Intelli-Check®, Inc. (AMEX: IDN)

Dear Reader,

Sometimes you can’t see the forest for the trees.

In our eternal search for interesting stories to bring to you, our dear reader, we queried some leading minds from the investing community (that’s you).  In doing so, we were able to gather a basket of new stock ideas to investigate and evaluate.  One extremely interesting company has emerged and will be the subject of today’s edition of StockUpTicks.

What’s peculiar is that we should have noticed this company already.  We’ve all seen it (that means you too) over and over again in a multitude of venues.

Take a look at this logo. Does it look familiar? 

It should, and you’ll find that you’re seeing it everywhere now that we’ve pointed it out.

This is the logo of Intelli-Check®, Inc. (AMEX: IDN), a company that verifies the identity of users for transactions and other applications.  This technology has broad application in preventing the fastest growing crime in America, identity theft, as well as a variety of applications in the Homeland Security sector.

Intelli-Check® can be used in a variety of Homeland Security measures as it works to authenticate a person’s ID in connection with their state or provincial driver licenses or military identification. This of course, will lead to safer stadiums, airports, ports, buildings, and purchases… even age-verification for alcohol, cigarettes, etc.

Better yet, this isn’t a pie-in-sky, is-anyone-ever-gonna-use-it pipedream.  Intelli-Check’s ID-CHECK® technology is already being utilized by a litany of high-profile entities across the nation -- from the U.S. Supreme Court and the Department of Defense to the American Stock Exchange and the Port Authority of New York. 

Maybe now we’ll notice!
 

About Intelli-Check®, Inc.

Intelli-Check®, Inc., the acknowledged leader in document verification has developed a patented technology to verify the validity of all currently encoded state and provincial driver licenses, state issued ID cards and military IDs including those that comply with AAMVA/ANSI/International Organization of Standardization standards. The technology can be used to increase security and deter terrorism at airports, shipping ports, rail and bus terminals, stadiums and arenas, military installations, high profile buildings and other sites where security is a concern.  It also is a potent tool to help prevent economic loss from "identity theft," the fastest growing crime in America.  The technology is fully capable of detecting fake, altered and tampered IDs, which are used to support check, debit and credit card fraud.  It can also be used to prevent fines and penalties to merchants who unknowingly sell age-restricted products such as alcohol and tobacco to underage purchasers.

Visual checks of ID cards are problematical and false documents that look real are readily obtainable. Law enforcement agencies have difficulty distinguishing them from legally issued documents. Current technology makes obtaining a fake driver license very easy.  Fake driver licenses and ID cards can be purchased over the Internet or produced using computers and advanced color copiers. Despite the holograms and other sophisticated security features that states are putting on licenses to thwart forgers, these high-tech fakes are virtually indistinguishable from validly issued documents. Starting with only a fraudulent driver license, an individual may be able to create multiple identities and engage in criminal activities such as check fraud, credit card fraud, obtaining welfare and other government benefits, refund fraud, pharmacy fraud, employee fraud and to gain entrance to high profile buildings and facilities. 

The proposals for establishing a national ID card in the United States has met opposition from many legislators and civil libertarians. The driver license is the best hope for a national ID because a vast proportion of the population already has one in their possession. In effect, the driver license has become the "de facto" identification card in the U.S. and Canada and is the most widely used form of government issued photo identification. In addition to its primary function, the driver license is used to verify identity to board planes and secure entry to facilities where photo ID is required, receive social services, purchase firearms, cash checks, use credit cards and for other applications. To make the driver license even more secure, Kentucky and Rhode Island are the first states to digitize the photograph from the front of the ID, into the 2 dimensional bar code on the back of the ID, which Intelli-Check's technology is capable of displaying with its C-Link Software.  Approximately 80% of the adult population in the United States already have an encoded driver license or state issued ID card and non-drivers may obtain a state-issued ID card as well. 
 

Market Overview

 
There are two distinct markets that utilize its products for different purposes:

Document Verification 

Age Verification 

Intelli-Check offers a product solution for each of these markets

Document Verification Market 
Our advanced document verification software is the ideal solution for validating the authenticity of driver licenses and ID cards used as proof of identity. This market can be further divided into Security/Access Control Applications and Fraud Prevention Applications. The software is fully capable of increasing security at military installations, high profile buildings, airports and other locations where security is a concern. It is also an effective tool to prevent ecomonic loss to merchants against "identity theft," which is often supported by fake identification and according to the Federal Trade Commission is one of the fastest growing crimes in the United States. 

