CASPIAN
www.spychips.com
www.nocards.org
By Katherine Albrecht
For immediate release
February 12, 2007
Human Chipping Company Omits Salient Risks from IPO Disclosure
VeriChip Corporation, the much-hated purveyor of the VeriChip human ID implant, is airing its dirty laundry this week. This is not by choice, mind you, but because the Securities and Exchange Commission (SEC) required the company to disclose its "risk factors" prior to launching its initial public offering of stock (IPO) Friday.
The company lays out nearly 20 pages of risk factors in its Form S-1 Registration Statement, a required document for the IPO. But what the company failed to reveal in its filing may be even more eye-opening, say CASPIAN privacy advocates Dr. Katherine Albrecht and Liz McIntyre. The pair, authors of the "Spychips" series of books, have been vocal critics of VeriChip, dogging the company in recent years and facing down its senior executives on radio and national television.
"Potential investors should be told how a hacker can simply walk by a chipped person and clone his or her VeriChip signal, a threat demonstrated by security researcher Jonathan Westhues months ago," says McIntyre, who is a former federal bank examiner.
"Omitting the cloning threat from its SEC documents is a serious oversight that could affect the value of VeriChip's stock. This is materially relevant information, considering VeriChip's claim that its
product could be used to tighten security in facilities like nuclear power plants," she adds.
(For more on VeriChip's vulnerability to hacking, see "The RFID Hacking Underground,' Wired Magazine,
http://www.wired.com/wired/archive/14.05/rfid_pr.html )
Verichip also failed to disclose to investors and the SEC that patients' VeriChip implants might not be readable in ambulances. VeriChip's chipping kit literature cautions that ambient radio waves, like those in ambulances, can interfere with the equipment that reads the implanted tags, but this important fact somehow didn't make its way into the SEC filing.
(Scanned images of VeriChip's chipping kit literature, including the ambulance caution, are available here:
http://www.spychips.com/verichip/verichip-photos-instructions.html )
Even with crucial information missing, investors may still find themselves scratching their heads over poorly conceived aspects of VeriChip's business model. "Anyone reading VeriChip's SEC filing would have second thoughts about the stock," says Albrecht. "Who, after all, would invest in a company that expects patients to document their own medical history and blood type in a database? This could prove risky for anyone, not to mention the elderly, Alzheimer's, and cognitively impaired patients that VeriChip is targeting."
She cites a passage from the registration statement that reads, "we anticipate that individuals implanted with our microchip will take responsibility for inputting all of their information into our database, including personal health records."
Other risks identified in the VeriChip filing could also scare investors away. These include anticipation of ongoing multi-million dollar loses, the "modest" number of people willing to get chipped, public opposition, and the risk that the microchip may be found to damage a person's health. The company also warns that it could be subject to lawsuits and loss of confidence if its patient database is unavailable in an emergency. The company admits that the database has been unavailable in the past.
The market seemed to be catching on to some of these problems as VeriChip began offering stock Friday in a bid to raise million of dollars to fund its human chipping operations. Analysts noted a "lukewarm reaction" to the stock and that it was trading on "the low end of the expected range."
To read the VeriChip Form S-1 Registration Statement (Amendment No. 7) see:
http://www.sec.gov/Archives/edgar/data/1347022/000119312507024937/ds1a.htm
The VeriChip implant is a glass encapsulated RFID tag that is injected into the flesh to uniquely number and identify individuals. The tag can be read by radio waves from a few inches away. The highly controversial device is being marketed as a way to access secure areas, link to medical records, and serve as a payment instrument when associated with a credit card or pre-paid account.
ABOUT CASPIAN
CASPIAN (Consumers Against Supermarket Privacy Invasion and Numbering) is a grass-roots consumer group fighting retail surveillance schemes since 1999 and irresponsible RFID use since 2002. With thousands of members in all 50 U.S. states and over 30 countries worldwide, CASPIAN seeks to educate consumers about marketing strategies that invade their privacy and encourage privacy-conscious shopping habits across the retail spectrum.
ABOUT THE BOOK
"Spychips" is the winner of the 2006 Lysander Spooner Award for Advancing the Literature of Liberty and has received wide critical acclaim. Authored by recent Harvard graduate Dr. Katherine Albrecht and former bank examiner Liz McIntyre, the book is meticulously researched. "Spychips" draws on patent documents, corporate source materials, conference proceedings, and firsthand interviews to paint a convincing -- and frightening -- picture of the threat posed by RFID.
Despite its hundreds of footnotes and academic-level accuracy, the book remains lively, readable, and hilarious, according to critics, who have called it a "techno-thriller" and "a masterpiece of technocriticism."
"A chilling story about an emerging future in which spychips run amok as Big Brother and Big Shopkeeper invade our privacy in unprecedented ways." - Chicago Tribune
"Paints a 1984-ish picture of how corporations would like to use RFID tags to keep tabs on you." - The Associated Press
CASPIAN: Consumers Against Supermarket Privacy Invasion and Numbering Opposing supermarket loyalty cards and other retail surveillance schemes since 1999
http://www.spychips.com/
http://www.nocards.org/
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