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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony, -- Ignore unavailable to you. Want to Upgrade?

To: Brad Davies who wrote (73845)	10/10/2001 12:13:43 PM
From: Hockeyfan	Read Replies (2) \| Respond to of 122087

Overview of Biometrics Companies... Look at the market caps/stock prices of these stocks before September 11th. DDSI, SACM and ESAF were delisted from NASDAQ and were on their last breaths. Veridicom, a Lucent spin-off once thought to be a strong contender, closed shop. DLSC has always been a Canadian pump & dump. The market caps of the only three players worth looking at IDX, VSNX and VISG were $144mm, $100mm and $32 mm which gave an indication of the perceived relative values of these companies. Biometric stocks was faltering due to 1)Slower adoption than anticipated 2)slowdown in technology spending and 3) crappy small cap market environment. September 11 has reversed #1 and #2 in spades. IDENTIX (IDX) was and still is the recognized industry leader in terms of installed systems for both BOTH livescan and Bio-ID fingerprint biometrics. Livescan is forensic quality equipment. The hardware and software typically cost $20,000 to $25,000. The government, law enforcement and airlines use livescan for criminal searches and background checks to IDENTIFY an individual against a huge database of criminal records. IDX currently counts 2 major airlines and 7 major airports as customers for background checks. The livescan business has been a slow, steady provider of business. Bio-ID uses cheaper($50 or less) fingerscanners used to AUTHENTICATE that a person is who they say they are. Bio-ID is designed specifically to replace passwords in the computer setting. Typically your fingerprint is compared to an encrypted, stored template of your fingerprint. If it matches you are granted access. Bio-ID is the most potentially explosive area of biometrics. Look for an Identix biometrics tie-in to the Windows XP rollout on October 25th. IDX has no debt and $25 million in cash and bank LOCs, but may need to raise additional capital if the market explodes. Identix partners are Microsoft, Motorola, Verisign, Keytronic, Novell, Toshiba, Dell, Cherry, Unisys, Compaq, and SCM Microsystems. These are real partners with real deals. Motorola and Verisign have made cash investments in Identix. identix.com Visionics (VSNX) is a combination of Digital Biometrics (DBII) a formidable competitor in the forensic livescan market and Visionics - a facial recognition company. VSNX has a low enough cost structure and enough business from both business lines to break even. VSNX will win its fair share of airport security and background check business, but they don't have a Bio-ID product so they won't participate in the explosion of biometric computer access protection. VSNX has sold over 150 livescan machines to the INS. visionics.com Viisage (VISG) is facial recognition only. I have seen numerous technical articles questioning the accuracy of their technology. VISG may get some contracts as stop-gap or redundant security measures until fingerprint-based systems get installed. Summary Based on numerous conversations with knowledgeable sources, I believe that fingerprint-based biometrics will get the lion's share of airport security contracts. Identix is the only complete solution provider (see white paper on their website), has an extensive relationship with the US Government, already counts 2 major airlines and 7 major airports as customers for background checks, and a 3-year pilot for air cargo security at Chicago's O'Hare. Although all the biometric stocks are ahead of their fundamentals, 9/11/01 caused a quantum shift in the acceptance and demand for biometrics. If the demand starts to translate into actual contracts these stocks may double or triple from here. If the demand doesn't develop they will be back in the low single digits. I believe we will know by Christmas. I still rate the biometric player's prospects on a scale of 1 to 10 as follows: IDX 8 VSNX 6 VISG 2 ESAF 1 DDSI,DLSC 0 Disclosure - I an VERY long Identix, but have owned DBII and ESAF in the past and shorted DLSC. I am trying to short VISG.