Age Verification Market
Underage access to age-restricted products, such as alcohol and tobacco, is a major problem in today's society. Federal regulations place a great burden on retailers to prevent the sale of these products to minors and many states have Dram Shop Laws that allow a person who is injured by any obviously intoxicated person to file a claim for relief for fault against any person who knowingly sells alcoholic beverages to a person under 21 years of age. Merchants are required by law to check a government issued photo ID and verify that the person meets the minimum legal age to purchase alcohol and tobacco. As a part of this verification process, the age of the individual must be calculated to meet the minimum age requirement and the document needs to be examined to ensure that it has not been tampered with or has expired. A retailer who sells to an underage person could face fines, license suspension or the revocation of their license. 

As a result of law enforcement efforts and regulatory penalties, we believe retailers that sell alcohol and tobacco, such as liquor stores, bars and convenience stores, are facing increasing pressure to accurately verify the age of their customers. Additionally, many jurisdictions and local governments carry out undercover "sting" operations to check compliance with the laws. 

Today's high-tech fake and altered IDs are virtually indistinguishable from the real thing, leaving businesses vulnerable. Unknowingly making an illegal sale of alcohol or tobacco to someone who is underage can bring fines, loss of license or even jail time, or worse - the loss of life. 

Intelli-Check's software can be used for issuing credit cards, providing instant credit, and as a screening device for new hires, decreasing the amount of fraud and providing the merchant with positive cash flow. 

Security/Access Control Applications
As a result of the tragic events of September 11, 2001, there has been a significant increase in awareness for the use of our software for security and access control purposes. 

Intelli-Check's software is fully capable of enhancing security at military installations, airports, shipping ports, rail and bus terminals, stadiums and arenas and high profile buildings. The ID-Check terminal is currently being used by some of the Nation's largest airports, nuclear plants, high profile buildings, government offices and military bases to improve security. 
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Intelli-Check®, Inc. Product Overview

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IDC-1400
The ID-Check terminal provides a cost-effective way to prevent the utilization of fake IDs in the purchase of age-restricted products. ID-Check's patented software validates the authenticity of an ID by reading, analyzing and verifying the information encoded in the bar codes and magnetic stripes on state and provincial driver licenses, identification cards, military and government IDs including those that conform to the standards of the American Association of Motor Vehicle Administrators (AAMVA), American National Standards Institute (ANSI) and International Organization for Standardization. ID-Check will determine if the ID meets the minimum age requirement for alcohol and tobacco purchases, if the ID has been tampered with, or if it has expired.

ID-Check provides you with an accurate, affordable system that virtually eliminates the human error factor. Used in conjunction with the optional C-Link software, which instantly displays the data and archives it into a PC, it is a powerful system for detecting fake IDs and increasing security. C-Link was designed to accommodate a variety of industries including government (federal, state and local), police departments, airports/airlines, rental car agencies, financial institutions, retail operations and other controlled access facilities to increase security and combat fraud. 

Q-Link 
A software package that is included with the purchase of an ID-Check unit. It allows the user to download the due diligence data from the ID-Check unit to a PC for permanent archiving. Merchants can run searches for specific transactions and create pre-made reports to meet due diligence requirements.

IDS6000 
The IDS6000, designed for the age verification market, reads the magnetic stripes on state issued identification cards or licenses. The terminal calculates the age and displays the information in a "Yes purchase" or "No purchase" format depending on the ID authenticity and customer's age. This information can be printed or stored for downloading at a later time.

IDS9000
The IDS9000 is a step beyond the IDS6000 with the addition of an integrated 2 dimensional barcode reader allowing the user to read more jurisdictions.

