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Secure Strategy Group, LLC

In The Boardroom With...

Mr. Scott L. Greiper
Secure Strategy Group, LLC

Updated December 10, 2010 Scott, thank you again for joining us today. What are the latest new developments at the Secure Strategy Group?

Scott L. Greiper:  It’s good to speak with you again.

We have had several exciting developments that Iíd like to share with your readers.

First is the stock performance of one of our clients, Implant Sciences (IMSC.PK) , which is a provider of portable explosive trace detection systems. We began working with the company roughly one year ago when the stock was $0.06 per share and the average daily trading volume was less than 10K shares. This week the stock hit a new 52-week high of $0.93 on over 2 million shares. In addition to helping drive momentum and liquidity in the stock, we've also been successful in generating business opportunities for the company. These include deployments at the U.S. Open Gold Championship, a NASCAR race held at the Richmond Raceway during the weekend of September 11th, and the Indian Ministry of Defense. Implant's technology provides real operating and cost advantages to end users and the company is well positioned to capitalize on the urgent need to detect IEDs (Improvised Explosive Devices) in transit, aviation and law enforcement venues."

Second is the sale of three of our clientís security technologies to NASCAR, for deployment at a race that was held at the Richmond Raceway back on September 11th of this year. The race attracted over 100,000 spectators which created the need for a comprehensive perimeter security and access control program. We were able to bundle three of of clients technologies as part of the deployment, including covert surveillance solutions from NSM Surveillance, trace detection technology systems from Implant Sciences Corporation (IMSC.PK) and crowd management long-range acoustic devices from LRAD Corporation (Nasdaq: LRAD). This provided a highly visible deployment for these clients in the sports venue sector.

Third, we were extremely pleased to have been invited to join a select group of companies on an executive trade mission to India in early September. The U.S.-India Business Council (USIBC), the Indian chapter of the U.S. Chamber of Commerce, led the trade mission and invited us to join. During the mission, SSG was introduced to leaders of Indiaís homeland security and defense agencies, including the National Security Advisor, Foreign Secretary, Director General of the Indian Coast Guard, Director General of the Central Reserve Police Force, and others. In the aftermath of the November 2009 attacks in Mumbai, the Government of India has embarked on an ambitious plan to modernize and upgrade its homeland security apparatus. The homeland security budget has been growing at an annual rate of 25% to fund the planned improvements in police and paramilitary forces, secure urban centers against terrorism and create a safe economic environment for the country as a whole. Now, more than ever, the Government of India is looking to U.S. companies for their expertise and high-end technology to provide solutions to some of Indiaís most urgent problems. This was a fantastic opportunity for us to introduce our security technology companies to representatives of the India government.

Finally, we were privileged to be asked to moderate a conference on Cyber Security at the British Consulate, which occurred on Monday, November 15th. The conference was sponsored by U.K. Trade & Investment (UKTI), the U.K. government agency that helps U.K.-based companies succeed in international markets and assists overseas companies to bring high quality investment to the U.K. The conference focused on vulnerabilities and solutions to the ever-growing problem of cyber attacks against government and commercial networks, and included representatives from the U.K. and U.S. governments, and senior executives from leading private sector organizations. These included Northrop Grumman, Goldman Sachs and the Royal Bank of Scotland. The all day event was followed by an evening reception at the British Consulate, sponsored by Her Majestyís Consul General, New York, Sir Alan Collins KCVO CMG and Lady Collins.

Thank you for the opportunity to update your readers on some of our success stories. Thank you for joining us today, Scott. It’s safe to say that you’ve been one of the leading and most respected names in the security industry for many years. Please give us an overview of your background and a brief company history of the Secure Strategy Group.

Scott L. Greiper: Thank you, Martin, for the opportunity to speak with you.  I've been fortunate to have been an equity research analyst and investment banker in the security industry since 1995.  This has given me the opportunity to witness the evolution of the industry from before the events of September 11, 2001 through to the present time.  The first security transaction I was involved with was in 1995 when I was a research analyst at S.G. Warburg.  I had recently joined the firm after leaving The Spinoff Group, a firm that I founded to focus on investment opportunities in spinoff transactions.  Warburg brought me over to help with the restructuring of Brinks Security, which involved the potential spinoff of Brinks from Pittston Services, its then parent company.  We provided the first structural and valuation analysis of the company that led to the break-up of Brinks into several publicly traded entities.  This generated a significant increase in value for shareholders. Several years later I joined C.E. Unterberg, Towbin as the firm's Senior Analyst covering the Global Security sector.  I was ranked as one of the top analysts in the sector based upon the investment performance of my research recommendations, which yielded over a 50% average annual return for our investors.  This performance helped bring the institutional investment community into the security sector, which added liquidity and stability to many of the public companies that we followed.  From there I was offered the opportunity to start and build the homeland security banking practice at Legend Merchant, which was called the Convergent Security Group.  There we completed the first SPAC transaction in the security industry and I began to implement my vision of combining investment banking with strategic advisory services to help back and build growth companies in the security industry.

