Development at Security Intelligence Technologies, Inc., has over 30
years of strategic management experience in Fortune 100 corporate strategic
mergers and acquisitions, strategic alliances, program launches, public
relations, as well as global sales and marketing. He has architected some of the
most sophisticated C4ISR voice, data, IT, video, cabling, satellite and sensor
solutions deployed today for the U.S. Department of Defense, the US government,
and its clients, including international programs for finance, banking,
insurance, investment, union labor relations, law enforcement, bringing in
security industry specialists who provide leading edge solutions to aid informed
decision-making for his clients. Mr. Hellman brings to the corporation a wealth
of practical operational experience in matters related to international
security, government requirements for advanced technology, public diplomacy,
policy formation and implementation, and foreign policy issues.
SECTOR SECURITY & PROTECTION SERVICES
TWST: Would you give us a brief historical sketch of the company and a picture
of the things you are doing at the present time?
Mr. Hellman: The company has been in existence for 50 years under the direction
of the founder. During the recent changes in the economic environment, the
political environment and the security industry in particular, there have been
corresponding changes in the management structure and the way we approach our
marketplace. The company produces equipment and provides the services for
homeland security right now, which are absolutely essential in today's world.
TWST: What kind of changes has the company made in recent years?
Mr. Hellman: In recent years, our sales focus has now moved back to the United
States. In the past, one of the issues for investors was that most of our sales
were foreign sales and now the homeland security issues require that new
technology be acquired and that additional services be integrated into existing
systems in the United States, and what that means is a need to harmonize many of
our practices with those that are crucial to the international community,
especially regarding investor relations or the international environment and the
political environment in US.
What this means in simple terms is that the management now is looking at a
positive growth in the future where we have an oversupply of opportunities, and
therefore we are being conservative in our approach to growth and expansion. We
have to ensure that all of our internal processes are consistent with the need
to work in strategic alliances with our alliance partners. So you will see more
quality relations with US suppliers in the future, in addition to more carefully
managed projects in the future
TWST: What are your main products and services right now?
Mr. Hellman: We have about six main types of services in the area of supporting
our military and people in Iraq, Afghanistan, and the Middle East. Certainly the
first type we have is cutting-edge technology on preventing bombs from blowing
up people. We call that technology Bomb Jammers, or RCIED/EOD Jammers. The
RCIED stands for "Radio Controlled Improvised Explosive Device" Defeat Jammer
Systems; EOD stands for Explosive Ordnance Disposal Systems. Both protect the
troops when they land on the ground and both protect the convoys.
The competitive advantage we have over others is that we use barrage techniques.
The barrage jamming is produced by a fast randomly-swept CW (continuous wave)
proprietary sawtooth waveform that slews or "sweeps" the frequency of the jammer
from its lowest to its highest frequency limits, and our main competitive
advantage is that we are in constant communication with the field, meaning that
we know exactly what is required to be included in our products because our
people are shoulder to shoulder in the field with our clients. We are a small
company, which in the past would have been a disadvantage, but in today's
situation where many of these devices are improvised and very innovative, the
responses require great flexibility and tremendous engineering performance,
usually rapid prototyping and rapid development. We are able to do that and
achieve that through our 50 years of relationships with people on the field.
The competitive advantage is that having the right technology that needs to be
deployed to protect our people, material, and clients means that now we're in a
growth period where we can see our requirements expanding, which means we have
to form strategic alliances with manufacturing facilities, so that our
architects can architect a solution and ensure that proper quantities and
volumes of material are available. That is one product line.
The second product line, Electronic Countermeasures, would relate to encryption,
bug detection, communication security and other things that have commercial
viability. Combating invasions of privacy such as eavesdropping, wiretapping and
spying are no longer problems for governments alone, but for everyday people and
businesses. People will pay for peace of mind when it comes to protecting their
secrets, their privacy, and their vulnerability. Our involvement in the sweep
business, like any other business, requires effort to perform the services at
client locations. The demand exists for consultants to solve problems of privacy
at the business and family level for the defense of people's security. Our
technology and expertise have assisted many people to successfully understand
the sweep service business and how to benefit extensively.
