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ICOP Digital Inc. (ICOP): Digital Surveillance for the 21st Century

ICOP Digital (ICOP) is a maker of advanced security, surveillance and communications technology used by law enforcement agencies across the United States. As video surveillance technology evolves from analog to digital technology, the industry is expected to grow to $46 billion in sales by 2013. ICOP’s first product was an in-car video system for law enforcement agencies designed to deliver higher quality audio and video. The company’s flagship product is the Model 20/20 and is used by police officers in 49 states.

Kansas-based ICOP is planning an ambitious expansion into markets away from law enforcement, such as public transit systems, banks and schools. In fact, in June ICOP began shipping some of its surveillance products for use in transit and school buses and rail systems. Diversification in its customer base is critical for ICOP, as most of its law enforcement customers rely on grants to purchase ICOP products. If grants by federal and state governments for law enforcement were to be reduced, ICOP’s bottom line could be affected.

Beyond the U.S., the company also has customers in Australia, Canada, the Middle East, Mexico and South America. ICOP was founded in 2002 and has about 65 full-time workers. Although ICOP has yet to be profitable, its revenues are surging and it is coming to the end of a long research and development cycle. ICOP said it could be profitable within the next year. The company had almost $12 million in sales for 2007 and is expected to have almost $19 million this year and $27 million in 2009.

In July ICOP announced it would sell 1.25 million shares of common stock to cover the costs of inventory purchases and general corporate purposes, which could include accounting and legal fees, rent, facilities expenses and other working capital expenses, and potential purchases of companies, products or technology. ICOP has a market value of $4.55 million and its shares closed at 61 cents on Friday.

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