DIGITAL DESCRIPTOR SYSTEMS INC
10SB12G/A, EX-10.2, 2000-11-17
PREPACKAGED SOFTWARE
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                                                                    EXHIBIT 10.2
  Classification
   RESTRICTED                      DDSI Offer No. 980519           ISC
--------------------------------------------------------------------------------

















                                                                Offer No. 980519
                                                                Development of a
                                                                     Finger/Slap
                                                                 Scanner Product

                                                                      Version: a
                                                                04/05/98 4:51 PM


                                                                  ISC/U.S., Inc.

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  Classification
   RESTRICTED                      DDSI Offer No. 980519           ISC
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                                                               1965 SE 22nd Ave.
                                                       Fort Lauderdale, FL 33316
                                                                             USA
                                                          Phone: ++1-954-5223302
                                                           Fax: ++1-954-522-3302

































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 Classification
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--------------------------------------------------------------------------------





                Herausgegeben von der / Published by / Publie par







                                       ISC
                                 ISC/U.S., Inc.

                                1965 SE 22nd Ave.
                            Fort Lauderdale, FL 33316
                                       USA

                             Phone: ++1-954-522-3302
                              Fax: ++1-954-522-3302









        Fur dieses Dokument behalten wir uns nach DIN 34 alle Rechte vor.
        Technische Anderungen im Zuge der Weiterentwicklung vorbehalten.


 Copying of this document, and giving it to others and the use or communication
of the contents thereof, are forbidden without express authority. Offenders are
  liable to the payment of damages. All rights are reserved in the event of the
   grant of patent or the registration of a utility model or design. Liable to
           technical alterations in the course of future development.



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 Classification
   RESTRICTED                 DDSI Offer No. 980519                     ISC
--------------------------------------------------------------------------------

Toute communication ou reproduction de ce document, toute exploitation ou
communication de son contenu sont interdites, sauf autorisation expresse. Tout
manquement a cette regle est illicite et expose son auteur au versement de
dommages et interets. Tous nos droigts sont reserves pour le cas de la
delivrance d'un brevet ou de

































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1 Content
---------



1      Content .............................................................5

2      Versions ............................................................6
2.1     Version a ..........................................................6

3      Responsibilities ....................................................7

4      Subject of the Quote ................................................9

5      Features of the Product .............................................10
5.1     General Description ................................................10
5.2     Logical Block Diagram of the System ................................11
5.3     System Environment .................................................14
5.4     User Interface .....................................................14
5.5     Physical Parameters ................................................15
5.6     Estimated Production Costs .........................................17

 6     Development Process .................................................18

 7     Customer's Obligations ..............................................20

 8     PC Requirements .....................................................21

 9     Time Schedule .......................................................22

 10    Price, Payment Schedule .............................................23

 11    Further Conditions ..................................................24











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2 Versions
----------




2.1 Version a


Author:   Roger Ludwig
Date:     05/18/98 8:02 PM

This is the basic document version, so there are no changes to former versions
to be documented here.


























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3 Responsibilities
------------------


                                  ISC/U.S.,Inc.
                                1965 SE 22nd Ave.
                            Fort Lauderdale, FL 33316


                               referred to as the

                               --- Contractor ----





herewith offers to



                                      DDSI
                        Digital Descriptor Systems, Inc.
                             2010-F Cabot Blvd. West
                               Langhorne, PA 19047

                               referred to as the

                                 -- Customer --






the research and development of a



                                  Finger Print
                                       and
                                Slap Scanner Unit
           for use in correctional institutes and police environment,

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 Classification
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--------------------------------------------------------------------------------

                               referred to as the

                                ---- Product ----




























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4 Subject of the Quote
----------------------

The customer plans to introduce a product for finger / slap scanning in the area
of correctional institutes and police departments. The contractor as of this
date 5/18/98 is offering a working prototype and the continuation of the
development which will result in a product believed to be free of conflict with
existing patents as supplied by the customer.

