'METH GUN' IS LATEST WEAPON AGAINST DRUGS

Legal and Logistic Questions Remain About the Device.

The Missouri Highway Patrol has been quietly testing a new scanning
device that can detect the presence of meth with only the click of a button.

To law enforcement, it could be the future of crime-fighting technology.

To meth dealers and manufacturers, this might signal the turning
point in the war against one of the country's greatest drug scourges.

But before police can begin widespread use of the scanner, it has to
overcome several hurdles.

The company needs to confirm its reliability while securing enough
investment to bring the device to market. The scanner models will
cost between $2,000-$5,500, but the price could drop after several years.

Civil libertarians and defense attorneys are also raising concerns
about the device's use in the prosecution of drug offenses, although
no prosecutors yet have submitted evidence derived from the scanner.

Regardless of the obstacles, the meth scanner will likely debut in
the coming months.

Testing the Scanner

The scanner was created by a small company called CDEX Inc. in
Tucson, Ariz. It is a small hand-held device that emits ultraviolet
light to scan clothes, skin or other surfaces to detect traces of
meth as small as one microgram.

CDEX quickly realized that the main market for the scanner would be
law enforcement, although CDEX foresees uses in schools, hotels and
the real estate and security industries. Eventually the plan is to
expand sales overseas and explore expanding the technology to detect
other illicit drugs or even explosives.

But to get the ball rolling, CDEX needed some real-world testing. So
the company hired lobbyist Hank Monsees of the Kansas City firm
Flotron and McIntosh.

CDEX CEO Malcolm Philips said he chose to do testing in Missouri over
other states because the state had an inordinate number of
methamphetamine laboratories.

Monsees was instrumental in securing a $75,000 contract with the
Highway Patrol to conduct testing on the initial version of the scanner.

The scanner was field-tested in Joplin, Springfield and Willow
Springs. The patrol sent its initial recommendations, and CDEX then
came out with a second version with improved features.

"Right now, we are still in the crawling-to-walking stage," said
Captain Tim Basinger of the patrol. "Forming an opinion now would be
like basing it on Windows 1.0. We haven't seen the finished product."

This second version ended up getting fewer "hits" because of the
changing composition of meth in the state. Apparently, imported meth
was gaining dominance over the home-cooked variety.

The final version just unveiled addresses other testing issues with
the addition of a rangefinder to judge sensitivity, a laser pointer
to show a target and a new ergonomic design that appears less threatening.

Tests have been done on the device, but none of the results have been
independently verified.

"Anytime you have testing of a device by someone who stands to make a
lot of money off of it, I am always suspect of that," said Stacie
Bilyeu, a Springfield defense attorney. "If the testing was done by
unbiased, nonpartisan groups, the results would be more reliable."

According to CDEX's contract with the state, the company will provide
the first 15 units to the patrol at cost with a minimum order of 150
units. From then on, the patrol will receive a 20 percent discount on
all purchases. In addition, CDEX will commit to setting up production
of the devices in Missouri if the initial order for the device
exceeds 500 units from Missouri and contiguous states.

Setting Legal Precedent

Basinger oversees the scanner's testing for the patrol, but he
declined to say anything about the scanner's capabilities -- or how
the patrol will use them -- other than the scanner had improved since
its inception.

The scanner is also being tested by the Sheriff's Office in Greenlee
County, Ariz., where Philips reports it has already been used in two busts.

Members of Stop the Drug War, an international organization working
for an end to drug prohibition worldwide, have raised concerns about
the admissibility of remote detection in a court of law.

The organization's Web site provides relevant case law such as the
2001 U.S. Supreme Court decision in Kyllo vs. The United States.

In that case, the court ruled that police have to obtain a search
warrant before using a thermal imaging device to determine whether a
person might be growing marijuana in his or her home. The case was
brought before the court on appeal because U. S. Department of the
Interior agents scanned the home of Oregon resident Danny Kyllo to
detect an infrared signature without a warrant. Later a federal judge
approved a search warrant on the house after considering the thermal
image as evidence.

Another concern would be the prevalence of trace amounts of illicit
drugs and their implications of guilt.

"This scanner only detects chemicals, not criminal conduct," said Bilyeu.

A study from the Argonne National Laboratory, one of the U.S.
Department of Energy's largest research centers, also found that 70
percent to 80 percent of all currency in Chicago, Miami and Houston
tested positive for cocaine. In fact, contamination increased as the
wear of the bill increased.

Because the meth scanner's current and future use in law enforcement
falls into a gray area, Eric E. Sterling, president of the
Washington, D.C.-based Criminal Justice Policy Foundation, laid out
some scenarios of the device's use and how a court system might
handle them -- assuming that the science behind the scanner is valid.

CJPF's mission is to educate the public about the impact of drug
policy and the problems of policing on the criminal justice system.

Scenario 1

A police officer detects meth on the door of a home that he suspects
contains a meth laboratory.

The central legal question is, "With a scan, but no other fact, is
that enough for a judge to issue a warrant?"