I left the Convergent Security Group at the end of 2008 to start Secure Strategy Group, which was formally launched in January 2009. The Secure Strategy Group (“SSG”) is a specialized strategic advisory practice.  We are passionate advocates for emerging technology companies in the homeland security and defense technology markets.  Our job is to identify the best of breed growth companies in these sectors and then help to back and build these companies.  We believe there are significant returns and shareholder value to be created by capitalizing on the growth and fragmentation in these markets and the unprecedented opportunity for small to mid-sized enterprises (“SMEs”) to compete. The challenges of combating modern terrorism and crime demand advanced digital, networked and web-based technologies that were largely absent in the pre-9/11 security world, and SMEs have stepped up as innovators.  Since 9/11, such companies have won contracts against larger competitors that would have been inconceivable ten years ago.  This success has attracted increasing levels of funding from the investment community and an active M&A market.

We believe that SMEs have and will continue to drive innovation not only in security technologies, but also in business models and solutions, and we seek to back companies that have both commercial and government applications.  However, because the industry is fragmented and politically influenced, success requires more than just capital.  Success also requires visibility and access to opportunities that are often beyond the reach of small and mid-sized companies.  Examples include: the ability to diversify revenue from both the government and private sector; penetration into key critical infrastructure verticals, including energy, universities, ports, law enforcement, healthcare and sports venues; access to advantaged contracting opportunities; M&A opportunities to complement organic growth and provide exit scenarios; and access to a range of financing sources. 
SSG provides an integrated set of services that meets our clients’ needs and is unique in today’s marketplace.  We provide strategic, M&A and business development expertise to help position and build a business, and access to capital to support these growth initiatives.  This model provides a range of value to our clients in a cost-effective manner, and from a single source.
The Secure Strategy Group team brings deep sector, government and capital markets expertise.  The members of our group have been involved in raising more than $300 million in capital for public and private companies in the security and defense industries, completed a range of M&A transactions, generated significant contract opportunities and developed a range of strategic business relationships for our clients.  Together we have a track record of success in advising, building and financing growth companies.  Along the way we have developed a deep network of industry relationships that are the lifeblood of our practice. What are the value-added services that Secure Strategy Group brings to the table?

Scott L. Greiper : SSG provides a unique mix of business development, corporate development, investment banking and research services:
 Business Development

Ø Comprehensive Business Development Services in the Fed/Gov market.  We provide direct introductions to contracting opportunities in the federal sector.  Through our strategic access to government clients in agencies such as DHS, FBI, US Department of State, the Department of Defense, the Intelligence Community, and other federal, state, and local agencies, we assist our clients in understanding client requirements, mission needs, and funding capabilities.   
Ø Comprehensive Business Development Services in the Commercial market.  We provide direct introductions to contracting opportunities in Critical Infrastructure Protection in the private sector.  Through our access to our network of Chief Security Officers and decision-makers in key sectors (Energy, Financial, Healthcare, Universities, Stadiums, Ports), we assist our clients in establishing a foot-hold and client “reference-ability” within important vertical markets.
Ø Access to Competitive Contracting Opportunities.  Secure Strategy Group has established SSG Technologies, a Service Disabled Veteran Owned Business (SDVOB) which provides its clients with competitive contracting opportunities for set aside RFPs.
Ø Access to Strategic Channel Partners.  SMEs frequently lack the resources to employ an effective direct sales model and to provide sales support in the form of training, service and maintenance. Through introductions to our network of systems integrators and third-party vendors, SSG helps our clients’ scale and support business development initiatives.
Ø Government Affairs support.  Through our strategic alliance with one of Washington’s premier emerging lobbying and government affairs firms, we offer our clients the insight and knowledge of the legislative process to leverage their technologies for success.
Corporate Development
Ø Access to Talented Technical Resources at Competitive Costs. Through its partnership with George Mason University’s Intelligence and Security Research Center, SSG’s clients have access to graduate level engineering students (many of them cleared) to provide technology support in a variety of disciplines including; software development, geospatial engineering, and other technical areas.