The development offered here is focussed on a product, that consits of two
external units, which can be integrated into a single housing and one or more PC
cards. This product therefore can be marketed as an upgrade to existing PC
computer installations such as the existing CompuScetch product of the customer.
However, the end customer is free in separating the installations into two (the
basic PC such as CompuScetch and the Finger/Slap Scanning application) isolated
applications.
Furthermore the product offered here can be marketed in a version featuring the
finger print scanner only (without the slap unit). This opens up new market
areas where high accuracy scanning is beneficial when a user is en-rolled into a
system. These applications can be found in social security, immigration, access
control,DEA, Interpol, etc. Another feature of the product offered here is a
module formed as a standard PC card. This card provides high processing power to
accelerate the scanning process.This provides DDS1 with additional options to
offer their potional customers a lower price entry model without the accelerater
card, then at a latter date the accelerator module could be offered as an
up-grade, In a high use area the advance model would be offered which will have
the accelator module pre installed Or if desired the slap unit could be offered
alone. DDSI will have available 1. An lower cost finger print scanner, 2. An
finger print scanner including an accelator module, 3. An lower cost finger
print scanner with an four finger slap unit intergrated in single housing, 4. An
high speed finger print scanner with an four finger slap unit intergrated in a
single housing

In general the contractor offers development and integration of electrical,
electronic, mechanic and optical devices for the end product and support for FBI
verification, compliance of scanners with the IAFIS Image Quality Specifications
activity as far as they are applicable, and related product and project
documentation

At the completion of the project (see chapter "Project Phases") the customer
will have available a finger and slap scanner which meets the standards of the
INTEGRATED AUTOMATED FINGERPRINT IDENTIFICATION SYSTEM (IAFIS) as described in
CJSI-TD-0100 dated March 1995 in those sections that apply for the technology
offered here. It is anticipated that the product can be mass produced for
subsequent delivery to prospective correctional and police departments.







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5 Features of the Product
-------------------------

This section specifies the overall features and capabilities of the product,
which can be produced as a result of the research, development, engineering and
integration offered.




5.1 General Description


One of the main design and development goals is the cost efficiency and
modularity of the system. The product to be developed consists of four physical
units (components):

o Finger Print Capture Unit (IR based touch-less scanning)
o Slap Capture Unit (IR based touch-less scanning)
o Standard PC interface and control card
o Standard PC acceleration card

The PC interface card is a high speed data management and control system. It
provides a high speed data bus according to differential fast-wide SCSI
standard. Power supply for the attached units is also provide by this bus. The
recommended maximum lengths of the bus is app. 15 meters (45 feet). Up to 15
units can be hooked to this bus and controlled from the interface card. Two of
those units are the finger print and slap scanner units. However there could be
more units hooked to a single bus if required or an optional digital camera
system for mug shots could be developed following this communication bus
standard.

The two scanning units are preferably mounted in two separated encasements. This
allows marketing of a finger print scanner version without the slap scanner.
Furthermore easy maintenance is achieved because the two units can be replaced
separately and finally the geometric arrangement of the two functional units can
be changed without the need for redesign of the encasement. However a single
encasement can be produced without changes of the components to be developed.
The PC interface card and the optional acceleration card are mounted into a
standard PC The data base functionality and the user interface requires a
standard PC office environment to be used efficiently, the mass storage and data
base maintenance features are not integrated into the finger print / slap
scanner units.









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5.2 Logical Block Diagram of the System


The product consists of several sub-units





































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                                [GRAPHIC OMITTED]













o Finger IR Emitter / Optics. A special optic unit provides 3-D pictures
  compatible to rolled fingers on a flat surface. The design and material of
  this unit is optimized for IR bands, Furthermore the optical unit includes a
  special IR emitter unit which will be synchronized with the IR detector unit.

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o     Finger Print IR Detector. The scanner unit for rolled finger prints
      consists of an IR detector unit provides in conjunction with the optics an
      equivalent of 600-1024 dpi image resolution.

o     Finger Print IR Control Unit. This unit will Synchronize the IR emitter /
      detector units and also provides data communication as an interface to the
      high-speed communication bus. Furthermore this unit will reduce IR
      background noise.

o     Slap IR Emitter / Optics. Similar to the finger print IR emitter unit,
      this unit provides a system of IR sources. The main difference between the
      finger and the slap optics is the 2D shape of this unit. It will result in
      flat scans of a four digit slap while the finger unit provides 3D scans
      for simulated finger rolling.

