Progress Report on Chipless RFID Applications SARcode™ Development By InkSure Technologies 1 1

InkSure Technologies Provider of covert, machine readable security solutions (“CMRT”) to definitively and quickly identify genuine branded products and documents for protection against counterfeiting Our expertise in spectral detection of covert marks enables InkSure to provide the most advanced readers in the authentication industry Over 5 years of commercial sales Billions of consumer products protected with InkSure technology Product and Image Security (“PISEC”) award winner: 2000, 2003, 2006 Member Document Security Alliance (“DSA”), North America Security Products Organization (“NASPO”), Product and Image Security Foundation U.S. public corporation (INKS.OB) Corporate Headquarters in Fort Lauderdale, FL; Global R&D Center at the Science Park in Rehovot, Israel

InkSure RF Three patents granted and three additional applications pending. Highly skilled and dedicated R&D team with expertise in: Leading mathematical algorithm research Experts in radar methods, RF and RFID technologies Advanced Chemistry Research Advanced optical/spectral research Recipient of 2007 Frost & Sullivan Product Innovation Award –Chipless Tag Market, Asia Pacific Proof of concept successfully demonstrated publicly at IDTechEx’s RFID Smart Labels USA 2006 conference in Boston, March 2006 Beginning initial field testing, with commercial launch expected by end of 2008

What is Chipless RFID? A “Read-Only” system (no chip, no memory) Bits of data based on a new printed symbology Potential to produce the lowest cost RFID tag Capabilities for printing directly and covertly on products or packaging Frequencies above UHF The RFID Connection Ability to read without line-of-sight at any angle. i.e. through packaging Ability to read at extended distances Ability to read multiple tags with anti-collision 4 4

Tag Price Comparisons Source: IDTechEX Chipless Chip Range 1m(3.3ft) 32¢ Tag price* 10¢ 10-20¢ Range 0.1m (3.9in) 4¢ Target to sell trillions a year 2¢ Sub-Cent Anti-theft 1 bit ID 96 bits More Data k bit *When bought in millions

SARcode™ Development Vision Develop a low-cost Chipless RFID tag Printed directly and covertly on products or packaging RFID tag price: under one cent Major advantages over barcodes or chip based RFID: Easily Detectable: Does not require line-of-sight Lower Cost: Requires less ink than printed RFID antennas and no silicon chip; does not take costly package space and improves package aesthetics Efficient: Enables detection of multiple codes simultaneously and remotely Higher coding ability: Codes a significantly higher amount of information than standard bar-codes, enabling EPC encoding Anti-counterfeiting solution: Easily integrated 96 bit coding Remotely detectable 12 digit/~40 bit Require contact reading 6 6

How to get there… Take Advantage of Diffraction Create a New Symbology: “SARcode” Utilize Radar-Based Imaging Principles Develop a New Portfolio of SARcode Readers Integrate Existing Printing Processes with SARcode Software

Understanding the Diffraction Phenomena The existence of diffraction has limited the extent to which symbols or images (such as barcodes) can be compressed. Diffraction is the bending, spreading and interference of waves when they pass by an obstruction or through a gap. When a bar code symbol is placed too near another symbol, its waves interfere with those of its neighbour (diffraction) and vice versa, making it impossible to accurately read either bar. This limitation has restricted the density with which symbol-based codes can be printed, and therefore the minimum size required for machine-readable codes. By extension, this has also limited the number of digits which can be used, for example, in barcodes.

Taking Advantage of Diffraction Current technologies do not take into account that the diffraction phenomena are predictable Diffraction is not a random, chaotic event - it is measurable and predictable Diffraction is 3 dimensional which allows a system to understand an object’s depth and orientation in relation to the reader Estimating an object’s depth and orientation allows the system to read multiple discrete tags All Without Line of Sight

The SARcode Concept - Controlling the Diffraction Effects The SARcode creates up to 96 bits in a small area and consumes only 10% of the conductive ink required for a printed RFID antenna!!!! Sequence of 37 symbols, each positioned (or not) in 1 of 9 potential vertical positions Special symbols for tag positioning 96 bits matrix = EPC code capacity Very high error correction capacity Tag dimensions = 119mm x 50mm 119mm x 50mm (4.68 x 1.9 inches)

