NEW YORK, Oct. 9, 2002 (PRIMEZONE) -- AdZone Research, Inc. (OTCBB:ADZR), a pioneering Internet surveillance technology solutions provider, today announced that Barrow Street Research, an independent firm focused on emerging growth companies, had begun covering the company, saying AdZone "...has the potential to be a huge micro-cap winner..."
Barrow Street said it was initiating coverage of AdZone with a speculative buy rating, and that its research "reveals that there are no other companies that at this time can offer the potential for obtaining Internet-related intelligence that is vital to the security of both private industry and government agencies."
Describing its investment rationale, the research firm said: "...we have been fortunate to chronicle the developments of many promising small companies. We have often been surprised to witness how these fledgling entities sometimes have been impacted and transformed by unscheduled and profound circumstances their founders and investors never imagined, nor intended...We believe this is happening again to...AdZone Research, Inc.
"At first glance," the report says, "one would correctly surmise that AdZone Research is a global research firm conducting research on the role of the Internet and new technologies. However, the emergence of AdZone as a possible key company engaged in the prevention and preemption of terrorist activity is currently creating a new dimension to the investment potential of the ADZR shares. In reality, the proprietary, super sophisticated monitoring software that ADZR has created and applies to its otherwise mundane tasks is also able to scan, identify and assess the Internet for information affecting national security, including terrorist activity and potential threats. Indeed, since September 11, 2001, the company has received many inquiries concerning the application of its technology in the war against terrorism from both the Office of Homeland Security and several states. AdZone management believes that if the company is successful in obtaining various government contracts, revenues have the potential to reach as much as $60 million within the next two years..."
As it relates to Internet advertising, the report notes, "Advertisers have become a lot more cautious with online expenditures, displaying greater discrimination about where they advertise, and becoming considerably more demanding about the terms on which they will do so. To this extent, the services offered by AdZone are very important. While the struggling U.S. economy has caused an overall decline in advertising expenditures, the online advertising industry has been holding its own." The Barrow Street analysts report that "Forrester Research estimates that advertisers will spend $15 billion online by 2003, as they try to attract the attention of the rapidly growing online population worldwide. Within this arena major media players are expected to rely on AdZone's proprietary data.
"But far more importantly," the Barrow Street report indicates, "the other major customer base that is now evolving for ADZR are governmental entities that are interested in monitoring the Internet for possible usage by terrorist groups. This market has a tremendous immediate need for technology that is effective in identifying and assessing security issues. Approximately $2 billion has been allocated for the general purpose of increasing the capabilities of various federal agencies. That number is estimated to grow significantly as new threats and new methods for detecting and assessing them are developed."
"Additionally," says Barrow Street, "management reports that it has had positive discussions with such key agencies as the Department of Defense. Still another likely market for the company is among defense contractors," the analysts observe.
"We point to ADZR's announcement of a strategic alliance with Raytheon (NYSE:RTN) as evidence that interest does indeed exist. Our research suggests that major defense contractors are very much interested in obtaining technologies that could be useful in intelligence and counter-intelligence activities. Indeed, among public sector companies, defense contractors seem the logical choice to develop products and services that can be useful in the fight against global terrorism. These companies have established strong business links with the defense establishment, which could give them a decided marketing advantage...
"Therefore, we conclude that it's more likely that larger companies in the defense contractor industry will be at the forefront of these activities. Besides Raytheon," the Barrow Street report says, "some of the other large defense companies considered likely to play a significant role include Boeing (NYSE:BA), Lockheed Martin (NYSE:LMT), Northrop Grumman (NYSE:NOC), and General Dynamics (NYSE:GD)."
Concluding its remarks, the Barrow Street report notes that: "...If AdZone is successful in obtaining significant contracts from government agencies and entities, the company will quickly become noticed within the investment community. Moreover, the prospect of further strategic alliances, such as the one with Raytheon, also will enhance the visibility of ADZR. Indeed, we believe that AdZone could attract much attention for what it can contribute to the war on terrorism.
"In addition," the report notes, "the efforts of New York Congressman Felix Grucci and his staff in assisting AdZone in the government application process could prove important in the months ahead. It also suggests a potentially promising future for AdZone, as it attempts to respond to the nation's and the world's needs for new and advanced efforts to combat terrorism. Indeed, in a recent meeting in which AdZone participated, along with other companies focused on global security, Office of Homeland Security Director Tom Ridge, formerly the Governor of Pennsylvania, lauded American ingenuity, and saluted the assembled companies for their being at the very forefront in winning the war against terrorism."
A full copy of the research report is available online at www.barrowstreet.com and additional information on AdZone is available at www.adzoneinteractive.com.
Certain statements contained herein are "forward-looking" statements (as such term is defined in the Private Securities Reform Act of 1995). Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements.