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L-1 to Acquire Bioscrypt

January 7, 2008

Security Magazine Publisher Mark McCourt just told Zalud’s Blog that L-1 Identity Solutions, Inc. has entered into a definitive agreement with Bioscrypt to acquire all outstanding Bioscrypt shares in a stock-for-stock transaction. The acquisition reinforces L-1's strategic vision to expand its market leadership into physical and logical access control. Furthermore, it dramatically increases the company's presence in complementary commercial markets, including transportation, banking / finance and healthcare.

Under the terms of the definitive agreement, L-1 will purchase Bioscrypt shares for C$0.55 per share, representing a total purchase price of approximately C$44.0 million. Subject to certain conditions, the number of L-1 shares to be issued in payment of the purchase price for the Bioscrypt shares is based on the average closing price of L-1 shares on the New York Stock Exchange for the 20 trading days ending five trading days prior to the closing date of the acquisition. L-1 estimates that it will issue approximately 2.5 million shares in connection with the acquisition. Under the definitive agreement, the maximum number of L-1 shares that can be issued is 2.6 million shares. In addition, L-1 will assume outstanding Bioscrypt stock options that are not exercised prior to the effective time of the acquisition. Additional terms of the transaction will be more fully described in the management proxy circular to be mailed by Bioscrypt to its security holders in connection with a special meeting of its security holders. Today, following announcement of the Bioscrypt transaction, L-1 intends to acquire approximately 500K-750K shares of L-1 common stock in an arranged transaction.

Bioscrypt is expected to add $20.0 million in revenue and be Adjusted EBITDA neutral in 2008. It is expected to be Adjusted EBITDA accretive in 2009. The current Bioscrypt business base accounts for 85 percent of its calendar 2008 projected revenue. Bioscrypt has experienced strong growth in recurring sales within its existing customer base and the acquisition will provide significant new cross-selling opportunities between the two companies' partners and customers. In addition, the companies will implement a restructuring plan to generate cost savings through synergies.

"With this acquisition, L-1 strengthens its leadership position in protecting and securing personal identities and assets by extending into access control, a market that is expected to grow substantially," said Robert V. LaPenta, chairman, president and CEO of L-1 Identity Solutions. "In line with our strategy to acquire the best-in-class solutions, Bioscrypt is a leader in advanced physical and logical biometric access control solutions and brings new and unique technological capabilities to our portfolio of identity management solutions, including three-dimensional facial recognition."

According to L-1, the world market for electronic physical access control is expected to be $2.1 billion in 2008, of which, biometrics-based products currently represent approximately 10 percent. In it, Bioscrypt is transforming how organizations are bridging the gap between physical and logical access to create secure working environments. Its hardware and software solutions deliver strong authentication processes to facilities, equipment, IT networks and computer applications and allow organizations to administer unified identity access policies across the enterprise. Bioscrypt solutions include multi-factor authentication readers featuring fingerprint or 3D face biometric matching for facility access, embedded solutions for integration of biometrics into products designed by Original Equipment Manufacturers (OEMs), Single Sign On and network logon software for IT security and technology licensing of patented algorithms.

Bioscrypt has over 400 global customers and an installed base of over 260,000 access control units. Significant customers include Kronos, Honeywell, Lenel and ADI, among others. In addition, Bioscrypt's VeriSoft software application is now included on more than 20 million HP computers and its 3D facial recognition, acquired as part of the A 4 Vision acquisition, is used by the largest casino in the world to provide access control for over 12,000 employees.

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