Following a summer in which a number of meaningful biometric projects were announced, we caught up with DAVID B. JOHNSTON, VP for Worldwide Marketing at LG Electronics USA's Iris Technology Division.

FB
It's summer. But the hottest time of the year isn't always the hottest time for business...or is it?

LG
Peter, we've had a brilliant summer, no make that a brilliant year. High visibility wins since Q1 have continued right through today.

FB
Can you give us some examples?

LG
Well, one of the biggest is in your backyard. The Canadian Air Transport Security Authority (CATSA) and project winning integrator Unicom picked LG's IrisAccess 3000 as the iris recognition solution for their project, the biometric enrollment and authentication of every employee in airports across Canada. Stage 1 will involve 4 airports and over 40,000 employees, but the program will eventually roll out to a total of 29 airports and nearly 200,000 workers. They are also testing a fingerprint alternative along side our iris, both of which will be embedded on an HID iCLASS smartcard. We've been working with HID for some time now. The ability to credential an individual, and then issue a prox or iClass smart card is something you can do with the software package for LG IrisAccess 3000 right out of the box. We are very excited about the Canadian project. It actually allows us to showcase the best advantages of iris recognition technology as the solution required involves a 1:1 verification use in the workplace, and a centralized 1:many identification capability at a national level.

FB
How about some others?

LG
We are doing an airport employee enrollment program for physical access control at one of the largest airports in the USA. In this phase, over 3000 employees will be enrolled, again in a multi-biometric, totally integrated and comprehensive security solution that involves a number of components. Here too, we find ourselves working with familiar partners, HID and Lenel, the latter with whom we announced an IrisAccess integration with Lenel's OnGuard® offering earlier this year. The job is being done by one of the most accomplished and experienced integrators in this sector of the business.

FB
Who's that?

LG
Can we leave it a secret for the moment? If I tell you, you'll figure out which airport inside of a minute, and I would like to give them and the authorities their due to make the full announcement when they are ready. As I said, it's a very comprehensive solution. Nothing like it in the country, and as it's a first I'd like to see them get to talk about it in totality, rather than just from our perspective as provider of a key solution component. Rest assured it'll be visible, and get noticed here and abroad.

FB
I look forward to hearing more about that. Ok, lets get back to things where you can be a little more forthcoming with details.

Homeland Security Secretary Tom Ridge looks into an iris camera as he becomes a 'registered traveler' at Reagan National Airport in Washington, D.C., Friday, Sept. 3, 2004. The airport joined four others in a test program that allows air passengers to submit to background checks in exchange for avoiding extra security inspections. (AP Photo/Kevin Wolf)

LG
Still in transportation, we successfully partnered with EDS, who developed an excellent solution for two of the TSA Registered pilot programs. We enjoyed a lot of press attention in Boston, and in Washington. In fact, you might enjoy seeing this picture of DHS Secretary Ridge enrolling on the LG IrisAccess 3000 enrollment unit. There is a story in the Washington paper where he says that biometrics will be used in air travel. We expect to be a big part of that play with that and future product in our pipeline.

FB
You mention other products? Can you fill us in on some of your plans?

LG
I'm not ready to go there yet. Just take it on faith that a company with the depth of resources of an LG maintains a development roadmap -- whether the focus is on the next model, the model after the next model, or another form factor for the technology. With the expiry of the Flom-Safir patent in Feb 2005, we think it's likely that other players will enter the market--we've certainly heard from algorithm owners who want to buy cameras, and other algorithm owners trying to sell algorithms.

FB
Speaking of algorithms and patents, what is the story between LG and Iridian?

LG
It's one of those classic differences of opinion that occur between licensors and licensees. Iridian chose to tell the world that they terminated our license. The way they announced, and moreover, what they announced was a little surprising. LG, of course, sees this situation differently than Iridian. LG's Agreement with Iridian specifically contains a mechanism that was agreed to by both parties, for sorting out these types of differences.

FB
Is it just about the process of resolving the dispute?