Ø Safety Act Certification. Through our strategic alliance with an established Washington , D.C. law firm with deep experience in Homeland Security and its Safety Act Certification, we offer our clients advisory services on the benefits of the Department of Homeland Security’s Safety Act Certification. The Safety Act is a unique opportunity that limits the liability exposure to companies providing technologies and services that address the nation’s homeland security threats.

Ø Management and Board Augmentation. When required, we provide access to qualified candidates to enhance our clients’ management team and Board of Directors.

Investment Banking
Ø Access to Capital. Secure Strategy Group, through its association with Pickwick Capital Partners, can assist in raising capital to achieve growth.  We have successfully raised over $300 million for our clients (both public and private companies) and have a deep network of investors in private equity, venture capital, hedge funds, family offices and strategic corporate funds.
Ø Mergers & Acquisitions. We have completed a range of provide both buy and sell-side assignments.  Our M&A practice helps to build our clients’ businesses through strategic acquisitions and provide exit opportunities for our investors through a strategic sale process.
Ø Corporate Restructuring.   We have completed a range of restructuring activities for clients geared towards increasing shareholder value, including refocusing corporate assets in the security sector, spinning off assets to unlock value, and reorganizing operations to create regional presence.


Market and Company Reports

Ø Market Research.  SSG provides market research in the homeland security and defense technology sectors.  Our research enables prime contractors, sub-contractors and systems integrators to understand the landscape, market opportunity and access points within specific sectors in both the federal and commercial marketplace.  As an example, we recently completed a study for a large prime contractor that was seeking to enter the handheld explosive detection market in the U.S.   As part of the study, over 125 end-users were interviewed which enabled our client to understand market demand, market size, pricing, and most sought after features and functionality among end- users.

Ø Company Reports.  SSG writes business plans and company reports for both public and private companies in the security and defense technology sectors.  Our reports serve as positioning papers for our clients, and are intended to communicate with both potential customers and investors.  The reports provide a comprehensive overview of a client’s business, including technology, competitive positioning, market differentiators, sales strategy, business model and comparable company valuation analyses. We understand you’ve been involved in some $300 million of financings and M & A deals. Any particular “success stories” you care to mention?

Scott L. Greiper: Sure, I’ll mention three.

Implant Sciences Corporation (IMSC), is a provider of explosive trace detection solutions.  We completed a sale of their largest non- security division two years ago and re-engaged with the company when a new management team came in early last year.  Since then we’ve helped to close over $6 million in new business, added two key board members, and introduced their technology into the Department of Homeland Security and the Transportation Security Administration.  During this time, their stock has increased over 600% and their average daily trading volume has risen by 80x.   

I.D. Systems (IDSY), a provider of RFID tracking systems.  We provided the first research on the company at $5.50 per share and brought in the first set of institutional investors.  Within a year of initiating research the stock had risen to $22.00 per share on significantly increased volume.

Essex Corporation provides signal processing services and products, and advanced optoelectronic imaging for U.S. government intelligence and defense customers.  Unterberg, Towbin raised several rounds of capital for the company at valuations below $30 million.  The company was eventually sold to Northrop Grumman for $580 million.

Glenn Bolduc, CEO, Implant Sciences Corporation:  “Scott Greiper and his team at Secure Strategy Group have been significant contributors to the success of Implant Sciences.  His role as both investment banker and strategic advisor to the company have brought significant and tangible results, in both the capital markets and new business activity.”

Ned Mavrommatis, CFO, I.D. Systems.  “Scott Greiper was the very first Wall Street analyst to understand what we were building at I.D. Systems and to publish research on our company.  His passion and hard work in introducing our company to the institutional investment community was largely responsible for our success in the capital markets.” The security industry is comprised of many different segments ranging from physical security solutions, to network security solutions, and biodefense among others. What is your perspective on the market drivers for these security companies at the present time? Do you see some sectors of the security industry growing faster than other sectors in the next few years?