With the sophistication of the business community that already is expert in
terms of our third product line - which consists of communications monitoring
systems; these systems are only available to law enforcement departments,
military and government clients - we're now finding that government clients are
realizing that our communications technology is extremely important to their
operations, both in terms of preventing kidnapping, identity theft, identity
fraud, identity conversion, stopping domestic terrorism, stopping drug smuggling
and ensuring that governance issues are properly met. We are finding many
opportunities there that really reflect growth in the client base's ability to
understand our solutions.
In other traditional areas, the product lines can be front-ended to some very
sophisticated US telecommunications equipment, or facilities management and
wiring systems, which creates economies of scale. This is a reflection of our
architects teaming with the clients to come up with some synergy and some new
solutions.
So, in general, as the Executive Vice President of Global Business Development,
my concern is that our growth is managed in a prudent and conservative manner,
even when the urgency for deploying our product is very much an issue. We have
clients who must have this technology right away, but on the other hand we must
ensure that our training department, our writers and our teams that deliver this
product are capable of being in the many different places that they have to be
simultaneously. So there is a strategic plan that is in place in the company,
reflecting the new environment. We have to now be concerned about the ecological
environment, in addition. These sorts of factors must be the first part that our
customers see - that our governance and our management structure is in place and
in position for sensible conservative growth. I think that you'll see a long-
term sustainable growth in the homeland security industry in the future.
TWST: You mentioned that there are six crucial areas.
Mr. Hellman: One of the other types of product lines includes logging equipment.
I'm not talking about forestry, but we are witnessing on the Internet tremendous
growth in database technology and the ability to have new media on which massive
amounts of voice, data, video, and sensor information can be stored. We provide
in our fourth product line, voice logging and recording systems, the technology
that stores and organizes these types of products, so that people who have a
need, for example, to ensure that whatever is said on a telephone is compliant
with the corporate policy, we have the means of recording these types of
conversations and keeping them as required by the records retention policy of
the company. That would be another area.
Some of our products are strictly reserved for the military, the
government and law enforcement in support of our national security efforts. Our
fifth product line, Covert Audio Surveillance Systems, includes equipment in
this area only for law enforcement and government agencies in the USA, as does
our sixth product line, Tracking Systems. There are some traditional areas such
as performing sweeps and looking for bugs to ensure that white-collar crime and
corporate theft does not occur within the premises, for which we have very
sophisticated technology that accomplishes that. Our Voice Stress Analyzers
could be considered a separate product line, but they are used in conjunction
with our other products as lie detectors. This is a service we do, together with
sweep services.
Going further when discussing a product like the Bomb Jammer, our field
representatives and engineers basically ensure that, regardless of the
innovation and the types of advanced technology that is stolen or that is used
by terrorists to harm US interests or the interest of our allies. we can
innovate at a faster pace.
We are a fast learning corporation, which means we have a strategic human
resource issue. We continue to attract the best and the brightest and the most
capable people. We can motivate them and stimulate them in this environment and
that requires some tremendous flexibility in terms of our human resource policy.
It is almost like putting Bell Laboratories-type Nobel Prize winners in the same
area as Wall Street lawyers who are very prudent and conservative types. This is
why I said at the onset that there are some very major management issues that
have to be addressed. We are partnering with our clients to advise them of the
changes that we're making in order that the type of unique company structure
reflects the capabilities to deliver what is needed to the marketplace at that
time. The Bomb Jammer would be one of those technologies, which is easy to build
to print for someone, but the getting of the requirements and establishing the
trust from the people of the field to give us the requirements and having
engineers who can quickly architect an appropriate solution is really what gives
us a competitive advantage.
TWST: Would you tell us more about your strategic plan?
Mr. Hellman: The essence of the strategic plan now is not just to make sales
happen but, because of the importance of the technology and that it be able to
be used effectively, we now have growth in training, and we have to ensure that
the new manufacturer technologies and the new ways in which industry uses just-
in-time manufacturing, we actually have to use these quality standards and
deploy them in a very sophisticated way that was not necessary even 10 years
ago. There is just a need to able to take one particular product line and
reflect an order that is very large and be able to deliver it to the field,
whereas in the past, people would come in and look at the products, buy them and
use them in their own environment. Now, there is a global requirement, which
requires significant due diligence and conservative management in order to set
up a network of global distributors and hubs in the Middle East, Far East, Latin
America, North And South America, China, ASEAN And Oceania regions, European
Union and the UK.
TWST: Looking ahead, do you foresee any problems for the company? Are there any
things that you have to worry about?
Mr. Hellman: The problem of classic business cases is that when a company which
is used to a small volume, meaning several million dollars of sales, suddenly is
confronted with a very large volume, a company such as that can easily run into
a cash flow situation, especially when most of this company's available cash is
constantly re-invested into research and development. So a disproportionate
amount of money is given to our best and brightest engineers to support their
mission to lead the field in technology. I'm not worried about this, but the
concern is that we ensure that we do not get into the situation where we are
fantastically profitable in terms of our orders and we have a cash flow issue.
Therefore, we are putting in place the proper alliances so that the financing
will be there as we need it. As purchase orders are written, we have to ensure
that the funds are there. So this is different from simply profit and loss.
There are many, many issues that have to be addressed before the growth that I
suppose the market would like to see reported happens. The first is the
strategic human resource development issues, with funds being focused on
ensuring that the technology is cutting-edge technology. The second is the
servicing of the market opportunities to make sure that when the very large
opportunities come in, through our strategic alliances and strategic partners,
we are able to demonstrate the viability of the company in the long term,
meaning not just this year; many of these contracts will be five years or a very
long-term relationship as a trusted partner.
TWST: How much have you done so far regarding alliances and partnerships?
Mr. Hellman: We have basically changed some of our negotiations. In the past, we
would pay for a build to print service when we had an urgent requirement that
was beyond our capability. We would find someone and use their facilities by
paying them. Now what we require is a financing commitment from these partners
that they must support the organization, which is ours, which is taking the
requirements of the field accurately and developing the relationship from the
leaders in the industry. We need to have a financial commitment in terms of our
growth, that someone is actually supporting us in addition to performing
professional services. That is the concept of a strategic alliance. It is in
their long-term interest to provide the financial backings so that we do not run
into what is essentially a prohibitive business case study of too many fish in
too small a boat. We foresee that our clients and partners are enthusiastic
about helping us achieve the success that we know we are capable of.
TWST: What is the picture that you would hope to see for the company in about
three years?
Mr. Hellman: In about three years, I would hope to see the company become a
"rising star." I would hope that some enabling legislation is passed that
recognizes the homeland security strategies as part of the industrial readiness
space. That is strategic to the national security, just as the oil reserves are,
especially since we are the sole source supplier of some of these technologies.
So we anticipate in the next three years that there probably will be a
prioritizing of the importance of our industry.
We also would anticipate in the next three years a change in the direction of
the company. In terms of its performance, I feel confident that there will be
some growth happening. The potential of our book order is there. The agreement
among all parties that these changes in management style, structure and
organization take place within three years will certainly be completed.
So to summarize, there should be some changes in the public perception and the
importance of our industry. There should be some changes in the professionalism
and the way in which our clients and joint venture partners can work with us.
The order size has changed and within three years the ability to deliver against
the increased order size should be reflected in the bottom line of the company.
TWST: Would you tell us about the backgrounds and the expertise of several of
the key members of the management team?
Mr. Hellman: The management team has to have, by virtue of its relations with
the government, military and police department, people with various backgrounds.
Some have the authoritarian type of management background you would expect of a
military commander, with the command and control type of approach. Others have
emergency rescue and emergency operations backgrounds, bringing to the company
experience from the New York City police, from the Fire Department of New York,
from K-9 and explosive ordnance disposal, tactical and operational know-how,
etc., each having their own methodology to achieving results in which there are
orders given. The orders have to be followed; they have to be compliant with
that. This is very important because when military, law enforcement, first
responders and rescue people who are used to this look for a peer, they can find
one within the corporation.
On the other hand, Wall Street has to have a CFO who understands reporting,
compliance and governance, and can properly communicate that in the forms that
it should be, so we have that.
In terms of motivation of the staff, that's where some of the issues come. We
are basically empowering our staff now rather than directing them. That means
that they become more independent. They can prove their performance by handling
a portfolio of clients. By being a small company, we can define the performance
objective. So the strategic human resource management is a new concept in the
company.
