New public company buys into security integration

Legacy R&D firm ComCam acquires Pinnacle Integrated Systems
Thursday, January 7, 2010

EXTON, Pa.—ComCam, a thinly traded public company making devices that take command and control information out into the field, has expanded its capabilities with the acquisition of systems integrator Pinnacle Integrated Systems for $1 million and 300,000 shares of ComCam stock. ComCam was last traded at $.40 per share, making the total deal worth roughly $1.12 million. The shares represent roughly four percent ownership of ComCam.

Specializing in the corrections vertical, Pinnacle (doing business at P2 ABC Controls) has a national presence and will allow ComCam to leverage its “unbelievable hardware/software platform,” said ComCam president Pete Ianace.

This is the second time Pinnacle president Robert Betty has sold a corrections-focused integrator called Pinnacle. He sold his first company to Stanley Works in 2006.

The Pinnacle/ComCam relationship has been long-standing, as Betty has been a ComCam board member for nearly a decade, but the acquisition idea gained impetus after ComCam won its first big contract with NYC’s ICE offices in 2007. Pinnacle did the integration for the project and worked easily with ComCam’s technology. Then, ComCam was close to winning a bid for a federal prison in Berlin, N.H., but needed bonding and was able transfer the bid over to Pinnacle. “So it became obvious to me that there was an opportunity to acquire Pinnacle,” Ianace said, which gives ComCam integration expertise, experience with installation protocol, and eliminates ComCam’s need for subcontractors on bids it wins.

Betty said Pinnacle’s 12-person staff and management will remain on board, many of them veterans of the last company Betty sold to Stanley. Both Betty and Ianace said Pinnacle’s cash flow and profitability were vital for ComCam. “If you put our $6 million with their track record in R&D,” said Betty, “that’s impressive, and it allows us to utilize some of their talent as well for future projects. And it allows us to install their product.”

“We have had some success recently at winning some security port access business,” Ianace said, “and with the government starting to throw homelands security money around, we’re now finally positioned well to win a number of those contracts. The really big ones that are hanging out there will get awarded to us much more likely with a 12-person staff with a lot of expertise with installing command and control systems.”

As a small company, why did ComCam remain public, rather than look to private equity for growth? “Traditionally, you should be able to raise money more easily as a public company,” Ianace said. “There’s a financial burden to being public, but it’s not as burdensome as some have let on.” Both GVI | Samsung and Mace International have lately said public costs as high as $1 million annually were strains on their businesses, both of which are much bigger than ComCam. “You can do it for $100k a year,” Ianace said.

Also, he said, “there’s nothing wrong with a management team that’s transparent to the industry, either. That’s a good thing.” However, “we’re open to a private investor group taking us private. We have the votes to go private if we were approached that way.”