Another day, another “one tiny company” pitch about a little recent IPO that’s going to solve our problems — in this case, stopping school shootings and terrorism and, while they’re at it, also making in-store advertising more effective. And it’s only 50 cents a share! Woohoo!
OK, fine, maybe that’s not all precisely true. We’ll take a step back and see just how much hyperbole is in the ad… and, of course, we’ll feed those clues to the Thinkolator and ID the stock for you, so you can do some thinking for yourself.
This time the wording is slightly different, presumably as they test what works for folks — you get a special report “dossier” called “Invisible Detection: 2,500% Gains on the Stealth ID Mega-Trend” for $99, and with it a “free” subscription to The Wealth Warrior, the new (to me, at least) newsletter from Outsider Club’s Jason Simpkins that seems to be focused on defense technology and similar sectors. And, of course, once that “free” year is up you’ll get an automatic renewal of your membership (for $99, presumably) unless you call to cancel.
So really, it’s all just the same stuff — does a “free” report make you more likely to part with your credit card number? Probably, but if not I’m sure they’ll try some slightly different tack next time.
And it’s the “secret” stock in that dossier that we’re after today — what is the stock they’re touting?
Here are our first clues:
“A new device — greenlighted by Trump EO 13769 — combines AI and Machine Vision to…
“End terror attacks and mass shootings…
“Become the go-to security tool in schools, stadiums, political events, and more…
“And send the tiny $0.50 stock that owns the technology surging for short-term 2,500% gains.”Are you getting our free Daily Update
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OK, so some kind of mass surveillance/weapon identification technology, I guess… only it’s not the same Patriot One pitch that we’ve seen from Outsider Club folks in the past, so it’s someone different (they do compare this stock to Patriot One, particularly in claiming the potential for it to rise dramatically — Patriot One has a “stealth X-ray” technology for scanning for weapons, and went from about 10 cents to $2.50 over 2-1/2 years… the stock was teased about halfway through that run by Alex Koyfman in 2017 and 2018).
So what other clues do we get about this company and it’s technology? Here are a few:
“What’s now being called the next ‘quantum leap forward in crime fighting’ is here. Only it could be even more transformational this time around.
“It’s a new stealth technology that’s promising to end all terror attacks, mass shootings, and more.
“A way to ‘ID’ shooters and terrorists that would render public attacks virtually impossible — all without:
“Firing a single bullet
“Any new gun laws
“Or more spending on bloated police forces”
And what’s that EO bit about a new Trump ruling?
“On February 10, 2017, Trump issued Executive Order 13769…
“Which greenlighted ‘Stealth ID’ technology to be deployed at airports and the border…
“Igniting a gold rush from Arlington to Palo Alto.”
That “Stealth ID” is a reference to biometric security for border control and customs, which was part of the very controversial Executive Order 13769, one of President Trump’s first actions in January 2017 (that order was entitled “Protecting the Nation from Foreign Terrorist Entry into the United States”, but was popularly referred to as “Trump’s Muslim Ban” — the biometric security screening for entry and exit was part of that order, but not the major focus).
And, yes, whenever there’s any upgrade in security rules or new security technology potential, there’s usually a “gold rush” as companies lunge for government contracts.
So where do we come in with this 50-cent company? More from the ad:
“There’s one tiny, virtually unknown company that has a lock on all the tech behind this game-changing device.”
Nobody has a “lock” on biometric security or facial recognition, of course, but presumably that’s a reference to one specific device that uses those technologies. That’s a common misdirect by newsletter ad copywriters, they take a large story and a not-well-understood market, like video security, and imply that somehow one tiny company is going to jump in and take over the whole thing.
That happens almost exactly never, but, of course, that doesn’t mean little companies don’t do well sometimes — they just don’t usually have a “lock” on the market.
“… it’s already lined up a long list of major Fortune 100 clients!”
“Right now, a recent catalyst has already begun to make this technology a household name…
“Sending it into major public venues and stores nationwide.
“This life-saving device even took center stage at the stadium where the biggest public event of the year — the Super Bowl — was hosted.”
“… this tiny company just quietly started trading days ago. Nobody knows about it.”
And then we get into some more detail about the product, which is apparently being fueled, we’re told, by a military push:
“Make no mistake, the military is the “invisible hand” behind history’s greatest financial growth stories.
“Life-altering inventions like…
The personal computer
And the Internet itself
“And now I’ve identified the next big technology that’s about to join the list.
