Whitefish digital imaging firm, Positive Systems, to go public

Dale Johnson has found one very good reason for coming out of the closet.

"Access to capital," he said. "It’s just that simple."

This summer, Johnson said, Positive Systems, http://www.possys.com the private high-tech company he owns with two partners, will go public, with shares trading on the Over The Counter Bulletin Board, a smaller version of the New York Stock Exchange or Nasdaq. The plan, he said, is to generate capital for sales, marketing, research and development and new technology.

By MICHAEL JAMISON of the Missoulian

"The idea is to find the cash flow to keep growing," he said.

For more than a dozen years, Johnson and his partners have privately operated Positive Systems, a Whitefish-based high-tech company building digital aerial cameras. Over the years, he figures his outfit has contributed more than $10 million to the local Flathead Valley economy.

But somewhere along the way, his market became flooded, and in order to keep growing he needed to shift his technological focus. A couple of years back, Positive Systems stopped making the cameras it was famous for and started making software it was decidedly not famous for.

The software, he said, pieces together the aerial photos taken by cameras like the ones he used to make, creating one big picture out of many smaller but overlapping images.

He calls it Digital Images Made Easy, or DIME, and says it also recognizes any individual pixel in an image and can attach that pixel to a specific geographic point on the ground, providing its precise latitude and longitude.

But while his software might recognize pixels, people no longer recognized his company. He needed a cash infusion to pay for a marketing blitz that would put his new product on the map and let people know that, although the name was the same, the game had changed.

The problem was finding venture capitalists in Montana. He found lots of investors in other states, he said, but they are the sort who like to be close to their money. To cash in with those investors, he would have to move closer to California’s high-tech centers.

But he likes Whitefish.

And so he went to the state, hoping economic development experts in government had created a network of venture capitalists, a cash infrastructure upon which to build a high-tech economy.

"But the state doesn’t do a very good job of supporting small business with capital," he said. "There’s just no coordination for putting business together with investors. Because of that, there are only so many avenues a small business has to get at capital." One of those avenues was to grudgingly give up some of their ownership in the business they had built, offering Positive Systems shares to the public.

But instead of jumping in with both feet, he chose to keep the public offering somewhat private, with what is known as a "private placement offering." That meant he still owned the business, and it was not considered a public company. It was not traded openly; rather, he as a private businessman offered investors a chance to buy into his potential.

Initially, the stock was offered only to "accredited investors," generally wealthy individuals who are well acquainted with the market. Later, a limited number of shares were made available to nonaccredited investors.

Of the 4 million or so shares out there, he and his partners still hold more than half.

That could change this summer, however, when Positive Systems’ stock begins trading publicly on the Over The Counter Bulletin Board.

Currently, he said, the company is preparing to go public, hiring a chief financial officer and jumping the auditing hoops set up by the Security and Exchange Commission. Once the existing shares are registered with the SEC, he said, people can begin trading company stock on the open Bulletin Board market.

"It’s a size criteria," Johnson said of the decision to list on the Bulletin Board. "If you’re a Plum Creek, you go toward the Nasdaq or the Dow. The Bulletin Board is a notch down for smaller companies like ours. In theory, though, it works the same. We receive capital from the sale of stock, we grow, the stock rises, people sell their shares and everybody makes some money."

The downside, of course, is his little private company is not so private any more. With shares trading freely, the possibility arises of someone buying up a majority and taking over.

Currently, he said, the company is valued in the $4 million to $6 million range and is looking strong. He employs about 15 people, with an average annual salary around $45,000 plus benefits.

And the market appears ready to absorb whatever he can produce. Projected growth in coming years for geographic information systems, or GIS, is between 10 and 12 percent, he said, and there remains a shortage of trained GIS specialists in the workplace.

"We’re doing better all the time," Johnson said. "Last year, like a lot of people, we hit some tough spots. But we seem to have come out of that nicely." Sales of DIME are up, he said, as are contracts to actually do the DIME imaging work for other companies or agencies.

"It’s a big change," he said of the anticipated public offering, "but in high-tech you have to be ready and willing to change. We’re still going strong and getting stronger. That’s what counts. A lot of high-tech firms aren’t going at all."

Reporter Michael Jamison can be reached at 1-800-366-7186 or at [email protected].

On the Net

To find out more about Positive Systems, visit the company’s Web site at http://www.possys.com .

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