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Special Alert
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Citadel Security Software
Inc. (OTCBB: CDSS) |
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Twelve Month
Target Price: $5.87 |
| 52-Week Range |
$1.50 - $0.51 |
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| Shares Outst. (fully diluted) |
15 million |
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| Approx. Float |
8 million |
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| 12 Month Price Proj.: |
$5.87 |
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| Reasons
To Buy CDSS: |
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| 1. |
CDSS
customers and alliances include SBC Communications, IBM Global Services, Washington
Mutual Bank, Merrill Lynch, EBSCO Information Services, the U.S. Navy and numerous
health care, education and corporate clients.
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| 2. |
CDSS
is positioned in the security software market that is the focus of many companies
after 911 and the growing threat of cyber-terrorism. |
| 3. |
The
number and sophistication of cyber threats to network systems is growing faster
than the IT resources of companies can find, assess and manually secure each node
on their network. |
| 4. |
CDSS’s
products SecurePC and NetOFF are already known product offerings providing the
Citadel with credibility in the security software space. |
| 5. |
CDSS’s
introduction of Hercules provides access to the large company enterprise wide
systems market. |
| 6. |
CDSS
has a first mover product in Hercules. It is presently the only known solution
that remediates vulnerabilities caused by all five sources of security vulnerabilities,
Software Bugs, Unnecessary Services, UnSecure User Accounts, System Back Doors
and Improper Configurations of Systems Settings. |
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| 7. |
Hercules
is an enterprise security solution designed to work with multiple vulnerability
scanning assessment tools making it the solution of choice in most companies where
multiple scanners are used to assess security vulnerabilities. |
| 8. |
Hercules
is being ported to UNIX and Linux opening up other revenue opportunities in 4Q02
and beyond. |
| 9. |
CDSS’s
business model is simple and the company structure is small and nimble to take
advantage of changes in technology and customer preferences. |
| 10. |
The
CDSS management team and board of directors is seasoned and has a solid knowledge
of the software industry and the security segment. |
| 11. |
In
June of 2001, IDC, a leading research organization predicted that the worldwide
security software market would increase to $14 billion by 2005, a compound annual
growth rate of 23%. According to IDC, this market grew by 33% to $5.1 billion
in 2000. |
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About
CDSS |
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CDSS
develops and markets computer security and privacy software for one of the fastest
growing segments today - security "inside the firewall." Computer software
products from CDSS
include security and management utilities for networks and personal workstations
designed to secure and manage personal computers (PCs) and local area networks
(LANs). These products enable companies to more efficiently manage their computing
environments and enforce security policies from a single point of control across
all Windows platforms.
CDSS
secures confidential information, applications, and systems from unauthorized
access, worms, and other security vulnerabilities. CDSS
solutions are designed to reduce client costs, improve accuracy of clients' information,
maintain the operation of workstations and servers, secure them from fraud or
unauthorized use, and generally enable IT professionals to devote more time to
improving service rather than focusing on operational details.
- Products
- CDSS operates in one business
segment of the software industry, security software. The Company's products,
Hercules, WinShield SecurePC and NetOFF, provide customers with network security
solutions inside the firewall. CDSS customers license their products for various
reasons ranging from a simple need for a security solution (NetOFF) to limit
access to an unattended computer, to a desire for centralized computer systems
configuration and policies management (Secure PC), to a concern of internal
or external attacks caused by system vulnerabilities and their remediation (Hercules)
to preclude such attacks or to meet the mandates of law.
- Hercules
CDSS’s new vulnerability remediation software application that
provides an automated remediation solution for corporate and government computing
environments, CDSS believe’s it is the only solution that can automatically
identify and deploy the appropriate patches and fixes to repair the vulnerability,
and enhance the security of the environment. CDSS released Hercules for commercial
availability in March 2002. In January 2002 CDSS filed a provisional patent
application with respect to the core technologies and intellectual property
rights related to Hercules software.
- WinShield Secure PC
Enforces security policies from a single point of control across multiple
operating systems and platforms. Additionally, Secure PC provides hardening
of system files that deliver the first line of defense against viruses, malicious
code and unauthorized access or theft of confidential information.
- NetOFF
Is designed to protect a network by shutting down unattended client PCs
automatically after a specified period of inactivity. Network administrators
may also use NetOFF to shut down PCs to enhance backup operations or assist
with the distribution of new software and anti-viral updates. The product ensures
an orderly shutdown by automatically closing all open files and applications
on the PC and saving the information.
