Detailed DD on VMSY/IPDG for Everyone...
Visual Management Systems, Inc. (OTCBB: VMSY), based in Toms River, New Jersey, provides loss prevention management solutions to businesses through the design, sale and installation of digital surveillance systems called “Virtual Managers” that enable clients to proactively manage their businesses with easy data retrieval and live viewing from anywhere in the world. VMS believes that there is a lucrative and underserved market for
loss prevention technology through the use of digital recording and video transmission to remote locations and corporate offices. VMS’ products and services include:
• Protective technology solutions and loss prevention surveillance capability through the
design and installation of closed circuit television (“CCTV”) systems designed to provide
safety and security and/or eliminate internal theft and corporate loss
• Access control systems which are frequently integrated with CCTV installations and designed to exclude unauthorized personnel
from specified and monitor entry and exit activity
• Point of sale system interfaces designed to prevent internal theft through video recording of cash register activity.
Visual Management Systems designs, manufactures, sells, installs, upgrades and services the digital video recording devices used in
its surveillance systems. In addition, Visual Management Systems sells these devices to unaffiliated dealers. It currently manufactures and sells several lines of its “Virtual Manager” DVR products, imports and resells components and camera products from other manufacturers and has additional product lines under development through its Research and Development staff and under alliance and joint venture agreements with third parties.
Visual Management Systems currently conducts its operations through two subsidiary entities, Visual Management Systems, LLC,
which provides Visual Management Systems’ protective technology solutions and remote management surveillance systems, and
Intelligent Product Development Group, which designs, manufactures and sells its DVRs and NVRs. video surveillance syst ems Visual Management Systems primary business is the design, sale and installation of CCTV surveillance systems. Through on-site consultations, VMS provides loss prevention analysis, liability assessments and custom-tailored CCTV camera layouts designed by professional system consultants to prospective customers. Visual Management Systems surveillance systems enable clients to manage their business through data retrieval and view their businesses live from anywhere in the world. The primary components used by Visual Management Systems in its video surveillance systems include: digital AND NETWORK video recorders:
Visual Management Systems’ DVR and NVR product line is comprised of custom configurations of surveillance hardware and software
systems based on proprietary capture and compression technology. Each of the DVRs included in Visual Management Systems
“Virtual Manager” product line can manage between 4 and 256 cameras and offer individually addressable recording schedules and
frame rates. The video recording system is the heart of Visual Management Systems video surveillance systems. Surveillance cam eras Visual Management Systems uses only high-resolution, low-light cameras in its video surveillance systems. There are numerous camera options available to customers, and camera selections are typically made on-site by the customer with the assistance of a Loss Prevention Consultant or a System Design Specialist provided by Visual Management Systems who creates and sells a “shot-layout” to ensure that the customer is satisfied with each camera shot. Cameras frequently used in Visual Management Systems’ systems include:
SMOKE OR MIRORED DOME CAMERAS
Smoked or mirrored dome cameras which present an image of “high-end” security and provide deterrence against common forms of
small business fraud, such as shoplifting, vandalism, credit card and ID fraud and employee theft. These cameras are popular due to
the wide variety of potential configurations and applications and their “stealth” properties.
BULLET CAMERAS
Bullet cameras: small, discrete and reliable. Bullet cameras have few moving parts, thereby limiting preventive maintenance to occasional cleaning. They are environmentally sealed for indoor and outdoor service.
COVERT SPECIALTY CAMERAS
Covert specialty cameras which are cameras concealed within other apparatuses, such as radios clocks, exit signs and smoke detectors. These cameras permit a business owner to monitor a location without the knowledge of those present at the location.
BOX CAMERAS
Box Cameras are the most widely recognized CCTV cameras and are the best choice for many applications. They offer great flexibility in resolution, light requirements and local length. A 24-volt AC current typically powers box cameras, which gives them the ability to carry images over greater distances than other cameras. As a result, they are often used for perimeter protection in smaller, self-contained 12-volt cameras.