“One that could be the next big military millionaire-maker.”
And has something to do with facial recognition…
“I’m talking about a new form of facial recognition technology. One unlike anything you’ve heard of….
“One Tiny Company Just Created the Next Generation of ID Technology…
“Facial recognition is becoming an “everywhere” technology.
“In our phones. With the iPhone X…
“The new Samsung…
“In our cars to stop theft…
“At the airport to stop terrorists…
“But one tiny company just emerged at the forefront of the facial recognition tech race.”
What makes them so different? More from the ad:
“It leapfrogs all current ‘Face ID’ technologies, with pioneering advances like object identification.
“This means it analyzes more than just faces — things like guns, knives, and other dangerous weapons.
“It can identify these objects and ‘persons of interest’ — all in just moments.”
And not only was it used at the Super Bowl in Atlanta, we’re told, but it’s also being used to stop school shootings…
“This ‘Stealth ID’ stops shooters before they take action…
“It can read faces and interpret mood, identify weapons hidden on a person’s body, and it can alert the authorities — all by itself.
“No more Columbines. No more Newtowns. No more Parklands.”
That’s a cruel and absurd premise, that this will protect all kids, but yes, there are lots of companies trying to sell facial recognition and other video security tools to schools and other gathering places, and lots of small security companies pushing their versions of this technology.
What else does this little company do?
“Advertising in stores, streets, and on signs is being digitized.
“Thanks to digital signs, in-store marketing is becoming as measurable and accountable as the Internet….
“What’s the profit potential?
“At the moment, this company is still pure ground floor — with just a half-million in revenue last year.
“But with its Fortune 100 client list, leading edge in the space, and unparalleled advancements…
“It is now positioned to seize a sizable share of that multibillion-dollar windfall.
“If it captures just a tiny fraction of the market, all early investors will be rich — no matter how much they put down!
“Say it captures a mere 10% of the market. In other words, roughly $3 billion in annual revenue.
“That’s a 659,000% sales surge in just three years!”
Another ridiculous trope, of course — capturing 10% of a market is never a small thing, certainly not if you’re talking about something big. That $32 billion reference is probably from a market research report (from 2015) that predicted the “biometric market” will be $32 billion by 2022. If you’re thinking about this stock, try to clear that number from your mind immediately… it’s not going to help you.
And one more clue, something that sounds like a “big deal”…
“Intel Just Inked a Deal With The Tiny Stock Behind ‘Stealth ID’ Technology…
“Intel’s software is the perfect match for these devices. It allows them to detect faces and weapons on any computer. No need for an Internet connection. No need to process the data at some other site.
“This means faster and more efficient detection of terrorist threats, on a much larger scale. It significantly reduces costs and increases profit margins.
“It also means ‘Invisible Detection’ devices can now be deployed almost anywhere, expanding its customer base!
“The company is already in talks with major U.S. cities to deploy on their citywide security camera networks and with major oil companies for pipeline monitoring.”
So who is it? This is, sez the Thinkolator, the digital signage company VSBLTY (VSBY.CX on the Canadian Securities Exchange, VSBGF OTC in the US, not much volume in either place).
Yes, they just went public a couple months ago, via a reverse merger in February on the CSE, which is generally populated with extremely high-risk little stocks who either can’t afford a Toronto or Venture listing or don’t meet the standards of those exchanges (like the US marijuana companies, who can’t list in Toronto because their business is technically illegal).
And yes, though much of their marketing is about signage and consumer monitoring, they do pitch their product as having security applications as well (scanning crowds for “persons of interest” or other stuff). The primary push has been for a personalized advertising system for in-person displays over the past couple years, digital billboards, signs in malls and in stores, etc. Here’s how they describe themselves in the prospectus they filed for their public listing in Canada earlier this year:
“VSBLTY, Inc. is a software company in the business of commercializing digital display and intelligent analytics. By combining interactive touch-screens and data-capture cameras, with cloud-based and edgebased facial analytics, VSBLTY, Inc. provides solutions for retailers and out of home digital signage networks to deliver interactive engagement and intelligence through the measurement of various elements of the customer engagement. The Company employs its proprietary software as a service-based model for its subscription-based customers. Clients of VSBLTY, Inc. are able to leverage their point-of-decision brand-promotion by installing VSBLTY, Inc.’s cloud- and edge-based facial analytics software in retail spaces such as beverage-cooler doors, in-line and free-standing refrigerator/freezer doors, digital display screens and other customer accessible displays in vertical markets such as retail grocery, liquor outlets, casinos and stadiums. VSBLTY, Inc. also utilizes its facial and object recognition capabilities in the
security business, where it can identify bad actors, weapons or other “machine learned” objects to assist various venues with crowd control through the identification and monitoring of dangerous persons or objects. “
It is an absurdly small company, with no real financials yet and almost no trading volume, so it wouldn’t be surprising if it bounced around quite a bit if Simpkins and the Outsider Club folks are able to draw some attention to the stock, though it hasn’t yet been dramatic (the ad has been around for a week or two, and they’ve posted free articles hinting at it as well).