o     Slap IR Detector Unit. This high speed detector unit will be synchronized
      with the related IR emitter unit and samples data which will result in an
      equivalent of 600 - 1024 dpi resolution images.

o     Slap IR Control Unit. Similar to the finger print IR control unit, it will
      synchronize the emitter / detector system and provides data communication
      as an interface to the high-speed communication bus as well as IR
      background noise reduction.

o     Interface and Control Unit (Kernel). This unit is built as a standard PC
      card (ISA-Standard). It controls up to 15 connected units. One of the main
      tasks of this unit is the synchronization of the attached functional
      sub-units and high-speed storage of large amounts of raw image data. It
      furthermore provides unit self test routines and an interface for the
      application program (or acceleration card) that carries out further image
      processing.

o     Host PC. The CPU (preferably Pentium) of the host PC is used as the work
      horse for the user interface and database program on the one hand and the
      intensive image processing o the other hand. This architecture allows easy
      interfacing to other stations or databases in a network and all networking
      standards such as TCP/IP, Microsoft or Novell if required. Transmission of
      data to external systems can be done using the installed soft- or hardware
      in an existing environment.

o     Acceleration Card Although a Pentium processor provides sufficient
      computing power for the image processing, an acceleration card could
      substantially speed up the process of creating finger print images from
      the raw image data. One of the additional features available with the
      acceleration card is an on-the-fly evaluation of the finger or slap
      position for automatic shots and automatic image quality control. In
      general the acceleration is an optional component of the system. Upon
      start-up the software detects the presence of an acceleration card and
      offloads the image processing routines to that unit. If no acceleration
      card can be detected, the PC will carry out all imageprocessing tasks.
      This architecture allows marketing of entry level models at a lower speed
      than a faster professional version that includes the acceleration card.
      The contractor will investigate, if standard processing cards are
      available on the market that could be used or modified here. This could
      substantially reduce the end customer price for the optional acceleration
      card.





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5.3 System Environment


The product is designed as a system of add-on components for standard PC
computers. The recommended or required parameters of this host PC is given in
chapter "PC Requirements". In general, this concept gives a maximum flexibility
for preferred PC suppliers. The user interface and all scan functions are
controlled from an MS-Windows (NT 4.0) user interface. Without any system
imposed limitations, the finger/slap scanner system can be integrated into most
Microsoft Windows NT based existing or planned computing environment. Existing
central user administration, backup services and network printing facilities can
be used in a network. Besides, the printing capabilities of the Windows system
are used for printouts. This provides a maximum flexibility. Without any changes
in the software new printer models can be used. Any new available high quality
or low cost printer that comes with a Windows NT printer driver can be
integrated for print outs.





                                [GRAPHIC OMITTED]












5.4 User Interface


o Data Entry: The user interface of the capture unit provides data entry for
  personal information such as name, date of birth and so on. The layout of
  screen is derived from paper based ten-print cards. The system allows for 16
  different layouts that can be selected upon system startup. The alphanumerical
  data are stored along with references to the image information in a Microsoft
  Access database. Hence


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      the structure of the database will be explained in detail, interfacing
      from external applications such as CompuScan is possible.
o     Remote DataBase Access: Additional access to a remote database provides
      look-up capabilities into previous stored external data. The database to
      be interfaced is the existing mug-shot database of the customer. This
      feature prevents the need for multiple data entry.
o     Capture Control: The capture process can initiated, repeated and
      controlled here. In general all captured fingerprints as well as the
      4-digit slap / thumb are displayed on the screen for quality control.
      Before capturing, a control window shows the three-dimensional position of
      the finger to be captured in order to increase the quality of the images.



5.5 Physical Parameters


Size / Shape: The unit to be developed consists of two encasements (which
optionally can be integrated into a single encasement). These encasements hold
the two scanning devices. Shape and size will allow integration into any
standard table.





                                [GRAPHIC OMITTED]
















Protection: In a very simple way the units can be recessed mounted into a table.





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                                [GRAPHIC OMITTED]


















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5.6 Estimated Production Costs


The production costs including material of a unit as described above is
estimated based on the present information and projections. In production
quantities exceeding 100 units per order release, a per system (fingerprint and
slap capture units and the central PC interface card) price of $US 15,000. - can
be reached, if production would be carried out using the manufacturer
connections, tools and equipment available at the contractor's site. However
there is no warranty given here, that production costs will not exceed this
margin. The contractor will inform the customer during the project if any
movement in production cost can be foreseen.
