Scott L. Greiper: Below are what we believe are key technology drivers in the industry:

  1. Convergence of technologies (digital, networked), platforms (fixed, wireless, IP) and applications (physical, IT)
  2. Wireless and IP enabled solutions that provide remote access, notification and control
  3. Intelligent systems and sensors mitigate manpower needs and increase ROI for the end user
  4. Processing and intelligence moves towards the “edge” facilitating true distributed and networked security systems
  5. Video bandwidth needs drive advances in storage and distribution technologies
  6. Security systems integration, training and support have become key market differentiators


The fastest-growing sectors in the HLS industry post 9/11 have been those that incorporate these technologies into solutions to protect private and publicly owned critical infrastructure. This is primarily due to the legislative and industry-driven mandates that were put in place in response to the security vulnerabilities highlighted by the events of that day, and the years it has taken to fully fund and deploy these solutions in the field.  We highlight the following eight sectors, and the associated security technologies, as those that have the best prospects for continued growth going forward:

Surveillance                                                                Asset Tracking
Intelligent video software and analytics                         Real-time tracking and diagnostics
Web-based video management solutions                       Supply-chain security
Storage management solutions                                     Secure, real-time communications platforms

Detection                                                                     IT/Network Security
Remote, stand-off CBRNE detection                               Data security/data mining
Portable, wireless detection systems                              Data fusion/interoperability
Next generation portals                                                 Authentication

Emergency Preparedness/First Responders                     Command & Control Systems
GIS/Digital mapping                                                      Open architecture platforms
Incident response software and training                          Security and operational features
Evacuation planning                                                       Multi-sensor

System Integrators                                                        Force Protection
Critical infrastructure protection                                      Net-centric warfare
Convergent solution providers (physical/IT)                     C4ISR
Intelligence community focused with clearances               Armor/hardening solutions

Governmental Priorities in HLS

Within the federal and DoD sectors, the principal drivers are Homeland Security related initiatives, principally cyber security, border security and infrastructure protection.  These government initiatives ultimately drive the private sector as well, but often from different perspectives.  Border security issues typically drive growth in government contracting and government services related companies, though there are opportunities in the private sector particularly in Supply Chain Security related businesses and technologies.  Cyber security and infrastructure protection initiatives are driven by government regulation and standards, but the end result is private sector funded implementation.

Department of Homeland Security (DHS)

DHS drives technological development and acquisition for the federal government and strongly influences acquisitions in the private sector.  There are a number of program areas that drive initiatives within DHS:

  1. Science and Technology
  2. National Protection Programs Directorate (Infrastructure Protection and Cybersecurity)
  3. Customs Border Protection
  4. Federal Emergency Management Administration


In May 2009, the Department of Homeland Security Science and Technology Directorate published a report outlining the priority technology areas for the Department.  DHS S&T’s Transition Program is customer-focused and output-oriented. The Directorate’s near-term efforts are aligned to DHS customers’ critical needs in the form of Enabling Homeland Capabilities (EHCs), consisting of technologies that can be developed, matured, delivered, and commercialized or validated as a standard within a 3-year period. A formalized, structured process, the DHS Transition Program aligns investments to Agency requirements and is managed by Capstone Integrated Product Teams (IPTs). These teams consist of DHS customers and critical stakeholders and are specifically chartered to ensure that technologies are engineered and integrated into systems scheduled for delivery and made available to DHS customers.  There are now 13 Capstone IPTs in the following functional areas:

    • First Responder
    • Border Security
    • Cargo Security
    • Maritime Security
    • Cyber Security
    • Information Sharing
    • Interoperability
    • Transportation Security
    • Counter-IED
    • Chemical/Biological Defense
    • People Screening
    • Infrastructure Protection You seem to have a niche in small and mid-sized companies. One will read on, that, “The Secure Strategy Group is dedicated to backing and building market leaders in the security and defense technology sectors.  We believe that small and mid-sized companies will continue to drive innovation in security technology, business models and solutions.  Since 9/11 such companies have won contracts against larger competitors that would have been inconceivable ten years ago.  This has attracted increasing levels of funding from the investment community and an active M&A market.”  Care to elaborate?