- Customers
- CDSS's customers recognize
the powerful benefits that CDSS security solutions can provide to them. Strengthened
business relationships, improved overall security, privacy of critical business
information, reduced security risk, less downtime and lower costs are just some
of the many benefits that CDSS customers are realizing.
Following is a brief sampling of CDSS’s very diverse customer base:
- IBM Global Services
- Washington Mutual
- Merrill Lynch
- VA Med Center Long Beach
- Children’s Mercy
Hospital
- Federal Reserve Bank of
Chicago
- The U.S. Navy
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| The
Investment Opportunity |
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CDSS just began trading
publicly last week via a spin-off from CT Holding’s, Inc., a publicly traded company.
CDSS was incorporated under the laws of the State of Delaware in December
1996 as a wholly owned subsidiary of CT Holdings. The corporate name was changed
to Citadel Security Software Inc. in January 2002.
CDSS has been allocated the CT Holdings corporate assets, liabilities and expenses
related to the security software business based on an estimate of the proportion
of such amounts allocable to CDSS, utilizing such factors as total revenues,
employee headcount and other relevant factors.
Excerpt
from the Chairman and CEO of CT Holdings, dated May 6,2002, to CT holdings stockholders
regarding the spin-off of CDSS:
Dear Fellow CT Holdings
Stockholder:
I am pleased to inform you that the board of directors of CT Holdings, Inc. (CT
Holdings) has approved a pro rata distribution to CT Holdings stockholders of
100% of the outstanding shares of common stock of Citadel Security Software Inc.
(Citadel), which is currently a wholly owned subsidiary of CT Holdings. Citadel
will own and operate the security software business of CT Holdings as an independent
publicly traded entity following the distribution. Following the distribution,
you will continue to own your shares of CT Holdings as well as the new shares
of Citadel.
We believe that the distribution will meaningfully enhance value for CT Holdings
stockholders and will give Citadel the financial and operational flexibility
to take advantage of significant growth opportunities in the security software
business. According to a January 3, 2002 article on the Dow Jones Newswire, in
June 2001 IDC, a leading research organization, predicted that the worldwide
security software market would increase to $14 billion by 2005, a compound annual
growth rate of 23%. According to IDC, this market grew by 33% to $5.1 billion
in 2000.
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Valuation |
A penny stock with multi-dollar
potential: trading today for less than $1 per share, but in our opinion, has
long-term potential for huge gains. The stock may be one of the year's BIG surprises,
making its current status as an undiscovered stock a rare timing opportunity
for investors. Don't overlook this one! We
not only consider CDSS an attractive "Emerging Growth Company," in
our opinion, but also a "Value Stock."
One way to value a company
is to look at its peers in the industry. Relative to comparative companies within
the Software & Programming industry, CDSS could realize superior growth in
business and earnings over the near-to-intermediate term period. A grouping of
comparable companies within this sector currently trades at an average price
to sales multiple of 8.02 times.
As stated earlier the security
software market could grow to $14 Billion in 2005, and $9 Billion next year in
2003. If over the next 12 months, CDSS with their blue chip clientele, and the
launch of Hercules, were to generate just $11 Million Dollars in revenue, then
applying the Price to Sales (TTM) multiple of 8.02 times, would equate to a market
cap of $88 Million Dollars.
Thus,
when applying the comparative group’s price to sales multiples to CDSS we
can arrive at a relative valuation of $5.87 per share over the next 12 months.
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| Summary |
| We believe CDSS is well positioned to take advantage of the changes
in the technology industry. We believe these changes are still in their earliest
stages, affecting primarily the small technology companies to date.. |
***** Important Notice and Disclaimer: Please Read *******
IInvestor Insights (II) publishes reports providing information on selected companies
that II believes has investment potential. II is not a registered investment
advisor or broker-dealer. This report is provided as an information service only,
and the statements and opinions in this report should not be construed as an
offer or solicitation to buy or sell any security. II accepts no liability for
any loss arising from an investor's reliance on or use of this report. An investment
in CDSS is considered to be highly speculative and should not be considered unless
a person can afford a complete loss of investment. II has been hired by the company,
and is contracted to receive 150,000 free trading shares of common stock, from
a third party, for the publication and circulation of this report. II intends
to sell all or a portion of the of the CDSS stock at or about the time of publication
of this report. Subsequently II may buy or sell shares of CDSS stock in the open
market. This report contains forward-looking statements, which involve risks,
and uncertainties that may cause actual results to differ materially from those
set forth in the forward-looking statements. For further details concerning these
risks and uncertainties, see the SEC filings of CDSS including the company's
most recent annual and quarterly reports
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