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6 Development Process
---------------------


The development will be carried out in several, partially nested stages. Each of
these phases has a defined development target, a deliverable, an estimated
starting date and duration. Each phase start will be announced by the contractor
and must be approved by the customer. The customer has the right to postpone a
phase start or even stop the project by not ordering new phases. The customer
cannot stop phases that are approved for starting however.

Phase 1: (completed) Finger Print Unit
The contractor has ready and is offering to DDSI a prototype FP live scanner
that has been developed and is ready for delivery uopon signing of this
agreement. The main features are live and touch-less scanning of fingers. The
range covered by the scanner is determined by 120 degrees minimum, 150 degrees
typical and 180 degrees maximum. The resolution of the images is about 1024 dpi.

Phase 2: (in progress) PC Interface / Control Card
A PC card is to be developed here that controls the high-speed communication bus
and the attached units. The card provides an interface via ISA PC standards to
any application programs that calculate images from the raw data. One of the
major tasks of this card is the management of the high-speed memory that stores
up to 60 Mbytes raw data per second.

Phase 3: (in progress) User interface, Data Base Functionality
The user interface is designed as a ten-print card. A selection of up to 16
different ten-print card designs can be stored in the system. The user interface
layout can be switched between these layouts when starting the software.
Furthermore the print function allows printing of the typed information such as
name, address and so on as well as the image information (10 fingers, 2 slaps)
on the different card types. As a switchable option the print process can
reproduce the card layout if printing on plain paper.

Phase 4: Slap scanner
A touchless four digit slap / thumb scanner is developed during this phase. The
active area of the equipment is shaped and sized like the area on ten-print
cards reserved for slap prints. This unit can produce a flat image of a thumb or
the other four fingers alternatively. The unit can be hooked to the highspeed
communication bus along with the finger print scanner.

Phase 5: ANSI Transport / Wavelet Compression
The required parts of the ANSI specifications for finger print data compression,
encapsulation, transport and representation will be implemented in this phase.
In order to reduce the time needed for development and testing, the contractor
will use standard software components if available. The software deliverable can
be executed on ordinary PC environment and will be installed on a PC at
customer's site for further testing. This test environment could be used for
transport interfacing test at FBI if desirable.

Phase 6: Tests / Support
Acceptance tests at contractor's laboratory, at customer's site, at the FBI and
optional external laboratories are carried out. These test and all related QA
documents are delivered at the end of this phase. External laboratory test
(mechanical stressing and environmental temper tests) are initiated on
customer's request.

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Cost for these external laboratory tests are not included. These could be
carried out in the US under control of the customer also. This phase is
initiated after completion of phase 1 (fingerprint scanner device) because
testing and support begins with delivery of fingerprint scanner prototypes

Phase 7: Mechanical End Design
Mechanical end design assembly and production documentation are produced here.
These documents as well as mechanical prototypes will be delivered at the end of
this phase. After this phase (and passed FBI tests) the product is ready for
(mass) production. All user documentation as well as technical documentation are
produced or finalized during this phase as well and delivered (electronic media
for reproduction, American language)

Phase 8: Accelerator Card
The computing power needed to analyze and process the huge amount of digital
information coming from the finger print or slap unit can be provided by the
host PC computer. Because of the limitation of computing power the production of
usable image consumes considerable time. In order to speed up the process an
acceleration card is developed during this process. As an additional feature,
this acceleration card can detect optimal positions of fingers or slaps on the
fly. This allows automatic snapshots and integrated quality control of the
prints. This phase includes delivery of a prototye and the related software.




