VASCO Data Security International (VDSI)

Attractive, service based business model that provides strong visibility via a large backlog revenue. Order backlog for Q407 of $33.4 million is best in the Company’s history (55% higher than the $21.5 million backlog we had when entering the fourth quarter of 2006 and 33% higher than the $25.2 million in actual sales reported for Q4 2006). Competition is limited, with RSA Security, a subsidiary of EMC, as the company's main threat based on comment's from management in recent conference calls. However, Vasco has mainly focused on the European market, while RSA Security has mainly focused on companies in the United States.

Attractive, service based business model that provides strong visibility via a large backlog revenue. Order backlog for Q407 of $33.4 million is best in the Company’s history (55% higher than the $21.5 million backlog we had when entering the fourth quarter of 2006 and 33% higher than the $25.2 million in actual sales reported for Q4 2006). Competition is limited, with RSA Security, a subsidiary of EMC, as the company's main threat based on comment's from management in recent conference calls. However, Vasco has mainly focused on the European market, while RSA Security has mainly focused on companies in the United States.

Increased need to protect against identity theft and other forms of e-fraud. The growth in electronic banking and electronic commerce, and the increasing use and reliance upon proprietary or confidential information by businesses, government and educational institutions that is remotely accessible by many users, has made information security a paramount concern.

Catalysts coming from increased government mandates from countries around the world. Examples include the Hong Kong Monetary Authority (HKMA), the Hong Kong Association of Banks (HKAB) and the Hong Kong Police Force (HKPF), which jointly issued statements regarding the use of two-factor authentication for internet banking. In the United States, the Federal Financial Institutions Examination Council (FFIEC) issued guidance for Strong Authentication/Two Factor Authentication in the Internet banking environment. Financial institutions were expected to achieve compliance by year-end 2006.