Submitted from Knobias ClipReportEven though much of the country was experiencing somewhat of a heat wave with some areas seeing temperatures above 100 degrees Fahrenheit, the summer will soon give way to the cooling temperatures of fall and the beginning of dying leaves, football, and the hunting season. While many are planning tailgates, game day parties, and collecting the jerseys of the latest off-season free agent signings, others will begin accumulating the latest gear to facilitate the annual excursions to stock their freezers with wildlife.
One company that is assisting the hunters of America is Xenonics Holdings Inc. (XNN). The Company is dedicated to producing technological solutions for optical ability in the dark through the distribution of their NightHunter and SuperVision lines.
The NightHunter line is currently comprised of 3 lines of high performance illumination products while the SuperVision line consists of a digital night vision product backed by their patented technology.
Even though the outdoors market isn’t the only one the Company operates in (they also have a very burgeoning defense niche), the products are known as being top of the line and outperform many counterparts in side by side testing.
Over the past week, XNN has been fairly busy with multiple announcements displaying contracts, earnings, and direct marketing agreements.
Knobias spoke with CEO, Chuck Hunter, who was very candid regarding some of the procurement contracts and future objectives of the firm.
“We offer high intensity illumination products which are the most powerful in the industry,” noted Hunter.
On August 14, XNN announced that it had shipped their new weapons-mounted illumination system, NightHunter3, to the U.S. Army for evaluation under the Army's Night Vision Sight, Crew Served Weapons program.
“It began with NightHunterOne. The Government loved it and it is a standard part of the Army’s non-lethal kit. They came back and said that they wanted something lighter in weight and were willing to give up some of the illumination for the smaller size, noted Hunter. “That is when we introduced NightHunterII. Again, they loved it and again wanted something smaller with the ability to be mounted on weapons. We’ve since developed the NightHunter3 system which is a weapons mounted system compatible with the 50 caliber machine guns and have shipped it to the U.S. Army for evaluation under their Night Vision Sight, Crew Served Weapons Program.”
Hunter was unsure of the Army’s exact timeline for their evaluation program of the NightHunter 3, but did note that he expected it to procure a contract sometime in fiscal 2008. The Company’s fiscal year end is in September. In the meantime, the Company announced on August 16th that they received a purchase order totaling approximately $646,000 from the Defense Supply Center Columbus for the NightHunter II devices which was expected to ship this month.
“We expect to continue to ship NightHunter One and II devices to the defense branches. NightHunter One isn’t obsolete because of the development of NightHunter II and III. They’re different products that are complementary and useful in each of their own ways,” said Hunter.
The Company’s other product line is their SuperVision night vision device which utilizes patented digital technology. Currently, it’s the Company’s only commercially available product and has a wide range of markets from the defense sector and law enforcement, to the outdoorsman and boater.
The product is available in Bass Pro Shops, Cabela’s and will be marketed through a direct television campaign through the Home Shopping Group. The Company also announced that the Army & Air Force Exchange Service (AAFES), which operates 'BX/PX' stores on U.S. military bases throughout the world, would soon be carrying SuperVision in selected AAFES locations. XNN also added new sales personnel with the expectation that more will be added in the very near future to effectively disperse the product.
In the law enforcement area, there has recently been a movement to update and upgrade police car video equipment with digital ability. Noted Hunter, “We feel that our system would be very complementary to many of the new products available in the law enforcement space.”
On August 14th, XNN released earnings for their fiscal third quarter. Revenues increased 20% to $1,023,000, including SuperVision revenue of $593,000 and revenue from sales of its NightHunter products of $430,000. The net loss for the third quarter was $1,952,000 or 11c per share which compared to a net loss of $633,000 or 4c per share for the year before period. Noted as the reasoning for the elevated loss was increased SGA expenses related to increased headcounts for the manufacturing of SuperVision and a $571,000 charge related to options and warrant expense.
But with the continued rollout of their SuperVision product and the contract procurements from the armed services for the NightHunter systems, top line growth could easily affect bottom line numbers, especially considering the Company’s zero debt levels. “We expect to be breakeven in the very near future,” noted Hunter.
In any event, defense contracts for each of the NightHunter products were expected to continue for some time. The Company could also have a commercially targeted NightHunter product up its sleeve. With the outdoor hunting season right around the corner as well as the holiday season which historically sees high tech gadgets perform fairly well, the SuperVision product could see an increase in sales especially considering the elevated sales initiatives over the coming quarters. With the Company in optimum position to take advantage of these factors, investors would be wise to watch.
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Labels: Knobias, small cap stocks, Xenonics Holdings Inc.