Optional Prototype Production
The phase 1 (prototype finger scanner) includes a working prototype of finger
scanner as a deliverable for that phase. However, the customer can order
additional prototypes at a cost of $US 20,000 each. In a similar way the phase 4
(slap scanner) also includes a working prototype as an included deliverable.
Here again the customer can order additional prototypes at a cost of $US
12,500-each. Please note that for each additional slap scanner prototype a
finger print prototype is needed. However due to the modular architecture, a
slap scanner prototype can be ordered at a later stage for a previous ordered
finger print scanner. The total cost for a prototype product (finger and slap
scanner) adds to $US 25.000. Similar, additional acceleration card prototype can
be ordered. Note 1: The prototype won't have final shape, size nor encasement
but all speed and quality parameters will be met. Note: 2 Cost of addition
prototypes are estimated in this paragraph and are not included in any phase
costs.

Optional Production
On request the contractor will offer end production and shipping of units










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7 Customer's Obligations
------------------------

o     Contact Person. The customer has to assign a responsible manager, who can
      initiate rapid decision taking processes and supply information needed by
      the contractor. This person will be the contact person for the contractor
      during the development process.
o     Information. In general the customer has to support the development
      process by providing detailed information on contractor's request. This
      information must be supplied on a timely bases so as time schedules can be
      maintained.
o     Approvals. The equipment under development must be approved by several
      organizations and probably must fulfill several standards. The customer is
      responsible for carrying out these approvals and hence the customer must
      first determine which approvals and standards to meet (FCC, FBI, and
      ANSI). Furthermore the customer has to initiate and follow up those
      certification processes. The contractor however supports the approval
      processes by documentation and adjustments to the product in order to meet
      the requirements. Costs related to these certifications are not covered by
      this offer.
o     Patents. The customer has expressed a disire that both the technologies as
      well as the physical device be patented to offer DDSI market advandage,
      the contractor will work in corporation with the customer to achieve these
      patent goals. It is understood that all patents will be in the name of
      ISC/U.S., Inc. and that DDSI will have the right to sell and market this
      product without the payment of any license fee or royalties. The cost of
      the patent attorney will be covered by the customer DDSI. Any cost incured
      by ISC/U.S., Inc.related to the patent filing will be at ISC/U.S., Inc.
      expense.











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8 PC Requirements
-----------------


Intensive image processing and handling of large image files require minimum
capabilities of the host PC:
o   Operating System: Windows NT 4.0
o   Hard Disk:  Only minimum  hard disk space is required for system  operation.
    However the local storage of ten-print cards (fingerprint/slap images)
    require considerable hard disk space (20 Mbytes per tenprint card,
    uncompressed). The amount of hard disk space available determines the number
    of tenprint cards that can be stored locally. However, a networked drive
    that is available in the environment could be used for image storage as
    well. Here the time to transmit the large amount of data has to taken into
    account.
o   RAM: Minimum 64 MB, 128 MB recommended.
o   CPU: The finger print prototype delivered at the end of phase 1 was
    tested on several PC platforms as host. The intensive image processing
    routines consume substantial processing power. Good results (app. 20 sec
    per fingerprint) were achieved with a double Pentium-11 architecture
    running at 266 MHz.
o   Graphic System: It is recommended that the graphic system of the PC (graphic
    card, monitor) has a capability of 1280 x 1024 pixels. This high resolution
    is useful for fingerprint inspection and quality control.

o   Slots: The PC must provide at least one standard ISA slot for the PC
    interface / control card of the system. An additional PC slot must be
    available depending on the architecture of the acceleration card (PCI or
    ISA).

o   Printinq System: Any standard printer that comes with an MS Wndows-NT
    printer driver or that is supported by Windows NT can be used for ten-print
    card printouts. However, if high quality printing is desired, 1200 dpi
    resolution is required. If original ten-print cards should be used to print
    on, the paperfeed system of the printer must be able to process size and
    thickness of the desired cards.
o   Additional Requirements. CD drive, floppy. mouse







