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Extreme CCTV

In the Boardroom With...

J.M. (Jack) Gin
Extreme CCTV, Inc.
(Toronto Stock Exchange: EXC.TO) May we have a brief Company history?

Jack Gin: Extreme CCTV Inc. was founded in 1997 and I have been its President and CEO since the start.  We’ve always specialized in “extreme application” cctv and through our acquisition of Derwent (2001), we became the “go-to” company for advanced infrared illuminators.  Prior to 9/11, infrared illuminators were appreciated only for certain applications in North America.  But they are now in the mainstream for critical surveillance projects in the USA and abroad.  The company’s strong executive management team has helped steer the company to position of technical leader in active-infrared imaging.  The security world is in need of this leadership in electro-optics, especially now in this digital-age where intelligent video-analytics requires excellent video under all ambient light conditions.

In 2003 we also invested in an imaging technology (Obzerv) that can see through night-time airborne obscurity (as in mist and fog).  This technology is now being installed for certain maritime security locations at critical global waterways.

In August 2006, we completed the acquisition of Forward Vision, the UK’s leading pan-tilt-zoom (PTZ) camera company to give Extreme CCTV another dimension to its product portfolio offering.   Forward Vision make a compact ruggedized mechanical surveillance system that is widely utilized in the UK and increasingly is being installed in the Middle East. Why did you acquire Forward Vision?

Jack Gin: Forward Vision has an engineering expertise that complements the engineering teams at Extreme CCTV and Derwent Systems.  Moondance cameras - also known as the “Metal Mickey” and Forward Vision’s best selling product family - have an incredible track record of performance, integrity and reliability.  Moondance is very well-engineered and “extreme” to the core, having toughness typically expected of Canadian design and destined to find success in global vertical markets. 

At Extreme CCTV, you will find the world’s toughest cameras - cameras that can take physical abuse and weather extremes.   With customers from Canada to Kuwait and Africa to Antarctica, we have addressed the world’s harshest environments, and have gone beyond weather extremes.  For example, Extreme has cameras that withstand gunfire, cameras certified for installation in hazardous explosive locations and cameras designed for acidic and corrosive environments. 

All of these models make for “fixed-installation” cameras that are explosion protected, bullet resistant, corrosion-proof and hurricane-ready, Forward Vision has recently designed for ALL of that in one mechanical PTZ camera that we are calling the “Moondance ExD”. 

The underlying strategy is to bring all of this engineering expertise together under one global company so that we can accelerate the development of several new product models that will radically raise the bar on what performance CCTV means in pan-tilt-zoom cameras.

Additionally, being able to work with their brilliant founding engineers was also one of the more attractive reasons to merge the company through acquisition.” What are your sales channels like in Europe?

Jack Gin: Derwent Systems, our UK-based European subsidiary, has operated throughout the region since its inception over ten years ago.  Derwent Systems has earned the reputation as being the go-to company for active-infrared illumination technology throughout the years.  It’s sales channels - comprised of integrators and distributors and supported by consultants - are very strong and are the result of many years of alliance building with the key players in the UK and Europe. 

The British are the world’s leading proponents of CCTV, having the highest per capita usage in the world and consequently the highest performance expectations.  The level of CCTV mastery in Britain far exceeds that of North America.  From within this environment, Derwent established itself as the most trusted name in infrared, a legacy they still uphold today. 

We also appreciate the British heritage of Forward Vision as well.  Their cleverly designed cameras have an installation base of thousands of units in the UK and there are customers and alliance partners that are very loyal to Forward Vision.  They too enjoy very well established sales channels and we will not be changing the valuable British heritage of Forward Vision.  In fact, you will see market expansion of the innovations that have and will continue to come out of this technology company. Who are your customers in the US?

Jack Gin: Our customers include government end-users including the US Navy and the US Army Corps of Engineers, major systems integrators such as Northrop Grumman and SAIC, Fortune 500 companies like Exxon and the small-to-medium sized security firms who provide security solutions to everyone from banks to hotels to airports. 

In fact, as a Canadian-headquartered company, we’re very well known to the top security providers in North America and the UK but still relatively unknown to the US Capital markets. Jack, you’ve said that, “Engineering is at the heart of Extreme CCTV.The Company now has 70 core products which extend to more than 500 models customized to meet a wide range of applications. Please give us an overview of the Company’s core technology.

