Arts & Entertainment  September 2, 2005

A4S envisions demand for digital video system

Michael Siemens thanks his lucky stars that he skipped an afternoon of boating that would have kept him out of the office on the precise day that a U.S. Air Force general called for some advice.

That call eventually led Siemens to form A4S Security Inc., Northern Colorado’s newest public company.

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“I happened to be in off the lake at the time,” he said with a laugh.

When the call came in, Siemens and his wife, Marie, were running a DVD/CD duplication company and consulting business in Montana. The general called after visiting the company’s Web site, which he discovered during an Internet search. The Air Force had a problem that needed resolution, and Siemens offered some assistance over the phone. Only a few days later, Siemens was presenting a solution to some of the Air Force’s most highly ranked officials.

What developed from that meeting became a four-year project to develop the MIL-4000, a digital audio/video archival system for the Air Force. Siemens focused on this contract, which carried a $7.2 million appropriation, until it dried up. After the terrorist attacks on Sept. 11, 2001, the military shifted its focus from enhancing infrastructure, including the MIL-4000 system, to active engagement.

Siemens had planned, though. His contract with the Air Force let him retain rights to the technology he developed.

“The technology allows for many applications,” he explained. A4S converted its product for applications in law enforcement.

Siemens and his wife are both ex-police officers and saw the potential for an advanced digital surveillance system in the field. The product was adjusted for use in squad cars and dubbed ShiftWatch.

The company filed its first registration statement with the Securities and Exchange Commission in January 2003 — around the same time the company decided to make a change in location for its engineering and development team.

Siemens said the company needed to apply its core technology in more innovative ways — a shift that would rely heavily on highly trained software engineers. He decided to check out Loveland after reading the news of the high-tech layoffs in the area. In his own words, he took lemons and made lemonade. The layoffs meant there was a well-trained workforce for the picking.

In February 2003, A4S set up a development team in Loveland. Late last year the company decided it was in the best interest of A4S for the company headquarters to join its development team in Loveland and reincorporated in Colorado in December. Siemens moved here in January.

In hand with its need to shift to product development, the company needed to raise capital. In 2003 and 2004, the company operated at net losses of more than $1 million as it worked to develop and market its product.

The company completed its initial public offering on July 22, selling 1.2 million units under the symbol SWATU on the Nasdaq SmallCap Market and Archipelago Exchange. The Archipelago Exchange, more commonly referred to as AcraEx, is an open, all-electronic stock exchange. The units consisted of one share of common stock and one warrant to purchase a share of common stock — initially sold for $6 per unit, raising $7.2 million.

On Aug. 25, the units separated into one share of common stock and one warrant which could be used to purchase one share of common stock. The stock and warrants will trade separately under the symbols SWAT and SWATW respectively. On Aug. 25, the stock was trading at $6.65 per share.

In the meantime, A4S has recruited some big names in business. In April, the company appointed Tom Marinelli, a former DaimlerChrylser executive, as CEO. Marinelli’s move to the growing company caught the attention of the Wall Street Journal. The publication featured Marinelli and his move to A4S, in an Aug. 24 article.

Additionally, former Colorado Lt. Governor, Gale Norton serves on the company’s board of directors.

Other executives at A4S include Jeffery McGonegal, CFO, who also serves as senior vice president of finance for Advanced Nutraceuticals Inc. and Cambridge Holdings Ltd., as well as CFO of AspenBio, Inc.; and Matthew Siemens, executive vice president, chief operating officer and Michael Siemens’ brother.

As of Aug. 18, A4S employed about 24 people. The company maintains its main sales office in St. Louis and recently opened a Sacramento, Calif., office.

“We’re hiring left and right,” Siemens said. He couldn’t be more specific about the number of employees since they have been doing so much hiring. He said most of the positions have been in customer service and technical support. The company outsources its manufacturing to a Pennsylvania company that specializes in manufacturing for the military.

While A4S originally sprung from military work, the company is not currently working with any military institutions. Siemens said this could be an option for the future. In the meantime, the company is busy focusing not only on law enforcement, but also on transportation.

While in talks with the Kansas City police force to discuss ShiftWatch, police officials suggested Siemans contact the Kansas City Area Transportation Authority.

In October, A4S sold its first batch of ShiftWatch units to the authority for use in about 70 buses. The ShiftWatch system allows the city to record all events on the buses for protection in litigation. In an April proxy summary, the company reported it was currently in discussion with more than 35 metropolitan transportation agencies and two agencies were engaged in product evaluations.

A4S is also working with a local agency. The Loveland Police Department installed the ShiftWatch system in its DUI patrol car in December.

Steve Watts, a specialist with the Loveland agency, said the officer with that patrol car uses the video to record his arrests. The system begins recording either when the patrol lights are activated or the officer activates it using a remote control attached to his belt. The system is constantly capturing events, but it only stores them — and the two minutes prior to activation — when it is activated.

That way, the system can record what may have occurred to cause the officer to activate his patrol lights or to manually activate the system.

The system can typically handle up seven days of intermittent recording or 13 hours of continuous recording. For the Loveland officer, the tape is changed at the end of his workweek. Watts said the officer typically records up to 10 arrests that last 20 minutes to 30 minutes.

Watts said the system has been useful and fairly easy to implement. As with any new technology, he said there were some start-up problems, but added that the company was very accommodating and responsive.

“What we would like to do someday is get more (systems),” Watts said. However, the current requirements for digital evidence storage would require the department to keep the videos for 18 months. So, the department would need to enhance its digital record-keeping system to be able to handle a data from a fleet of ShiftWatch-enabled patrol cars.

Watts said the money to invest in the new system was a decision made with the realization that the department’s other systems were going digital as well. He said he couldn’t comment on the cost of the system due to the city’s bidding process.

Digital systems are beginning to gain popularity. Watts said the department was in contact with several other companies offering such systems before choosing A4S. He also said the department is getting calls from other agencies to inquire about there system. But the fact is that the technology hasn’t caught on in the mainstream.

“There aren’t a lot of departments out there using digital video,” Watts said.

This is a reality that Siemens expects will change soon. He is a member of the International Association of Chiefs of Police. The association is drafting digital video standards that are on schedule to be completed in the first quarter of 2006.

Siemens believes these standards will usher the law enforcement market into a new digital video era and that A4S will be along for the ride.

Michael Siemens thanks his lucky stars that he skipped an afternoon of boating that would have kept him out of the office on the precise day that a U.S. Air Force general called for some advice.

That call eventually led Siemens to form A4S Security Inc., Northern Colorado’s newest public company.

“I happened to be in off the lake at the time,” he said with a laugh.

When the call came in, Siemens and his wife, Marie, were running a DVD/CD duplication company and consulting business in Montana. The general called after visiting the company’s Web site, which he discovered…

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