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9 Time Schedule
---------------
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
 N    Phase                                Phase starts at      Phase ends at      Phase deliverables
-------------------------------------------------------------------------------------------------------
<S>   <C>                                  <C>                  <C>                 <C>
 1    Electronic, Optical, Mechanical      (completed)          (contract          Fingerprint Scanner
      Prototype FP Live Scanner                                 signing)           Prototype
-------------------------------------------------------------------------------------------------------
 2    PC Interface / Control Card          (in progress)        May 31, 1998       PC Interface
                                                                                   Control Card
-------------------------------------------------------------------------------------------------------
 3    User Interface, Database             (in progress)        Jun 30, 1998       Software
      Functionality
-------------------------------------------------------------------------------------------------------
 4    Electronic, Optical, Mechanical      May 31, 1998         Jul 31, 1998       Slap Scanner
      Prototype Slap Scanner                                                       Prototype
-------------------------------------------------------------------------------------------------------
 5    ANSI Transports / Wavelet            Jun 30, 1998         Jul 31, 1998       Software
      Compression
-------------------------------------------------------------------------------------------------------
 6    Test In-House /External LAB          May 31, 1998         Aug 31, 1998       Service, Test- and
      DDSI / FBI                                                                   QXReports
-------------------------------------------------------------------------------------------------------
 7    Mechanical End Design,               Jul 31, 1998         Aug 31, 1998       Production and
      Documentation                                                                Assembly Docs,
                                                                                   Manuals
-------------------------------------------------------------------------------------------------------
 8    Acceleration Card                    Jul 31, 1998         Sep 30, 1998       Acceleration Card
                                                                                      Prototype
-------------------------------------------------------------------------------------------------------
</TABLE>


The fingerprint prototype could be FBI tested at the moment. The entire
prototype unit (including the slap scanner device) can be (FBI-) tested starting
July 31, 1998. The test phase (nb. 6) starts 6efore availability of the entire
product, because the critical tests are focussed on the finger print unit which
available already. The acceleration card is optional add-on for the product but
not needed.





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10 Price, Payment Schedule



The total project as stated here is offered for a fixed price of $US 635,000.-
plus the price for additional prototypes as stated before. Not included are
travel expenses if travels to customer's site and/or approving institutes are
necessary. Furthermore any kind of VAT, custom duties and US sales taxes is not
inluded.

Payments are due with end of each phase according to following payment schedule
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
 N  Phase                                                                Phase ends at           Payment with
                                                                                                  deliverable
-------------------------------------------------------------------------------------------------------------
<S>                                                                      <C>                     <C>
 1  Electronic, Optical, Mechanical Prototype FP Live Scanner            Apr 30, 1998                $135,000
-------------------------------------------------------------------------------------------------------------
 2  PC Interface / Control Card                                          May 31, 1998                $115,000
-------------------------------------------------------------------------------------------------------------
 3  User Interface, Data Base Functionality                              Jun 30, 1998                 $55,000
-------------------------------------------------------------------------------------------------------------
 4  Electronic, Optical, Mechanical Prototype Slap Live Scanner          Jul 31, 1998                $130,000
-------------------------------------------------------------------------------------------------------------
 5  ANSI Transports, Wavelet Compression                                 Jul 31, 1998                 $30,000
-------------------------------------------------------------------------------------------------------------
 6  Test In-House /External LAB / DDS1 / FBI                             Aug 31, 1998                 $30,000
-------------------------------------------------------------------------------------------------------------
 7  Documentation, Mechanical End Design                                 Aug 31, 1998                 $45,000
-------------------------------------------------------------------------------------------------------------
 8  Acceleration Card                                                    Sep 30, 1998                 $95,000
-------------------------------------------------------------------------------------------------------------
    Total                                                                                            $635,000
-------------------------------------------------------------------------------------------------------------
</TABLE>
Cost per additional fingerprint scanner prototype:                       $20,000
Cost per additional slap scanner prototype                               $12,500
Cost of PC                                                               $ 7,500
Cost per acceleration card prototype (to be determined)









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<PAGE>




 Classification
   RESTRICTED                      DDSI Offer No. 980519                 ISC
--------------------------------------------------------------------------------


11 Further Conditions
---------------------


o This offer is valid until May 31, 1998.
o All dates stated in the project schedule are under assumption of contract
  award before May 31, 1998
o This offer is valid under the assumption that neither European nor US
  import/export restrictions apply.
o All prices stated in the offer do not include VAT, customs duties and US sales
  taxes, and are given in US dollars.
o The contractor retains all rights to the product and technologies developed
  under this agreement
o The customer has the right to sell and market this product without the payment
  of any license fees or royalties.








 .........................................               Dated 6/9/98
(ISC/U.S., Inc. By R. Ludwig/President)




 .........................................               Dated 6/9/98
(DDSI by Garrett Cohn / President)









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