Like many startups, the company presents itself as being well-positioned in a bunch of huge markets — you can get an idea of this from their investor presentation, but it doesn’t get into the financials at all… for that you have to go to their actual filings, particularly the prospectus available on SEDAR (SEDAR is the Canadian regulatory depository, similar to searching for filings on the SEC’s EDGAR in the US).
According to that filing, the company had been around for a few years (since 2015) and had very low but growing revenue in 2016 and 2017, but it dropped off dramatically in 2018 (2017 revenue was $468,228, for the first nine months of 2018 that number was $65,595). I don’t know what that means, if anything, but presumably it meant they went public from a position of some weakness, though they had raised about $4 million by selling private placement warrants back in October.
There is some connection to Intel (INTC), in that VSBLTY as a software provider uses different hardware providers to implement its solutions for customers — and they use Intel processors for all of their project and they use Intel’s OpenVINO platform and say they have “had a long relationship” with Intel, though I don’t know that it’s particularly meaningful for Intel and the notion that Intel has somehow “bought in” to this particular company is probably an exaggeration.
And, no surprise for a teensy microcap that is being teased by a newsletter, the company is, well, trying to get the attention of investing pundits… this little nugget jumped out of their prospectus at me:
“Targeting influential writers within the news media and the investor community as well as individual investors will be a key focus in 2019.”
Part of that’s taking the form of a new website that was announced today, and the purchase of google ads, which you can see if you search for vsblty online (if you’re looking directly they don’t own vsblty.com, they’re at vsblty.net) They are trying to get some pilot projects underway this year with retailers and casinos who they’ve apparently already been working with, though they haven’t said much specific about that so far. Presumably their next official filing will have more information.
So for now, this is a company that has a fairly unique blend of security and marketing technology… but both of those areas are extremely competitive and fast-changing, and there’s not a lot of evidence so far to support the notion that their customers are clamoring for a combination of marketing kiosk and security-scanning software. That doesn’t mean it won’t work, but it means they are a tiny company trying to build a business and we should expect that they will be promotional and will probably sell more stock before too long to keep the business going, but that they will not be making any money anytime soon. All the entries for projects in their prospectus are for product development costs, not revenues ($75,000 for a pilot project with a large retailer, $35,000 for transitioning a casino customer from pilot to production, etc), so I would assume that the press releases and website will continue to focus on the big story potential they dream of, not the actual financial or operating results.
That’s not unusual, but it means you should keep your expectations in check. They’re not going to take over 10% of the biometrics sector next year, nor are they going to have billions of dollars in sales in the next few years. They might make it as a company and build a product portfolio and get some good customers who love their stuff, or they might not, right now it’s a shiny guess and we don’t even really know what they might charge for their software, or what it will cost to operate the company on an ongoing basis. It’s very early days, and if I were to bet on a company like this (I’m not going to, to be clear) it would be an extremely small speculation and I’d want to dig in a lot deeper… for a business this small, you’d really need to be a believer in management and their ability to develop and sell their software, and you’d probably want to go in with a fairly standard “venture capitalist” assumption that the most probable outcome is losing 100% of your money.
And with that, I’ll leave you to think it over and dig into the filings for yourself… see a great future for VSBLTY? Think they’ll become a presence in every local shopping mall and get incorporated in security plans for major venues? Or will they be an also-ran in the facial recognition marketing/security business? It’s your money, so it’s your call — let us know what you think with a comment below.
P.S. We’ve never looked at The Wealth Warrior before, and our readers always want to know what actual subscribers think — if you’ve ever tried a subscription Simpkins’ letter, please click here to share your opinion with your fellow investors.