Visual Management Systems video surveillance systems also include monitors, power supplies, battery backup power, wire and connectors. Visual Management Systems is a value-added reseller for several product lines, including the IDS Tech-Eye and Sony, Panasonic, and General Electric platforms.
DIGITAL VIDEO RECORDERS
Through IPDG, VMS manufactures several lines of DVRs and NVRs. These “Virtual Managers” are custom configurations of surveillance
hardware and software systems. Each DVR and NVR is a Microsoft WindowsR PC based product, and the product line ranges from four
channel systems to enterprise grade, unlimited source systems that can be expanded into virtually unlimited, network based engineered systems.
DVR systems have historically been available as software systems or hardware systems. Software based DVRs are simply software
programs which run on personal computers. They are cost effective and operate on readily available, easily serviced PC-platform
computers; however, image quality often suffers and digital video recording places a significant strain on a computers resources. This strain causes premature failure of primary computer components and can cause other parts of the computer to function slowly or ceasefunctioning. Software DVRs are generally not suitable for business class security applications.
“Firmware” or “solid state” systems are also computer based but are essentially multiplexers with hard disk drives built in for recording. Generally, this hardware based DVR is built for the sole purpose of providing video surveillance and are effective; however, hardware based systems generally have two significant short-comings: inflexibility and service. Generally, there is little or no room for modifying or expanding the system. As for serviceability, hardware based systems, like a stereo or television set, have no user serviceable parts. For repair, the equipment must be returned to the manufacturer. Inasmuch as a significant amount of DVR manufacturing takes place in Asia, repairs frequently result in several weeks of “down-time” for users. Given the relative strengths and weaknesses of software based and hardware based DVRs, Visual Management Systems believe that the best choice for consumers is a DVR which incorporates both types of technologies. Visual Management Systems uses hardwarebased video capture cards in its “Virtual Manager” DVR which process the video and remove the heat and strain from the computer’s motherboard. The hardware based video capture card resides in a software driven PC environment. The result is a dedicated security computer. The use of removable hard disk drives for storage flexibility and components that are readily available, inexpensive and easy to service provides a PC-based security system that can grow with a business.
IPDG builds its DVRs for Visual Management Systems and dealers to very specific standards. Each DVR is built from tested, proven components and is driven by Microsoft WindowsR software and is customized to perform optimally based on a system designed by a Visual Management Systems Loss Prevention Specialist. All of its custom-built DVRs offer record-on-motion capabilities as well as continuous, alarm-triggered or combination settings. Data is easy to retrieve by date and time and can be reviewed at user-controlled speeds and in one, four, nine or sixteen camera formats.
Standard features of the Visual Management Systems Virtual Manager DVRs include:
• Live remote viewing • Motion and frames per camera are addressable per camera
• Access to recorded data by date and hour • Alarm notification by e-mail, phone or IP-alert
• All functions are user name and password protected • Video motion sensor and built-in motion detector mode
• Uninterrupted recording • Access control.
Other features made available by VMS include
• High resolution digital color cameras per system design • Flat panel LCD monitors for on-site viewing
• Unlimited Access RMS software licenses • Extended warranty on parts and labor
Remote Management Software used with DVRs offers the ability to view a location live from anywhere, at any time via telephone
lines or high-speed internet access. In addition to selling DVRs as part of systems designed and installed by VMS, IPDG sells its DVRs through unaffiliated dealers.
NEW OFFERINGS
TrueHybridTM SP
As the industry shifts from analog to internet-based IP technologies, enterprises are faced with the costly decision of abandoning existing infrastructure investments or relying on legacy equipment. With its TrueHybrid™ Surveillance Platform, Visual Management Systems has developed a solution that preserves existing networks while providing IP compatibility. Featuring state-of-art, proprietary software designed to manage the traffic of large video networks, TrueHybrid™SP is one of the few viable options available to mid and large-sized enterprises making a phased transition to IP video.
GoVyetm Services
For companies who trade in digital CCTV systems and services, recurring monthly revenues (RMR) have been an elusive target.