Frank Mandelbaum, chairman and chief executive officer, noted these important developments in an 8/16/04 news release:

"We continue to innovate with new product offerings designed to meet the exacting demands of our customers in applications from age-verification, to commercial-fraud prevention, to homeland security. For example, this quarter we installed a beta-version of ID-CHECK® PDA on a trial basis at select locations of a major national convenience store chain with over 5000 locations. Designed to run on handheld personal data assistant devices, ID-CHECK PDA has similar functionality to our ID-CHECK PC desktop version, while providing the user with a smaller footprint and the advantage of portability, depending upon the configuration chosen by the end user. Because of the success of the test, corporate staff has formally recommended to the approximately 250 New York franchisees that they adopt the technology to help protect themselves from the risks associated with the sale of age-restricted products to under-age purchasers. In further support of the initiative, the chain agreed to absorb a substantial portion of the total deployment costs. We have also been informed of its intention to roll out the technology in other Northeast states and then possibly go nationwide. This quarter, we also completed development of C-Link® 3.1, our 'network capable' data-management software, which has been enhanced so it can both be used with our new data-capture module (DCM), and also read the 'smart chip' contained on the Military Common Access Card (CAC)." 

Mr. Mandelbaum added, "We are very excited by the potential of our new homeland security product, now in final stages of development, that is designed to instantly compare the information encoded on many passports and visa or border-crossing cards against the parsed and verified data encoded on a driver license, state-issued ID card, or military ID to produce a Match/No Match result. We expect that a number of the new security programs initiated by the departments of Homeland Security and Defense will require the verification and comparison of two government-issued documents during in-person proofing. We believe that our product will expedite this process to enhance security." 
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Recent News From Intelli-Check®, Inc.

Press Release Source: Intelli-Check, Inc. 
Tuesday October 19, 2:52 pm ET 

WOODBURY, N.Y.--(BUSINESS WIRE)--Oct. 19, 2004--Intelli-Check, Inc. (AMEX:IDN - News), a leader in advanced identification-document-verification systems, today announced that the company's propriety ID-CHECK® technology is being used by high-profile entities across the nation -- from the U.S. Supreme Court and the Department of Defense to the American Stock Exchange and the Port Authority of New York -- as part of a comprehensive effort to help safeguard facilities and personnel. ID-CHECK instantly reads, analyzes, and verifies the encoded data in magnetic stripes and barcodes on driver licenses, military, and other government-issued IDs to determine if the content and format is valid. 

"Our technology is becoming a key component of many access-control programs at high-profile facilities across the nation, used to screen visitors as well as in the badging process for employees," said Frank Mandelbaum, chairman and chief executive officer of Intelli-Check. "For example, in the first deployment of Intelli-Check's enhanced network-capabilities, the U.S. Department of State's Bureau of Diplomatic Security has purchased and plans to install the company's systems in a variety of the State Department's facilities for identity verification. Driver licenses, typically presented as the primary government-issued photo ID, are also the most common form of breeder document. Since it is virtually impossible to distinguish a high-quality fake from a legally issued document using visual inspection alone - verifying the validity of the ID document is the critical first step in the identification process." 

Mr. Mandelbaum continued, "We believe our technology will help government agencies comply with the August 27, 2004, Homeland Security Presidential Directive, which outlines standards for issuing identification for federal employees and contractors, including verifying identity." To read the entire release Go Here

Press Release Source: SiVault Systems Inc. 
Wednesday October 6, 5:32 pm ET 

NEW YORK, and SAN JOSE, Calif., Oct. 6 /PRNewswire-FirstCall/ -- SiVault Systems Inc. (OTC Bulletin Board: SVTL.OB - News), a leading provider of products and services for the secure authentication, processing, storage, and retrieval of signature-based medical, financial, and retail electronic transactions and documents, today introduced an innovative point-of-transaction solution that authenticates and validates an individual's identification in real time. Called SiVerify, the new solution, incorporating Hypercom Corporation (NYSE: HYC - News) and Intelli-Check Inc. (Amex: IDN - News) technologies is available now.

Using global payment technology leader Hypercom Corporation's compact, high speed and high performance signature capture Optimum L4100 card payment terminal and Intelli-Check's proprietary ID-document-verification technology in the back-office, SiVault's new solution is designed to validate and authenticate government-issued documents across the US and Canada by building a biometric template of the cardholder's signature, and then validating all subsequent signature-based transactions.

The new SiVerify solution can help to dramatically reduce transaction losses due to the use of forged documents and signatures, identity theft, or the creation of false identities. By first verifying the encoded data on a driver's license with Intelli-Check's proprietary technology and then building a unique customer file with a tamper-proof template of one's biometric handwritten signature, the identity of the individual can be assured. Industry estimates indicate that up to $70 billion of the $1.4 trillion health care cost for Americans can be attributed to fraud, and that's just the beginning.  To read the entire release Go Here
 

IDN Financial Highlights

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