LG
Unfortunately not. We learned after Iridian's announcement alleging that LG's license was terminated, that Iridian had also contacted existing LG customers, as well as prospective customers with whom they knew we were working. Now, we'd be the first to acknowledge that competition -- let me clarify -- fair competition, is desirable in markets.

However, LG needs to protect its customer relationships as well as its relationships with potential customers. To do that, LG filed a lawsuit in United States District Court in Newark, New Jersey. LG is seeking several types of relief from Iridian, as the parties work through their formal dispute resolution procedure. These were detailed in the announcement we issued last week in response to Iridian's Press Release.

FB
When do you expect things to be sorted out?

LG
Hard to tell, and it is dangerous to speculate. For us, it is business as usual until there is resolution--either in the mutually agreed forum provided in our agreement, or in the Courts.

FB
OK, if it is business as usual, lets get back to business here. What else of note has been going on?

LG
I've highlighted how the Administration's Secretary Ridge came face to face with IrisAccess 3000 in his enrollment in the TSA Registered traveler program. In a way we've worked the other side -- I mean the Democratic Party side-- as well. IrisAccess 3000 was chosen as the means to secure 30,000 credentials issued to delegates and other attendees of the Democratic National Convention in Boston.

FB
I think I remember LG got some other press related to the Convention as well?

LG
Yes. That's true. Heightened security was on everyone's mind during the convention, and the hotels were no exception. We were very fortunate to have the Hotel Nine-Zero choose LG IrisAccess 3000 to enhance security for a floor of special suites, and also secure service doors where vendors and other commercial contractors working with the hotel were enrolled in the system and then required to recognize to gain entry to the hotel. Hotel management is reportedly very pleased with the system, and sees a variety of applications including loyalty program management for frequent visitors as offshoots of this exposure. The hotel caters to a sophisticated clientele who reported being generally pleased that this type of security would be employed and found it surprisingly easy to use. I think we had 7 or 8 excellent media pickups including NBC Nightly News with Tom Brokaw, USA Today, several local TV stations, The Times of London, and of course we have had interest from other hotels interested in enhanced security and similar guest loyalty applications in recent weeks.

FB
Anything else?

LG
We continue to see traction in laboratory protection and in the data center sector where the kind of Clients we are adding to the list of LG IrisAccess data-center users reads straight out of Who's Who in Global 100 Enterprise. In a corporate world that is taking data backup and off site storage very seriously, we offer a compelling value proposition to provide deterrence at the door for any data-dependent organization -- which when you think about it, is just about anybody these days.

FB
How do you judge the climate for biometrics outside of America?

LG
For the last 18 months or so we've seen demand for our products internationally outstrip demand in the Americas. The market ex-North America continues to be excellent--particularly in Europe, Asia, and the Middle East/Subcontinent. In many ways, these regions are ahead of North America in terms of biometric technology adoption. As volatility and security concerns remain, we believe we will see continued growth. As you know LG sells iris recognition products indirectly and we depend on our network of business partners and highly competent integrators. We think we've chosen excellent partners who understand their markets, have foci on the same sectors where we think we offer compelling value, and most certainly all have the kind of relationships that ensure our product gets considered as part of the security solution in the opportunities we target. We've worked the international side of our business very hard over the past year, and expect to see it pay off allowing us to announce new projects of scale in the near term.

FB
What are your expectations for the upcoming ASIS Conference in Dallas?

LG
I expect with the release of increased Federal funds, the growing interest in biometrics around the world, the fact that pilot programs have been supplanted by real-world scale-size deployments, there will be plenty of interest in biometrics, and in the show in general, especially given the heightened interest and awareness of security related issues.

I know we are changing our thrust. Two years ago, we felt we were in education mode. Last year, we focused on what the technology could enable. This year, we are actually going to show what solutions are being deployed in the real world.

We hope people will come and see them, and go away thinking, "If that is what people are doing, perhaps it is time for us to make the leap." The industry is looking for an inflection point, and when biometrics starts to penetrate and be played back in the lexicon of policy makers, I think you have to believe that that inflection point is closer than it has ever been.

FB
Thanks for taking the time to speak with us, David.

LG
It is always a pleasure, Peter.

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