Below are two summaries of the Annual Meeting by persons who attended it. Thought it might be of some interest. BDAnnual Meeting 11/15/05 Here are my snippets of the statements made. I've probably cut corners like two years ago. I'm sure Laker who I met at the meeting will have a better in depth report. And will correct some of my reporting. I don't think all this should go to the main board. Laker would know best. Joe explained that, as we know, hardware was not the profit item software was. The prices of hardware are dropping, there is little maintenance as the machines are more reliable. Hdw is still part of their revenues and IDNX sales for Health care is a case in point. Also IDNX gets most of the law enforcement sales. The company has set up a program of modules so that they can go into any potential customer and just stick the building blocks that they have already made and bundle up a package for the customer. They had the Print and Facial and some software to go with it but they were hurting in software. The biggest draw back was the software as big software went to NEC, Cogent etc.As of a couple of months ago, after years of work, IDNX now has it all. They have the total integrated package available for sale. He stated Cogent 15 years ago decided that their direction was with only software. It was a good move then. However, now they don't really have a complete package to offer. They send in engineers to design systems around the customers needs and then they have to find the hardware and other items to complete their operation. IDNX can now go out and take any job all by themselves with up to 100,000,000 million prints. To me this was the biggest deal in this meeting. I brought up 3D and Iris and what does IDNX think. Joe stated that the Iris patent in the US ran out in April of 05 and will go out in April of 06 in Europe. He stated they have done a lot of research on 3D and find that increase in reliability is so small that it doesn't warrant the tremendous increase in costs and development to use it. He said let them use it but they have a huge way to go ramp up the product. He was not really impressed with Iris. Talking with another guy I got the feeling that it is a has been for the 007 era but does not offer an economical large scale use. It is however, very accurate. As to my question on X-match and Visg. I stated that two years ago Joe you showed where the smudges on X-match and the stitching for palm readers made their product second rate. What is your synopsis today? He stated today we are even farther ahead in quality than we were 2 years ago. He went on to elaborate that IDNX is held in high esteem in every area of application Talked with the CFO and she was quite upbeat. With 40 Mil in cash there is no way they will need more. The worst in cash burn for the year might be 3 to 4 Mil and then again they may add to their cash??? Long-term projections are hard to estimate. Companies and governments are looking for identity solutions and IDNX can supply the needs. Joe stated the State Dept has asked and relied on IDNX to set the standards in the industry. . They keep coming back requesting new research on new ways to go for the State Dept. The State Dept feels IDNX is the only company that can complete the total research package. They feel there is no one else in the industry that has the total grasp. Joe stated that the first week the AFIS platform of FR was used by the State Dept, 5,000 people were caught. Joe stated that they are the leader in the industry. We will remain silent on what and where we are going. We will give no advance notice of what our plans are. To do so will give the wannabes an advance warning. They will find out when we get sales in products and they then will have to start to catch up. He stated the Airport biometrics for frequent travelers is really not up to snuff. He stated you could use it in Minneapolis but Atlanta may have a different program. So TSA Airport programs have a long way to go. I talked with one of the Directors and he agreed with me that Dr. Atick not only has a fantastic Technical background but also has a good business sense. Most executives that he and I knew had either have a good technical background only and/or a good business only and/or a sales only background and/or a bean counter only back ground. Joe can grasp quite a lot of all of these. He feels Joe is a no nonsense man who watches spending closely. Talked with the Nasdaq rep who was at the meeting. They are quite concerned with naked shorting. So they have an experimental plan where they are watching every third company on the Russell 2000 ( the one IDNX is in ) for short selling. She couldn't tell me if IDNX was one of them. They are making sure that stock is delivered or is in the brokerage house that has been shorted. If the stock is not there, the brokerage house is punished by not being able to trade in that stock. I was impressed two years ago and have to say ( for the last time) IDNX is about to ramp up.. Ron Ohio(Note to Ron - If I have missed anything, feel free to chime in.)The marketplace is looking for "solutions"...not "products". Identixhas designed a set of modules (FR, FP, database search, etc.) thatcan be plugged together to solve a customer's ID management problems. This can be done efficiently and consistently. If the customer desires special features, the package can, then, be customized to meet those requirements.Identix doesn't have to build a custom solution from scratch forevery customer. (Cogent builds an end-to-end solution for eachcustomer and, in many cases, doesn't even document what they havedone!)As in the case of the DoS, Identix builds the infrastructure for thecustomer and is, then, in the position to sell additionalcapabilities. DoS started out as a $2.2M contract that has expandedby another $4M...a total of $6.2M over 18 months.Identix is functioning as the biometric prime for the DoS.Identix spent 5 years pushing for biometric standards..."We were theauthor of standards."ABIS - 6 months ago Identix could not bid (didn't have all pieces inplace) against Cogent, Sagem, etc. on voter ID projects. Now we can.In a few weeks, the world could wake up to the knowledge that we cannow do this.IBIS - All of the competitors have been informed that Identix willvigorously defend the patents. Many have requested to license thetechnology. That decision is yet to be made. ABIS will also play alarger role in the adoption of IBIS. Sounds like some of the AFISproviders have been causing problems, for the customer, by refusingto accept the IBIS info...until the customer yells for it.3D - 3D buys a bit of accuracy, but not enough to warrant theadditional cost. There are many millions of 2D cameras that can haveFR added to them very easily. There are only about 10,000 3D camerasin the world. The money will be made in 2D FR for the foreseeablefuture.Iris - Patents have expired in the US and will expire worldwide inApril '06. Identix will not waste the time and money to develop anIris algo. We already have the availability through Iridian and LG.Trusted Traveler - Basically stalled in the US. Until the governmentdecides on a standard and the decision on who will pay ismade...nothing will really happen. The airlines can't afford theprogram. The airports don't want the expense. Faced with the decisionof keeping the airlines flying or making the lines move faster...thegovernment will put the money into the airlines.Joseph's last statement (in light of the fact that the competitionhave all suddenly jumped on the IBIS/ABIS/IIS bandwagon) was veryinteresting..."We have already gone through the changes that ourcompetition is just beginning to go through."clear laker
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