    Scott L. Greiper: Small to medium sized companies (“SMEs”) have always been the source of innovation across technology markets.  This is no different in the security industry.  What is different is the fact that the homeland security industry is a relatively new sector, is very fragmented and extremely politically influenced.  As a result, SMEs face a significant challenge in understanding and accessing opportunities in both the federal marketplace and the private sector.   Our mandate is to identify best of breed security technology companies in the sectors of the industry that we follow, and position these companies as a platform for growth.  We do this by utilizing our expertise and network to create strategic and business development opportunities to drive organic growth, provide capital to support these growth initiatives and lend our M&A expertise to supplement growth through a targeted acquisition strategy.  Our end game is to achieve a profitable exit through a sale or a going public event. Congratulations on your announcements that Mr. Robert Liscouski and Mr. Joseph Dunne have joined your Company. Please tell us more about your team’s unique capabilities.

    Scott L. Greiper: We are very fortunate to have attracted senior level people to our group that believe in our model and in the value that SMEs bring to the security industry. 

    Robert Liscouski has been a member of our advisory board for the last several years, and joined as a partner in July of last year.  Bob heads up our Strategic and Business Development practice and brings extraordinary experience and wisdom to our group and our clients. He was the first Assistant Secretary for Infrastructure Protection for the Department of Homeland Security, serving from March 2003 to February 2005, and reporting directly to then Secretary Tom Ridge.  He commanded over a $500 million budget and was responsible for coordinating authority over the protection of all sectors of the nation's critical infrastructure, including agriculture, food, water, public health, transportation, and hazardous materials, as well as key assets such as national monuments, nuclear power plants, and dams. Bobís private sector experience includes Director of Information Assurance for The Coca-Cola.

    Bob’s private sector experience includes Director of Information Assurance for The Coca-Cola Company in Atlanta, GA, and Vice-President, Law Enforcement Division, for ORION Scientific Systems. His government experience includes 11 years with the Diplomatic Security Service of the U.S. Department of State and five years criminal investigative experience as a homicide and narcotics investigator in Bergen County, N.J.  He is a Senior Fellow at the Center of Strategic and International Studies in Washington, D.C. and is an advisor to the U.S. Government on technology matters. He has a B.S. degree in Criminal Justice from John Jay College of Criminal Justice in New York, and a Masters of Public Administration from the Kennedy School of Government, Harvard University.

    Joe Dunne recently joined the advisory board of Secure Strategy Group, and brings a wealth of experience in the law enforcement industry.  Joe has enjoyed a distinguished 32-year career in the New York City Police Department, rising through the ranks from patrol officer to second in command of the 50,000-member agency.  In 1999, then Chief Dunne was promoted to Chief of Department, the highest ranking uniform position in the NYPD, in command of the five NYPD enforcement Bureaus – Patrol Services, Detectives, Organized Crime Control, Housing and Transit.  He was responsible for coordinating the crime control strategy known as “CompStat” which tracks and analyzes crime incidents via computerized statistics. CompStat was the driving force behind NYPD’s remarkable crime reduction efforts beginning in the 1990’s.  Joe also planned and coordinated several major events during his tenure as Chief of Department including the New Year’s Eve Millennium Celebration, Y2K Disaster Preparedness, Operation Sail 2000 and the United Nations Millennium Summit.  On 9/11, he responded to the scene and was closely involved in the emergency response to the terrorist attack at the World Trade Center and in the recovery efforts that followed.

    Upon his retirement from the NYPD in 2002, Joe joined UBS Wealth Management as a Managing Director heading Security Services in the Americas and Puerto Rico for this world leading financial services and international banking firm. Under his leadership UBS up-graded home office and branch physical security systems and streamlined the background screening process. He retired in April of 2009 after seven years of service. We’ve seen a fair amount of consolidation in the security industry the past few years. Do you see that trend continuing?

    Scott L. Greiper: Absolutely.  The pace of consolidation in the security industry has been quite dynamic and consistent since 9/11, driven by three primary factors.  One, the requirements for combating the terrorist threat has spawned a slew of new companies innovating security technologies and solutions.  As the industry has evolved there has been a natural consolidation among these companies in an effort to create scale and more mature organizations.  Two, as the defense budget in the U.S. has slowed relative to the growth in the homeland security budget, the larger system integrators and defense contractors have been acquiring security companies in order to “buy growth” and sustain multiples, particularly in the public markets.  Finally, traditional industrial and non-security related technology companies, like IBM and Cisco, have been acquirers in the security industry to supplement their organic growth rates.

    At this point in time we don’t see any of these factors changing.  In fact, the current difficult economic conditions have pushed many private security companies that were planning to go public to pursue exit opportunities through a sale.