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North Charleston-based Information Systems Support changes hands in $4.1 million deal

Dec. 1, 2003
Charleston Post and Courier
By John McDermott
A designer of building security devices that are activated by fingerprints and other unique personal features is being sold to a Washington state company that specializes in safeguarding computer systems.

Information Systems Support Inc., based in North Charleston, agreed Monday to sell its eight-employee BioMetric Solutions Group Inc. division to Saflink Corp. of Bellevue, Wash., in a deal valued at $4.1 million.

The sale price includes $500,000 in cash and 1.12 million shares of Saflink's publicly traded stock, which, under the terms of the deal, cannot be sold for three years. The agreement already has been approved by shareholders and board members.

BioMetric Solutions will keep its offices on the South Carolina Research Authority campus on International Boulevard.

"We're pretty well entrenched in Charleston," said Bob Turbeville, senior vice president. "The critical people won't live anywhere else."

Biometrics involves the scanning of one-of-a-kind personal markers, such as fingerprints and retinas, and the storing of the distinguishing characteristics digitally. When incorporated into a security system, those attributes can replace access codes and magnetic swipe cards.

BioMetric Solutions has been operating in the Charleston region for about five years, Turbeville said. It and Saflink have worked together in the past, including on the ongoing development of a $1 million security system for a major, unidentified pharmaceutical maker.

Turbeville said the two companies are not competitors because they have different specialties. BioMetric Solutions' expertise is designing "physical" security systems for office buildings and manufacturing plants, he said. Saflink's main focus has been on developing software for "network-based security, such as logging onto your computer with your fingerprints or your eyes," he said.

By combining, the two companies hope to broaden their sales by offering government and corporate customers a one-stop shop for their high-tech security services.

"We call it doorway to desktop," Turbeville said of the convergence trend.

Glenn Argenbright, Saflink's chief executive officer, characterized BioMetric Solutions' business as "high margin," adding that the technology his company is acquiring in the deal "will be a key component in over half of our revenues in the coming year."

Sales at Saflink totaled $1.5 million through the third quarter, up 65 percent. Despite rising revenues, the company lost $7.9 million during the first nine months of the year, compared with a $9.5 million loss for the same period last year.

The fledgling biometrics security field is relatively small and fragmented, but the market is expected to grow quickly. Last year, revenue totaled just $601 million for the entire industry, according to the International Biometric Group. By 2007, sales are projected to swell to more than $4 billion, largely because of the growing security needs of businesses and government agencies.

Turbeville said the boom that some industry observers predicted would follow the September 2001 terrorist attacks never materialized. Most of that talk was "speculation," he said.

"Everybody thought 9-11 was going to be the panacea of biometrics security ... but it didn't really drive volumes up," he said.

Going into 2004, Turbeville is more bullish about the industry's prospects because falling prices are making biometric technology more affordable.

A few years ago, it cost $3,000 to $4,000 to equip one door with the technology, he said. "Now it's less than $1,000 and in some cases less than $500 a door," Turbeville said.

Also, attitudes about biometrics are changing.

"What's happening in the United States is that people are starting to trade some privacy concerns for security," he said. The industry, Turbeville added, "is now starting to come into its own."

Saflink's purchase of BioMetric Solutions spurred heavier than normal trading volume, but the deal did not help the stock price Monday. Shares fell 8 cents to close at $2.82 on the Nasdaq Small Cap Market.
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