"The scan is not sufficient ... because all it shows is that someone
who handled meth touched the door," said Sterling. "It's possible it
could have come from a deliveryman or any number of sources."

Basinger agreed with that assessment.

However, if a prosecutor chose to introduce evidence from the meth
scanner in such a scenario, Sterling suspects a defense lawyer would
challenge the warrant and the final decision might fall to the U.S.
Supreme Court.

In such a case, the burden would fall on the government body that
introduced the evidence to independently verify the function and
results of the scanner.

Scenario 2

Police use the meth scanner in routine motor vehicle searches on the
hands and faces of young drivers or on other surfaces of the car.

The central legal question is, "Does this search require a warrant or
does this meet the standard of the evidence being in plain view?"

In this scenario, a precedent involving remote detection had been set
in Kyllo vs. The United States, although the issue of the search of a
car and a home may result in different rulings.

Tony Horvath, a lawyer for the patrol, cited the 2005 case of
Illinois vs. Caballes as an example of the difference.

The case revolved around a traffic stop in which Roy Caballes was
pulled over for speeding. While one officer was issuing a ticket,
another officer used a drug-sniffing dog to detect marijuana in the
trunk of the car.

The U.S. Supreme Court ruling held that a dog's sniff is not
intrusive enough to violate the Constitution's ban on unreasonable
searches and that a motorist doesn't have an expectation of privacy
in a car if illicit substances can be detected by a dog. The range of
a dog's ability to sniff out drugs versus the 8-inch range of the
scanner could also play into legality of the searches.

"Anytime you have law enforcement using technology like this, several
questions have to be asked. Is the technology reliable? Is the
officer adequately trained in how to use it and interpret the
results? Is the simple use of it a violation of citizens' Fourth
Amendment rights?" said Bilyeu.

Scenario 3

Police scan the clothing of a suspect being held on unrelated charges
and find three micrograms of meth.

The central legal question is, "Does this constitute a usable amount
of the illicit drug?"

Sterling believes that state courts have varied decisions on this
subject, but that it is usually dependent on whether police can
isolate and obtain any amount of the drug.

"Where is the data that shows a microgram of evidence proves that
anyone has done something wrong?" Asked Bilyeu. "Would you have to
ask yourself constantly, 'Did I shake someone's hand today?'"

"Anytime you get new technology like this, there is going to be new
case law," said Basinger. "Right now we are figuring in the
reliability factors before getting to the legal ones."

CDEX still feels the device is extremely valuable. That's because no
evidence is destroyed in an ultraviolet scan, unlike with the
chemical tests currently used to determine whether a substance is meth.

"As we complete the final production model and deploy it in the
field, we will begin the process of judicial validation of the
technology for use in court. This will likely involve bringing CDEX
and outside experts into the judicial process along with reports and
independent reviews of the technology and scanner," said Philips.

But Philips said he won't wait for a successful prosecution before
his company begins selling the scanners. CDEX expects to introduce
the scanner to the market in December and have the product available
by February.

[sidebar]

CAN CDEX BRING SCANNER TO MARKET?

Tucson, Ariz.-based CDEX Inc. incorporated in 2001 and soon purchased
technology assets from a defunct Austin, Texas-based technology
incubation company called Loch Harris.

A former Loch Harris and current CDEX investor -- Michael White of
Sarasota, Fla. -- first encountered the technology behind the meth
scanner at a conference in San Diego in 2000. Wade Poteet, now CDEX's
principal scientist, was demonstrating the future optics of the
CDEX's remote detection capability. White soon became not just an
investor, but a believer in the technology.

White believes it is one of the most important technologies being
developed to deal with the country's security, so much so that he
e-mails information about the scanner to reporters who happen to as
little as mention meth in a story.

CDEX CEO Malcolm Philips claims CDEX is now light years ahead of even
that technology. Yet the company has not received substantial capital
investment. In the past year, it has replaced some top executives and
only recently hired a CFO.

It diluted its stock at the beginning of the year in order to create
more shares available to drum up investment.

The stock was trading on the Over The Counter Bulletin Board on
Thursday at around 60 cents per share.

In recent SEC filings, CDEX lists the following risks to investing in
the company:

. A history of losses and an accumulated deficit (a $24 million
deficit as of April 2007).

. A lack of additional financing could result in a total loss of the business.

. No assurance of successful manufacturing due to outsourcing
(Outsourced to Mastek-InnerStep in Tucson).

. Lack of market acceptance may limit ability to sell products.

. Substantial competition may limit ability to sell products (General
Electric, Ahura Corporation).

"Being a small company, you live by the resources that you have," said Philips.

CDEX does hope to bring in $33.75 million in sales from similar
remote-detection technology targeted at hospitals.

The company also anticipates that with only a 5 percent market
penetration of the nation's 35,000 law enforcement agencies and
school districts, the company could generate $26.25 million in sales
of its meth scanner, based on the units selling for $5,000 each.

Philips estimates CDEX will have little competition at that price.

Said White, "I have a positive outlook on the situation, even though
I look at my portfolio and I'm underwater all the time."