the road less travelled...

Have been doing a little digging...

Seems TNC may not be performing as badly as some might think.

Certainly looks less than ideal at face value, but dig a little deeper and a picture of slow progress in a very unfavourable environment begins to appear.

Looks to me like TNC might be more your typical "turnaround" or "ramp up" story, rather than one of incompetence or mismanagement as suggested by some.

It is fair to say however, they are finding it hard going in these early days.

They will post a loss close to $6m this year, but given their relatively short life, the exponential size of their growth potential, the nature of the contracts awarded to date, the high cost of establishing support infrastructure and the relatively low number of shares on issue, it’s not all bad in my opinion.

Considering what they already have achieved, in what is really a relatively short time frame, and their potential for future growth, a market cap of just $8m (fully diluted) seems a little low to me…especially when you consider over half of that is CASH!

So that’s just $4m for the whole company?

Might turn out to be expensive if the rug gets pulled out from under them…but in my opinion that simply isn’t going to happen.

I see the current action by Allleasing (Rentworks) as somewhat opportunistic…somewhere in the fine print, the terms of the $15m+ lease-back agreement indicate a breach of condition if a trial is not converted to an ongoing contract. This should be read as nothing more than a safety trigger in my opinion, included by the lease-back group to provide an avenue for checking TNC’s books from time to time.

Anyone notice the fact that it’s the first anniversary of the leasing facility…LOL…I reckon they are simply managing their investment!

The picture has changed somewhat for TNC since the $15m facility has been established…

* It has been a rather big year for TNC, with plenty of “beach-head” costs…I suspect this year might see a different story unfold.

* Litigation has also been a very big distraction to date...this too would appear to be over now, unless of course, TNC decide to pursue for damages...perhaps there may be a case for this?

* Almost half of the intersections covered to date come "on line" next quarter, resulting in increasing levels of recurring income.

* The current year has seen substantial funds applied to consolidating their support infrastructure...this has resulted in a short-term cash drain and should have a positive effect going forward.

* There are many ongoing contracts awaiting approval, new opportunities emerging in Canada and towards the East Coast of the US...interestingly, some of the largest contracts awarded to date have occurred in recent times, suggesting the beginning of a “snow ball” effect…then we have the local market, Singapore, etc…

* The particular importance of a slow but progressive expansion in the US, is the emergence of a "track record" which should help with the winning of subsequent contracts…I see this is a valuable asset.

* In particular...and perhaps more importantly for TNC and all the other camera operators, competing in what really is an emerging market...the more systems that are installed, the more common place they will become, which should eventually lead to an "easing" of the various legal constraints currently imposed on the photographic identification process by many US states.

Regardless of all the positives however…we should know TNC’s immediate future very soon.

As far as I can see, they are not insolvent, have more than enough cash in the bank for short-term commitments and until Alllease called for an “inspection of the books”, could easily raise cash at 20c per share…as evidenced from the recent placements.

In my opinion, it would appear that someone didn’t really think this through enough…LOL…the people who stand to loose the most out of TNC’s failure are Allleasing themselves, for the simple fact that the lease-back arrangement only works for them while TNC exists to operate and administrate the system.

Without TNC, the residual value of Allleasing’s assets (read TNC’s cameras) is next to nothing.

Some “fixing” of this mess is in order in my opinion, so look out for a rather “up-beat” joint announcement in the near term.

Cheers!