Tighter manufacturing is a new concept because of the need to integrate the
controls throughout the manufacturing process. The team is getting adjusted to
the changes that are required without changing the success rate of the company.
So there are new performance measures being put in place. There are new
reporting responsibilities, new quality initiatives, and a new teaming
agreement. Basically, we now have internal customers. They are moving closer to
where they have a quality of product management sort of responsibility and they
also have a strategic human resource responsibility to develop the people who
work for them, and work with them using some of the most modern practices that
are effective.
TWST: Have you been communicating all this to the investment community?
Mr. Hellman: No. I think that it's early, because when you initiate a program,
it's better to wait until the program results are tied to performance results in
terms of a movement in the bottom line. Management has decided to be very
conservative in its announcements because I think as long as we are viable and
as long as we are getting additional contracts, we have our investors waiting to
see our ability to make the next leap. There is a need to be able to go from
delivering 20 to 50 units to make that leap to being able to deliver 200 to 500
and not get caught in some of the growth problems that other small companies
face when they suddenly ramp up quickly to meet a customer demand that has
changed in magnitude.
TWST: What would be the two or three best reasons for the potential long-term
investor to start taking a good look at the company?
Mr. Hellman: The first is that both the domestic and the international security
business is certainly going to be long-term sustainable. We are already filling
new orders from various governments around the world such as the Surinam
government, the Trinidad government, the Afghanistan government, and we see this
as very promising. We are seeing the awarding of PhDs now for people in
international security, which means our pool of qualified professionals is
growing. I look at the types of people applying for work within the corporation;
not only do they have the head of security type of background or some other
senior responsible position, but now they have academic credentials also. So
that's one reason. For the long-term investor, without question, the need to be
able to provide security is growing.
The second is that it might escape certain people, but when you reduce the cost
of shrinkage or theft or disruption of continuity in the business supply chain,
what you are doing is increasing the efficiency. So actually homeland security
should be seen as a quality program. When properly executed, what you have done
is you have increased the efficiency of an operation, and therefore there is a
business case to be made showing that it is sustainable. So therefore we can
look at market indicators showing that the industry is growing or pick up the
newspaper and see that terrorism, types of kidnapping and other things going on
are increasing.
When people know they are properly policed - I recall that during the last
blackout in New York City when all of a sudden all of the alarms went off and
there was no electricity, there was no looting. Therefore what would have been a
crisis in a former time or era was not a crisis in today's time. Similarly, you
can see that as it becomes a habit, people have cooperated at airports and are
recognizing the importance of security. Although it's an inconvenience, they try
to be as efficient as possible and that increases the effectiveness of this
system. So if I look at just those two points alone, I would say that the
industry and this particular company has the potential to realize its goal of
basically being recognized for its achievement. Right now, many of the things go
unrecognized.
TWST: What is your feeling about your current stock price?
Mr. Hellman: The current stock price would probably reflect the number of shares
and a past history. I find that stock prices do reflect the perception of the
market based on indicators that usually are accurate. However, it's the future
growth that we are now leveraging, and the amount of money being invested in the
quality programs and the people and the technology is incredibly significant. So
therefore, not as much money is being distributed as could be, but it's because
we have to look at the long-term growth of the company. I don't like to use any
words such as undervalued or overvalued, but I do see that this company has the
potential to handle the purchase orders that are available to it in the future.
TWST: Is there anything that you would like to add, especially regarding
strategies, long-terms objectives and reasons for an investor to look at the
company?
Mr. Hellman: The long-term strategy is really dependent on the performance of
the Homeland Security chief. As his message is developed and carried to the
public, and as public acceptance of the need for and the importance of the
mission is brought to the public, growth in the industry will occur. The only
means by which the business community can accept that the military or homeland
security needs additional resources is by financing companies in that industry
and ensuring their growth. I see that long term there is that great potential,
but it does depend on the success of the leadership of the country.
TWST: Thank you. (MC)
GEOFFREY A. HELLMAN
EVP, Global Business Development
Security Intelligence Technologies, Inc.
145 Huguenot Street
New Rochelle, NY 10801
(914) 654-8700
(914) 654-1302 FAX
www.spyzone.com
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