Jack Gin: Extreme CCTV Inc. with its UK subsidiary, Derwent Systems, are already known in the CCTV world for engineering expertise, especially in the areas of infrared illumination and extreme environment cameras.  Throughout Europe and the world over, the Company delivers several thousand units of high performance products every month and has earned a reputation for reliability, quality and durability over a 15-year history that is founded on engineering expertise. 

We have in-house R&D teams in both North American and the UK that are constantly developing our core expertise in active-infrared imaging and opto-electronics.  In a competitive world that has a lot of “copycat cloning” from unreliable and start-up companies, Extreme CCTV has continued to innovate the industry and derives its success from being able to deliver surveillance products that exceed expectations, delivered time and time again, from manufacturing facilities that operate with quality and integrity.  Even now, Extreme is one of the only companies in the world to operate night vision labs that continually improve infrared night vision products while being of service to all the top specifiers and systems integrators in the world. 

Integrity through a foundation of engineering expertise makes sense for our target markets.  In buying from Extreme CCTV, you are engaged with the company that designed every aspect of each product.  So if there are questions regarding design, materials, standards, safety, performance or systems integration, you will be able to call us as if this was your own engineering team.  Our customers want to know that they are buying from a technology company that is reachable, dependable and knowledgeable.  “Terrorism”, unfortunately, is certainly one market driver for your business right now especially in the Defense, Homeland Security, and Transportation markets. What’s your perspective on other market drivers affecting your target markets?

Jack Gin: The security world is changing rapidly for two reasons: technological convergence and security need that is heightened by the threat of terrorism.  Extreme CCTV is a company that has stayed “ahead of the curve” in terms of technology expertise and market anticipation.  That is why this company has a reputation for “innovating the industry” with its market leading products. 

On the topic of convergence, Extreme is in a position to capitalize on the growing trend towards IT convergence in the security industry.  Our products play a key critical role in enabling the optimal night-time functioning of novel security software such as video analytics.  In fact, during development trials of our intelligent license plate recognition platform, we worked with the authorities in Las Vegas to successfully identify more than one individual on a Homeland Security Terrorist Watch list.

Additionally, we are actively engaged in incorporating the latest imaging technologies into our products and will be soon delivering several innovations to the market.  Let’s turn to the International market for a moment. Extreme CCTV recently announced sales success in Singapore in an application where Extreme’s Integrated Day Night™ (IDN™) cameras will be used for security upgrades by a major power company. Extreme has also had “wins” in Australia, Mexico and South Africa. You’ve also got a section of your website up in Chinese. What would you like our end-user audience and investor audience to know about Extreme CCTV’s penetration in International markets?

Jack Gin: Extreme’s success in North America and Europe has enabled us to form alliances with leading global and regional systems integrators.  We are still a small specialist company and we are growing in popularity to the mainstream security providers worldwide.  As we continue to develop our regional presence in each of our target areas, we expect continued sales revenue growth and brand recognition. 

Overall, we believe that Extreme CCTV has achieved a critical mass and are now poised for another period of high organic growth.  This is expected to occur in not only our traditional North American and European markets, but also new markets like the ones you have mentioned: Mexico, China, Australia and others.  Let’s cover some financial updates. Extreme CCTV has registered 6 consecutive profitable quarters. Not too many companies can match that. How is the balance of 2006 and 2007 shaping up? Does the Company have the resources it needs? 

Jack Gin: In fact, without exception, we have been profitable in every single year since we went public.  As a technology company, an innovator and a market-maker, we know that it is a challenge to be profitable under tough market conditions.  But we will continue to be profitable and we are confident in our growth strategy.  We tend to grow our resources as they are anticipated, and yes we are hiring at this time.

It should be noted that we have 9 consecutive years of balance sheet growth, we have no debt and we have been cash positive on an annual basis since we started business in 1997.  Would you like to make any closing comments?

Jack Gin: Today’s security world needs optics.  We’re valued and unique.  Customers who buy security need to deal with vendors who are technology leaders, reliable and dependable and who provide quality products.