World Surveillance Group Inc (fka WSGI)

[Madmonks]

Hi msturgeo,

I think I remember you from the Globetel days. I'm not sure that you posted a lot, but that was a while ago now, so my memory is probably a little fuzzy. I wasn't posting back then, but I was reading the board. Hope you're doing well.

As with any investment, you should do your own due diligence. But I will provide you with some highlights (and lowlights) about the company.

First off, World Surveillance Group, Inc. (WSGI) is the parent company (I really hate the name, and it's the fourth name change since I've owned the stock), and it has two wholly-owned subsidiaries: Lighter-Than-Air Systems (LTAS) and Global Telesat Corp. (GTC).

http://www.wsgi.com/

http://www.ltascorp.com/

http://www.gtc-usa.com/


WSGI's current management took over 3-1/2 years ago in an effort to turn around the company. The CEO, Glenn Estrella, is a former JP Morgan Chase executive and is a Harvard Business graduate. No one in the management team receives a salary. All are compensated with shares of stock. That's because there isn't enough money to pay them. The revenue picture looks like this:

2011 - $0
2012 - $1 million
2013 - $2 million (projected - the 10-K is due March 31st)

Current debt: Approximately $15 million

Securing funding has been a challenge, and stock dilution has plagued the company and remains an issue.


Since this management team took over, the company has:

- Settled all outstanding matters with the SEC involving the fraud committed by previous management
- Settled or resolved most of the lawsuits filed against the company related to the fraud
- Acquired two companies (GTC and LTAS)
- Developed the Blimp-in-a-Box (BiB) aerostat system and Argus One airship


The BiB has the most potential in the near-term. They've sold two BiBs to the U.S. Army JIEDDO (Joint Improvised Explosive Device Defeat Organization) which has been evaluating the BiB for over a year now at Fort Polk, LA.

http://content.stockpr.com/snsr/files/media/Inside+the+Army+Bib+992013.pdf

Another version of the BiB, which the military has dubbed the WASP, is being evaluated by the U.S. Army SMDC (Space and Missile Defense Command) in Alabama for communications purposes.

http://www.army.mil/article/115882/SMDC_helps_WASP_fly/

And finally, a number of aerostats have been sold to the U.S. Army REF (Rapid Equipping Force). Those aerostats are currently in operation in Afghanistan.

http://ir.stockpr.com/wsgi/company-news/detail/1234/lighter-than-air-systems-receives-order-for-aerostat-systems-to-support-the-u-s-army-rapid-equipping-force

The BiB is designed to be operated at the platoon level. So if the BiB were to be added to the U.S. Army's Table of Equipment, it would become standard equipment. There are approximately 3,000 platoons in the Army. So doing the math, the BiB (which sells for $300,000) could potentially become a $1 billion product. And that's just selling to the U.S. Army. The BiB could also be sold to the U.S. Marines (which follow the Army's lead when it comes to equipment) and other U.S. government and law enforcement agencies, not to mention foreign governments.


In the longer-term, there is potential for the airship side of the company. To date, not one airship has been sold (a epic failure IMO). However, they are expecting to make a sale this year. The U.S. Air Force seems to be the most likely customer. I wish I had more information for you about the Argus, but the company took down all the information about their airship program from their website. I think something is in the works. Meanwhile, back in August, the company announced the forming of a new consortium for airship development.

http://ir.stockpr.com/wsgi/company-news/detail/1224/world-surveillance-group-establishes-consortium-teaming-agreement-to-further-develop-and-commercialize-argus-one-airship


And, in the even longer-term, there is the Stratellite. The Stratellite is an airship designed to hover in the stratosphere which could serve as a replacement for cell-towers and provide voice, Internet and TV service to millions of customers. Google is developing a similar system called Project Loon, but I think WSGI's concept is much more doable and has many advantages over Google's. Project Loon requires thousands of balloons floating through the stratosphere. WSGI's Stratellite would be stationed over a specific area, and one airship could cover hundreds of square miles.

http://www.wired.com/gadgetlab/2013/08/googlex-project-loon/


In conclusion, WSGI's business strategy is simple: Foxhole to the Stratosphere.


The stock is pretty much near its low, so I think there is much less risk of it falling much further since the threat of bankruptcy has now passed. At its current market cap of $6 million, I think the stock may be undervalued, but further dilution makes it hard to assess. This past year was another rebuilding year, but I'm hoping 2014 will be much less so. Follow-on contracts for the BiB are possible and an airship sale is also possible.

Anyway, that's it. If you have any more questions, I'm sure someone else more qualified on this board could answer them.

Good to see you on the board again. Maybe we'll see you some more in the future.