Markland Technologies (fka MRKL)

[BornAgain]

DD on MRKL

http://www.otcjournal.com/archive/listserv/20050108-1.html

Markland Technologies plays one of the most important roles imaginable in developing technologies to fight terrorism. On behalf of the Department of Defense, MRKL is actively involved in the development of technologies which use sensors to detect hidden weapons, explosives, chemicals and gases.

The company's fortunes changed entirely in June of '04 when they acquired privately held EIOR Technologies. MRKL's revenue stream immediately rocketed from $6 million in annual revenues to $60 million in annual revenues (based on September quarterly revs of $15 million).

Wholly owned subsidiary EIOR is intimately involved in the development of remote sensing devices used to detect terrorists, bombs, weapons, and all kinds of threats.

Here's a run down of some of the companies products in development under contracts with the DOD:



Pictured here is MRKL's AWAS (Advanced Wide Area Search) vehicle. AWAS is a scout vehicle that consists of a Hummer equipped with a Forward Looking Infra Red Sensor, a High-Resolution Short Wave Infra Red Sensor, and a Ground Target Radar. The sensors are mounted on a gimbal which has been modified to allow it to perform a wide-area scan. The scanned sensor data is fed into an Automated Target Recognition software program for locating potential threat areas for the operator.

The AWAS is being developed in support of the Ground Systems Division at the Night Vision Laboratory, located at Fort Belvoir, Virginia. This systems can detect all kinds of threats at night.



Here is MRKL's U. S. Navy’s Shipboard ACADA man-portable point detection system used to detect all classic nerve and blister agents as well as other chemical warfare agent vapors. The system is easily upgradeable for new and novel agents. Patented by the U.S. Navy, it is designed to operate onboard a ship and used to detect agents at low concentrations in real time while ignoring the presence of common vapor interferents. The system has visible and audible alarms.

It weights 26 pounds, runs on AC or batteries, and can detect chemical agents within 3 seconds of being activated.



Lastly, you are looking at two different versions of MRKL's Long Range Acquisition Scout Surveillance System (LRAS). These are portable devices currently under development in conjunction with the US Army Special Forces.

The devices use multi spectral infrared sensing to aid US Army Special Forces operators and other ground-based combat units in clearing and securing building interiors and perimeters as well as other urban structures in advanced combat areas of operations such as those found in Iraq and Afghanistan. These devices can detect the precense of potential dangers in buildings and caves.

These portable devices will not be field tested until the 3rd quarter of 2005.

This final one is the Coup de Grace, and the subject of today's press release:



As part of a top priority program funded by the US Army, MRKL has been using its remote sensor technology to develop technologies for Hidden Weapons and Explosives Detection. These guys are developing the technology that will eventually used to identify and thwart suicide bombers.

Using technology to identify suicide bombers in a crowd is a difficult undertaking. First, a thermal component used at varying ranges must be incorporated. Secondly, the system must optimize the processing bandwidths. Thirdly, the system must be developed with Aided Targeting Software.

I don't understand exactly how the varying technologies all work together. However, I do know the company announced Friday it has successfully completed the first phase of testing of this new suicide bomber detection technology. Within the press release CEO Bob Tarini states: “When all of these different detection technologies are integrated into a single, unified solution, the system can attain an extremely high level of accuracy in the detection of potential threats with a relatively low rate of false alarms”.



Now that you have a clear picture of the company's products, here are some thoughts on the investment potential. There are currently 58 million shares I&O on MRKL. If all warrants outstanding are exercised, there will be another 20 million shares issued.

Therefore, we have a company with a market value of about $43.5 million, growing organically somewhere in the 30% range, and currently delivering about $60 million in annual revenues based on the September quarterly results of $15 million. You can own this stock for less than 1 times annual sales- a bargain basement level by any metric.

While the company operated at a loss in the September quarter, they were in fact cash flow positive from operations. If you extract all the one time expenses related to the acquisition, and all the non-cash expenses, the company generated about $1/2 million in positive cash flow. MRKL's management feels it won't need to raise any more capital in the near future. As the stock moves up in price and warrants are exercised, the proceeds will fulfill the company's capital needs.

In keeping with the theme of not repeating past mistakes, today you are reading about a company that has already completed its financing, and got it's registration statement effective back in November. The underlying cheap stock has already been absorbed by the market for the most part.

MRKL is a brisk trader with a big following. It averages about 1.8 million shares per day in volume. Back in September when the company announced it had generated $6 million in sales in August it traded 39 million shares in one day. Unlike past premature ideas, this stock has been wrestling with an excess supply from the financing, but is closing in on a critical breakout point.

On the fundamental side the future is bright. MRKL is developing all these technologies for the US Military on the government's nickel. Once completed, the company gets to manufacture the final products and sell them to the military.

Most of the products in development have cross over applications towards fulfilling our needs for homeland security. Over the next several years MRKL will be in a position to manufacture and distribute domestic versions of these products at much higher margins. Long term, these are the kinds of developments which could put the stock many times higher than where it currently trades.

In the short term, MRKL's post close announcement of successful testing of its suicide bomber technology could send the stock surging up the charts. I feel the stock is definitely a buy up to $1, but use caution if the opening gap is too big. Check the OTC Journal BLOG for market feedback about 1/2 hour after the open on Monday. If it doesn't gap open too high, don't be afraid to take a position.