The result of this inconsistency has been difficulty in establishing valuation multiples. Management views GoVye™ as the solution. GoVye™ services include offerings that enhance system maintenance, management and effectiveness through the use of components like proactive system health monitoring, automated software upgrades, virtual mystery shopping and reactive alert monitoring. GoVye™ services have been recognizes by prominant industry sources as unique “best practices.” The company expects success in growing an RMR base by deploying GoVye™ services to its new and existing customers.
Sales and Marketing
Visual Management Systems markets and sells its video surveillance and other security systems through a dedicated inside and outside employee sales force. VMS’ pricing strategies are based upon an estimate of labor hours multiplied by standard rates and the estimated cost of system components, including subcontractors, plus a profit margin. Its DVRs, NVRs and other branded products are also sold through independent dealers. Visual Management Systems plans to expand both its employee sales force and dealer network in 2009.
Visual Management Systems uses various methods to market its products and services. These include direct sales efforts, personal consultations, sponsorships, attendance at exhibitions and trade shows, advertisements in industry journals, public relations and direct mail solicitation. Business is also obtained through competitive bid processes and referrals. Visual Management Systems has a “Referral Alliance Program” pursuant to which clients receive a “finder’s fee” for each new client they refer to VMS that purchases systems or components. Management and the Board of the Directors contemplate investing in additional marketing inititatives as a component of proceeds from anticipated financing.
Service
A strong service and maintenance capability is an important element in maintaining good customer relations and low attrition, and is an important revenue generating activity for Visual Management Systems. Visual Management Systems offers one and three year service contracts as well as extensions and takeover programs. Parts are typically covered by warranty for a period at least as long as the warranty provided by the manufacturers. Service is provided by Visual Management Systems staff or subcontracted through partner companies such as IPDG dealers or structured cabling companies. In addition to providing revenue and gross profit to Visual Management Systems, service contracts allow Visual Management Systems sales personnel to generate new revenue streams.
SUPPLIERS
Visual Management Systems manufactures six original lines of digital video and network video recording hardware and software. The company acquires the components for its video surveillance systems through various suppliers and chooses not to align itself with any one supplier so that it can recommend the best solutions for its customers. Substantially all of the non-proprietary components used by Visual Management Systems are readily available from multiple sources.
GEOGRAPHIC PRESENCE
The company maintains its headquarters in Toms River, New Jersey. This facility houses corporate management, integrator dispatch,
core software development, manufacturing and shipping. The company supports an outside sales force primarily located on the
US eastern seaboard, from New England to the Carolinas. It maintains sales, installation and development facilities in Delaware, Maryland, Virginia and Ohio. VMS systems are presently installed in more than 40 US states, Mexico, Canada and the Caribbean.Through its IPDG divisions, the company is exploring international distribution opportunities. The company serves locations outside of its geographic footprint through a network of dealers and sub-contractors.
market Visual Management Systems believes that the multi-billion dollar market for video surveillance systems and other protective technologies is growing rapidly due to a number of factors, including:
• Many existing security and surveillance systems are becoming technologically obsolete and inadequate
• Insurance providers and governing bodies began mandating surveillance in certain environments and situations
• Since the tragic events of September 11, 2001, security is among the highest concerns of Americans at home and work
• Widespread coverage of kidnappings, robberies and other crimes appear daily on television, in newspapers and other media
• Technological advancements provide the opportunity to increase the scope and efficacy of many routine security tasks
The World Market for CCTV & Video Surveillance Equipment Report by Electronics CA Publications, an electronics industry market
research and knowledge industry publisher, details findings in their report of the video surveillance equipment and security industry as:
• Consistently high, double-digit annual growth forecast for the next 5 years
• Network camera market to exceed $1 billion by 2009
• Shipments of video servers to grow at an average of 50% per annum for the next five years
COMPETITION
The security industry is highly competitive. Visual Management Systems competes on a local, regional and national level with a small number of major firms and many smaller companies. Visual Management Systems competes on several fronts, including quality, design and price. Certain of Visual Management Systems’ competitors have greater name recognition and financial resources. It may also face competition from potential new entrants into the security industry or increased competition from existing competitors that may attempt to develop the ability to offer the full range of services the company offers. It believes that competition is based primarily on the ability
to deliver solutions that meet a client’s requirements and, to a lesser extent, on price.
