sales force - my view
Shmolton~ Earlier this month I met with ICOP's Kevin McDugle.
Prior to coming to ICOP, from Sept 2003 to Feb 2005, Kevin led the sales team at International Police Technologies, Inc (a competitor of ICOP's), developing contacts with police agencies nationwide.
After joining ICOP, Kevin served as ICOP's Director of National Sales from March 2005 (about the time when the 20/20 first became commercially available) until July 2006. During this time period we have seen ICOP's quarterly sales increase sequentially, with repeat orders and average size of orders increasing. In this short time, the 20/20 has gone from newly commercially available in 2005 to deployed in police agencies in 43 states presently.
No question that ICOP sales thus far have been to small departments across the US. Small departments typically have a quicker timeframe from the time they decide they want a digital in-car video system until the time they order, with less levels of administration to pass through to make the orders.
Also, many large police departments in the US have not adopted in-car video (VHS or digital) in the past. One reason apparently is that unions have, in years past, argued against the systems (not wanting their officers to be taped, perhaps to avoid a Rodney King-type recording). I have been told (but need to do more DD in this area) that many large police departments are now recognizing the benefits that an in-car video system can bring in protecting officers from false charges.
I believe it is a smart move by ICOP to target small departments as well as medium/large ones. I have seen other start-ups pin their hopes on sales to one large buyer, whether a governmental buyer or other, and time passes while the large buyer has to take its time getting comfortable with the product, the approval has to pass through several levels of administration, etc.
By targeting small depts as well, ICOP is getting its product out into patrol cars across the nation, getting local chiefs and officers familiar with the product who will then tell their colleagues at other nearby local departments, building a reputation for customer service, continuing to build revenues and bring in some cash while the bigger orders work their way through the process, etc.
The mistake would be to pin all hopes on a few big orders, and then to frequently require additional cash financing while waiting for those orders to come to fruition.
I met with Kevin for over an hour. He was gracious and answered question after question after question with confidence, enthusiasm, specifics, etc--very impressive. He demo'd the 20/20 for me in his Dodge Charger which was very informative.
With 8 years with the US Marine Corp, and with the assistance of--
1) Director Noel Koch - former instructor for the U.S. State Department's Anti-Terrorism Assistance Program, and served for over five years as Director of Special Planning in the U.S. Department of Defense, and
2) Advisory Board Member Colonel Albert DeProspero, US Army (Ret.) - with over 36 years combat arms experience in U.S. military service
--it made sense to move Kevin in July 2006 to the new position of Director of Military Sales, where he will use Mr. Koch and Col. DeProspero's contacts and assistance to market the 20/20 to the military for use in humvees, Secret Service, etc.
I like that ICOP is marketing the 20/20 into other markets, such as school buses, and military uses, while the police market builds.
John Stransky moves into Kevin's former position as Director of Sales. I also met John. John was previously a Regional Sales Manager with ICOP, and I like that he served 8 years as a Commissioned Police Officer for St. Louis Metropolitan Police Department. With Kevin's background as a Marine, and John's as a police officer, these sales directors are able to communicate well with their customers IMO, and certainly are familiar with the industry. Plus, both had sold to police departments/governments prior to coming to ICOP.
The next couple of quarters for ICOP will be key to see if they can land some large and/or mid-size department orders in addition to the smaller dept orders. Also, it will be interesting to see what happens in the bus market later this year. The salesmen I spoke to were very positive and confident larger (police) orders are coming. Management mentioned on the 8/9/06 call that ICOP has received verbal commitment on larger orders.
I think ICOP stock will be a good long term hold, but like many small companies, ICOP will have to swim against the "flight to quality" investment background that has existed in the markets the last couple of months. With relatively low volume, the PPS has moved down sharply the last month or so.
But if/when an order of 200 units lands, that should represent an order of about $1M, which is about as large as its previously largest quarterly revenue. Hopefully we will see an order of that size in Q3. I believe the sales team is working hard toward many of those size orders, as well as continuing to serve its bread and butter smaller departments.
I believe ICOP said in its last call that the inventory was at about 1,000 units, in anticipation of some larger orders. ICOP has prided itself in being able to ship its 20/20s next day (after PO), and has promoted that as a selling point.
Shmolton~, my visit with Kevin and John was very positive. Hope you found the information helpful.
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