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Digital Barriers – announces a further $7 million of contract awards, but caveat emptor…

By Steve Moore | Saturday 7 January 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Digital Barriers (DGB) has followed contract wins announced last month with an announcement of the award of a further two contracts with a total value of $7 million. The shares are up more than 10% above end of 2016 lows in response, heading towards 40p, but I’d still suggest caveat emptor.

The latest awards are a $6 million contract with a “US Federal law enforcement agency” for specialist surveillance equipment and an approximately $1 million ‘ThruVis’ technology contract with “a new customer in Africa”. The announcement also sees CEO Zak Doffman emphasise;

“Today's contract award continues to highlight the rationale for our acquisition of Brimtek, which enables us to sell and deliver a wider range of technologies into the US surveillance market. Meanwhile, the ThruVis contract award, into a new and important customer in Africa, again illustrates the uniqueness of this technology which delivers a level of protection unavailable from any other technology in the marketplace.”

However, as I earlier noted, this follows contract wins announced last month. These saw me remind that the company has recently seen it necessary to establish a £10 million revolving credit facility - November-announced half year results showing a £7.4 million reduction in net cash to £3.4 million on revenue of £13 million.

What then are the chances of positive share price momentum being met with an attempted discounted fundraising? With also a terrible financial track-record, I currently retain previously-stated scepticism here.

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