Management and the Board of Directors believe that the market for video surveillance systems remains highly fragmented among a
small number of larger providers and a broad array of small companies. They plan to remain focused on the substantial opportunitties presented in the underserved midsized business market.
Research and development are ongoing processes at Visual Management Systems. The company continuously develops new product
lines, learns different disciplines and integrates products and programs into its offerings to bring new value to its customers and the overall market.
Through IPDG, Visual Management Systems evaluates new hardware and software technologies regularly. It samples systems to integrate with its existing products as well as new stand-alone technologies. IPDG’s newest ventures include fully integrated data translators that are software based, immersive-moving video integration, mobile DVRs for law enforcement and fleet vehicle use and hybrid DVRs that can use traditional, hardwired camera inputs as well as IP-based camera solutions. We believe that the company is breaking new ground with remote communication and actuator systems that allow central monitoring stations to become useful, effective profit generators.
Visual Management Systems’ future plans include the development of a central video monitoring service and any associated support
contracts. With the implementation and use of the products and services it provides, there are a multitude of supporting services available for sale. These include, but are not limited to virtual guard tours and mystery shopping, loss prevention observation reporting, risk management and mitigation, facilities insurance programs, two-way access patrols, video alarm verification and off-hours facility monitoring.
To further its research and development efforts, VMS is actively seeking companies, technologies and patents it can acquire or adopt to strengthen its offerings and bolster its product suites. Acquisition discussions are focused on installation capacity, product lines, software development and copyrighted or patented technology that can have an immediate impact on revenues and profit growth.
Customers
Visual Management Systems has a wide range of customers. They include small, medium and large-sized businesses, residences, office buildings, manufacturing, warehousing and other classes of commercial operations. Its customers are individuals, private and public companies and government entities.
CORPORATE CLIENTS
Visual Management Systems serves many corporate clients. Corporate clients are departmentalized and typically represent larger
contracts. Visual Management Systems receives a majority of its revenues from medium sized corporate clients.
As this middle level client is the core for the Visual Management Systems business model, it continues to enhance marketing programs
in this sector. It offers incentives for referrals to other businesses in the group and plans to remain innovative as it proceeds.
Visual Management Systems’ corporate clients include but not
limited to:
Apple American (Applebee’s restaurants) Best Western Hotels
Bob Ross Motor Cars Brandywine School District DE
Briad Group (TGI Friday restaurants) Cadbury Schweppes
Clearview Cinemas Coca Cola
Croda Chemical Delaware State Police
Dons Crabs Inc. Dunkin Donuts
El Rancho Foods (Taco Bell franchisee with VMS systems installed at 80+ locations)
FISCA (New York/New Jersey Cashiers Trade Association)
Fort Wayne Lincoln Mercury Hampton Inn
Harley Davidson Motor Cycles Hollywood Tans
Jersey City Police Department KFC
McDonalds NAPA (retail automotive parts)
Penn State University Ramada Inn
Ramen Noodles (division of Nissin Foods) Residence Inn
Sarku Japan Taco Bell
TGI Friday’s UPS Store
GOVERNMENT
Until recently, Visual Management Systems had not aggressively marketed its products and services to government agencies. New
Homeland Security initiatives (DHS) and aggressive payment programs based on discounts for early payment have made the government a more attractive customer. Successful bids include school districts, municipal projects and police departments in several states and DHS projects in the New York/New Jersey Waterfront Security District.
Because there are grants, mandates and numerous other moratoriums on the subject, Visual Management Systems plans to launch
an enterprise sales group to promote its affiliation with the government and prime contractors. This is an area that offers tremendous growth potential for Visual Management Systems and its subsidiaries.
VLF