Radar-Based Imaging The reader is based on a multi antenna array, is operating in the MM wave spectra and is based on InSAR and SAR algorithms. It detects multi-symbol patterns and their inter-symbol diffraction effects. The tag is carrying up to 96 bits of information and can be read in an extended range. Synthetic Aperture Radar (SAR) is a form of RADAR technology in which sophisticated post-processing techniques of SAR data are used to produce a very narrow effective beam. The result is a map of radar reflectivity, including both amplitude and phase data. The SAR principle is expected to be used in all reader applications. The series of observations can produce the same resolution as of that of a very large antenna; InkSure’s process creates a synthetic aperture that is much larger than the length of the reader’s discrete antennas. Interferometer Synthetic Aperture Radar (InSAR) InSAR extracts data from the phase information. Utilizing major improvements and developments of InSAR algorithms, we can detect typical static/ hand held applications. InSAR allows the tag size to be substantially smaller.

SAR Fundamentals Forming a very narrow beam using a large synthetic aperture Narrow beam = high resolution Output = image 12

SAR image 3D view 13

SARcode Processing Example What You See What the Reader Sees What the Mathematic Model Sees Thank you Prof. Boag. SAR interpretation of the diffraction patterns produce a unique image for each label, like the sample that is shown on the left bottom of the slide. As you can observe, the presence of each symbol (reminder: symbol is a printed character with conductive ink on a surface) in the label is reflected as high intensity (red color) area in the image. We can process the image that is created in order to extract the symbol structure and sequence. There are three basic operations that have to be performed; Locate the label in the image and isolate it from the surroundings Analyze the image and identify individual symbols Interpret the symbols according to the symbology used and reconstruct the label The image on the right hand side describes the first step of the processing. The bounding box of the label area is calculated, and further interpretation of the label contents is focused in that area only. In case of multiple labels in one image, this is the step that separates the labels and creates a separate detection task for each one. Notice Diffraction “Blur” 14 14

Multiple Tags Reading Process Second step: High resolution SAR for single tag data detection First step: Low resolution SAR reading multi tag Third step: Image Processing resulting in evaluation of tag bit data 010011001011…0101 011111001010…1101

InkSure Readers SARCam I - Conveyor Version Up to 1 foot reading distance; 3 feet in 2009 Weighs less than 1 pound Up to 150 milliseconds reading time Dual tag reading option over single item /reading process Reading compatibility with any released SARcode format “Tailor Made” designs for specialty applications Connectivity feature to any infrastructure, backbone ~30cm(11.8 inches) ~10cm(3.9 inches) 16 16

InkSure Readers – SARCam II For Stationary Applications Read range of 5” to 12”; up to 2 feet in 2009 Up to 150ms reading time Multiple tag reading options Reading compatibility with any released SARcode format “Tailor Made” designs for specialty applications Connectivity features. 17

InkSure Readers – SARCam III For Portable/Handheld Applications Up to 1 foot reading distance; 2 feet in 2009 Up to 850ms reading time Multiple tag reading options Reading compatibility with any released SARcode format “Tailor Made” designs for specialty applications Connectivity features ~25 cm( 9.8inches) ~35 cm (13.8inches) Weighs Less Than 2 Pounds 18

InkSure Readers – SARCam III Multiple tag reading requirements Range separation > 1” or Cross-range separation > ½” Up to 3 tags (2008) Cross-range separation 30 degree in all axis Range separation 19

InkSure Readers – 2008 SARCam I Conveyor Availability: Beta/Pilot: 06/2008 Commercial: 11/2008 SARCam II Stationary and SARCam III Handheld Availability: Beta/Pilot: Q3/2008 Commercial: Q1/2009 20

