Mobilisa stock surges amid security concerns

By James Robinson of the Leader
Posted 1/12/10

Following the failed bombing attempt of Northwest Airlines Flight 253 on Dec. 25, and a subsequent federal push to bolster security at the nation’s airports, executives at Port Townsend-based …

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Mobilisa stock surges amid security concerns


Following the failed bombing attempt of Northwest Airlines Flight 253 on Dec. 25, and a subsequent federal push to bolster security at the nation’s airports, executives at Port Townsend-based Intellicheck Mobilisa are riding a wave of Wall Street success. According to data from the New York Stock Exchange, the company’s share prices tripled during the last week, with gains holding steady.

Among other products and services, Intellicheck Mobilisa provides Defense ID – a wireless handheld scanning device similar to a barcode scanner seen in retail stores – which scans passports, driver’s licenses, military identification cards and other identification cards, then checks the information against a database of 140 “bad guy” lists.

Intellicheck Mobilisa CEO Dr. Nelson Ludlow said that although Defense ID is widely used for security and access-control purposes at military bases across the country, the product is well suited to a variety of retail and commercial tasks, including processing store credit card applications and running identification checks to expedite car rentals, hotel check-ins and the opening of new bank accounts.

“Anywhere someone reads an ID card, that’s our stuff,” Ludlow said.

Although Ludlow said the firm’s retail and commercial clients include 222 bank branches, Walmart, Toys“R”Us and Target, he linked the recent Wall Street share surge to the capabilities of Defense ID and President Barack Obama’s commitment to thrust manpower and dollars toward airport security improvements.

According to Ludlow, one of the key steps toward improving airport security is to prevent all would-be terrorists from moving much beyond the ticket counter. Ludlow said his company provides products well suited to that task.

“There are two ways to stop a guy from bombing a plane: Find the bomb or stop the guy who has the bomb. Obviously you need both systems,” Ludlow said, “and our system has over a million names.”

With its access to government watch lists, no-fly lists, law enforcement bulletins and a host of other data, Ludlow said his company’s identification-scanning equipment and technology may soon have broad appeal to agencies such as the Transportation Security Administration (TSA), which, with other agencies, is working under federal mandate to develop and deploy a more comprehensive security matrix at the nation’s airports. According to data from the New York Stock Exchange, investors might think the same, although Ludlow said the company is poised to grow with or without TSA.


Recent gains

Throughout much of December, the cost of Intellicheck Mobilisa (NYSE Amex: IDN) shares hovered at just above $1. On Dec. 25, however, Nigerian Umar Farouk Abdulmutallab, 23, boarded a Detroit-bound flight from Amsterdam and attempted to blow up the plane with explosives sewn into his underwear. By Dec. 26, Intellicheck Mobilisa shares began a four-day climb, hitting nearly $4 per share by New Year’s Eve.  Since Jan. 1, the company’s shares have traded as high as $4.83, with lows holding near $3.98. In contrast, on March 4, 2009, Intellicheck Mobilisa shares traded for 50 cents.

Anti-trust suit

Despite recent successes on Wall Street, Intellicheck Mobilisa is not without detractors. According to an antitrust lawsuit filed Nov. 30, 2009, in federal court, Portland-based Eid Passport Inc. alleges Intellicheck Mobilisa violated state and federal anti-trust laws when it engaged in anticompetitive and predatory business practices in the U.S. military market. Specifically, the suit accuses Intellicheck Mobilisa of attempting to unlawfully monopolize the market for electronically validating state-issued driver's licenses presented by visitors at access-control points at military bases in the United States.

The suit stems in large part from Intellicheck Mobilisa’s Aug. 31, 2009, purchase of Positive Access Corp.

According to the complaint filed by Eid Passport Inc., Positive Access Corp. was Intellicheck Mobilisa’s primary competitor for developing driver’s license reading software. Eid Passport Inc. had purchased the software from Positive Access Corp. via license for use in its own systems; the suit alleges that Intellicheck Mobilisa pursued the $2.23 million purchase in order to cut off Eid Passport’s access to the software.

In fact, once Intellicheck Mobilisa closed the deal, it terminated Eid Passport Inc.’s licensing contract the following day.

Ludlow confirmed the contract termination.


Savvy business

Although Eid Passport Inc. CEO Steve Larson was reluctant to comment on the lawsuit over the telephone, he made his company’s position clear via press release. In it, Larson writes, “In this era of heightened security requirements at U.S. military facilities, we believe it is unconscionable for a company to try to squeeze legitimate competitors like Eid Passport out of a market that is intended to protect our armed forces, their families, and the hard-working men and women who work on their bases. That is why we felt we had no choice but to file this antitrust lawsuit against Intellicheck Mobilisa. We must be allowed to fairly compete in this very important marketplace.”

Ludlow dismissed Larson’s claims and defended his company’s actions as simply savvy business.

“Our position is that it [the antitrust suit] is frivolous, and we’re going to vigorously defend it. We don’t have to give our technology to a competitor, so we chose not to. We have nine patents on how to read driver’s licenses, and we’re afforded certain protections,” Ludlow said.

“We feel just the opposite,” Larson said. “We’ll just have to wait and see.”

Meanwhile, and as the case begins its journey through the courts, others – Ludlow calls them “competitors” – have criticized the company for offering overpriced and outdated scanning and wireless solutions and for receiving millions of dollars' worth of congressional favors in the form of earmarks and no-bid contracts with the Washington State Ferries system and the military.

Ludlow said the allegations that his company does not provide leading-edge technology and equipment are “patently false.”

Mobilisa merged with Intellicheck on March 14, 2008. The Port Townsend office employs about 35 people.


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