Speziali, Greenwald & Hawkins, PC Announces Docketing and Allocation of Class Action Suit on Behalf of Short-Sellers of Intelli-Check, Inc. Securities

Business Wire, Oct 25, 2001

Business Editors/Legal Writers

VOORHEES, N.J.--(BUSINESS WIRE)--Oct. 25, 2001

The law firm of Speziali, Greenwald & Hawkins, PC, announces that a class action lawsuit filed on behalf of short-sellers of the securities of Intelli-Check, Inc., (AMEX:IDN) has received an allocation of assignment and docket number.

The action has been assigned to the Hon. Joel A. Pisano, USDJ, United States District Court for New Jersey, Camden. The docket number is 1: 01cv04860 according to the court's allocation.

Service of the Summons and Complaint upon the defendants is being delayed pending the filing of an amendment to the complaint. It is anticipated that an additional short-seller, Daniel Borislow (present position 78,400 shares short) who last short-sold the company's securities in June, 2001, will be added as a named plaintiff.

It is also anticipated amendments will be added regarding non-employee professionals of the company and failure to disclose as a "significant event" the loss of a primary distributor. Further delays with respect to amending and serving the complaint may occur pending investigation of yesterday's Dow Jones Newswire story regarding Intelli-Check's motives for a recent rights offering.

The story inaccurately reported that Borislow represents 90% of the current short-position (755,085) and the rights offering was launched to negatively impact his position. Indeed, Borislow's position is 78,400 shares short and the rights offering results in shares being sold by the company, has no effect on short-positions and simply dilutes the position of existing shareholders.

If it is determined that Intelli-Check provided this inaccurate and misleading information and issued the rights offering to negatively affect short sellers than additional securities violations and allegations will be added to the amended complaint.

The complaint charges that defendants violated Sections 10 (b) and 20 (a) of the Securities and Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of materially false and misleading statements to the market during the class period concerning its' supposedly strong and growing sales thereby artificially inflating the value of the Company's stock price.

In fact, sequential sales from Q4 2000 to Q1 and Q2 2001 have substantially decreased.

Specifically, during the class period defendants reported materially inflated revenue for Intelli-Check by manipulating the reporting of sales and revenue in its filings with the Securities and Exchange Commission and in its press releases and failing to disclose significant competition having a material impact on the Company and the sale of its products.

The defendants on May 9, 2001 announced significant increases in revenue for the second consecutive quarter when in fact shipments and sales of products had actually decreased.

The defendants on August 13, 2001 announced that revenues for the second quarter of 2001 increased nearly 15 fold from the second quarter of 2000 and 10 fold for the first six months compared with the year ago period failing to disclose a possible change in the method of accounting for distributor sales impact on revenue and deferred revenues reported in its financial statements.

It is also alleged that the misleading disclosures have materially and artificially inflated the price of Intelli-Check shares thereby allowing certain of the defendants to sell shares at substantial gains and allowing the shares to close at or above $10.50 per share since September 24, 2001.

If the price of Intelli-Check closes at or above $10.50 per share each day through October 19, 2001, Intelli-Check will be able to force the exercise of 979,076 stock rights at a price of $8.50 per share thereby forcing the sale of stock at an artificially inflated price.

At all times relevant defendants benefited, by virtue of substantial ownership interests, through sales and otherwise, from the artificially inflated stock price and rights offering, all to the detriment of the class of short-sellers.

If you short-sold the securities of Intelli-Check, Inc., between January 1, 2001 and the present date, you may request that the Court appoint you as lead plaintiff. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation.

In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff."

Your ability to share in any recovery is not, however, affected by the decision to serve as a lead plaintiff. You may retain Speziali, Greenwald & Hawkins, PC, or other counsel of your choice, to serve as your counsel in this action.

If you wish to discuss this action with us, or have any questions concerning this notice or your rights and interests with regard to the case, please contact the following attorney :