SARcode Printing Capabilites Creating a 96 bit tag pattern SAR interpretation of the diffraction patterns produce a unique image for each label, like the sample that is shown on the left bottom of the slide. As you can observe, the presence of each symbol (reminder: symbol is a printed character with conductive ink on a surface) in the label is reflected as high intensity (red color) area in the image. We can process the image that is created in order to extract the symbol structure and sequence. There are three basic operations that have to be performed; Locate the label in the image and isolate it from the surroundings Analyze the image and identify individual symbols Interpret the symbols according to the symbology used and reconstruct the label The image on the right hand side describes the first step of the processing. The bounding box of the label area is calculated, and further interpretation of the label contents is focused in that area only. In case of multiple labels in one image, this is the step that separates the labels and creates a separate detection task for each one. 21

SARcode Printing Capabilities Creating a 64 bit tag pattern Thank you Prof. Boag. SAR interpretation of the diffraction patterns produce a unique image for each label, like the sample that is shown on the left bottom of the slide. As you can observe, the presence of each symbol (reminder: symbol is a printed character with conductive ink on a surface) in the label is reflected as high intensity (red color) area in the image. We can process the image that is created in order to extract the symbol structure and sequence. There are three basic operations that have to be performed; Locate the label in the image and isolate it from the surroundings Analyze the image and identify individual symbols Interpret the symbols according to the symbology used and reconstruct the label The image on the right hand side describes the first step of the processing. The bounding box of the label area is calculated, and further interpretation of the label contents is focused in that area only. In case of multiple labels in one image, this is the step that separates the labels and creates a separate detection task for each one. 22

Printing Flexibility Tag size Vs. data capacity 34 bits (5cm/1.97” x 5.08cm/2”) 96 Bits(5cm/1.97”x11.43cm/4.5”) 15 Bits(2cm/.787”x5.08cm/2”) 41 Bits(2cm/.787”x11.43cm/4.5”) 23

Printing Flexibility Different tag layouts for different applications – 64bit example B2R5 B3R5 121mm X 41mm (4.76x 1.6 inches) 88mm X 41mm (3.46 x 1.6 inches) B2R2 B3R2 15 Bits(2cm/.787”x5.08cm/2”) 80mm X 45mm (3.15 x 1.77 inches) 119mm X 45mm (4.68 x 1.77 inches) 24

InkSure SARcode Formats Size/Data Conversion Method: 28-to-74 bit 25

InkSure SARcode Formats Size/Data Conversion Method: 34-to-96 bit 26

InkSure SARcode Print Process Capabilities Conductive Ink Development Nano-scale development underway Sintering tests for InkJet printing underway Thermal Transfer Ribbon in test and available (InkSure and IIMAK joint development) Tag image – Screen Printing Tag image – Ink Jet Printing

How Our Technology Will Be Used Consumer Promotions Estimated Annual Volume Potential: Billions ¹ Brand Protection Needs for Multi-Layer Anti- Counterfeiting Estimated Volume Potential:100s of billions ¹ Printing Industry – Sorting and Verification of Documents Drug/Pharmaceutical Identification Estimated Volume Potential: 100s of billions¹ ¹ ID TechEX and Internal estimates for unit volumes

How Our Technology Will Be Used Asset tracking /internal identification Estimated Volume Potential: Hundreds of Millions¹ Replacement of barcodes for added information and added “package real estate” Estimated Volume Potential: Trillions¹ Anywhere “Low Cost and Easy to Print” is important= $ & ¢ !!

SARcode Summary 2008 2009 and Beyond Pilot tests begin Read Range =1 foot (conveyor/handheld) Read Speed=0.15 second (conveyor), 0.85 second (handheld) Information Capacity = up to 96 bits Print Sizes = 4.6” x 1.6” Non-Line of sight reading = yes Orientation Flexibility = yes Anti–collision = yes Anti-counterfeiting capability = no 2009 and Beyond Commercial Availability Read Range =3 feet (conveyor), 2 feet (handheld) Read Speed = 0.15 sec. (conveyor), 0.85 second (handheld) Information Capacity = up to 113 bits Print Sizes = 4.6” x 1.6” Non-Line of sight reading = yes Orientation flexibility = yes Anti –collision = yes Anti-counterfeiting capability = yes 30 30