Sunday, May 06, 2001 1:39:02 AM
NANOPIERCE TECHNOLOGIES, INC.
Symbol: NPCT OTC:BB
370 17th Street, Suite 3580
Denver, Colorado, USA 80202
303-592-1010 (Phone)
303-592-1054 (Fax)
Web site: http://www.nanopierce.com
Email: Paul@nanopierce.com or kampmakj@classic.msn.com
German Subsidiary:
Nanopierce Card Technologies GmbH
Lise-Meitner Strausse
Hohenbrunn D-85622
Phone 011-49-81 0 2786155
Shares Outstanding: 33,155,585 (as of January 12, 2000)
Affiliates (insiders):
*Intercell Holdings: 12,237,550 (parent company) 36.9%
*Management's 1,526,731 (4.6%)
(Beneficial Ownership)
Non-Affiliates: 17,130,333 (including public float) 51.6%
*Estimated Public Float: 16,349,834 (49.3%)
(Held by non-affilates**)
*Based on common shares only, does not include outstanding options and warrants held by management and others.
**Excludes "restricted shares" held by non-affiliates and certain free trading shares held by non-affiliates who are close to management and considered unlikely to trade their shares. This includes shares held by funds and institutions.
19 Active Market Makers: DLCR, FLTT, FRAN, GAIN. GVRC, HILL, HRZG, MASH, MHMY, MULE, NAIB, NITE, OLIE, PBLC, PGON, SHRP, SHWD, SPIN, WIEN
Investor Relations: Stock Enterprises James Stock, 702-614-0003 jamestock@aol.com
European Division (Munich, Germany)
Contact: Dr. Michael E. Wernle 011-49-810-299 9372 Michael@nanopierce.com
or MICHEAL.E.WERNLE@t-online.de
Directors and Officers:
Paul H. Metzinger - President, Chief Executive Officer, Director
Dr. Herbert J. Neuhaus - Executive Vice President, Technology and Marketing, Director
Dr. Michael E. Wernle - President & CEO, Nanopierce Card Technologies GmbH (subsidiary), Director
Kristi J. Kampmann - Director of Investor Relations
Related Expert:
Charles E. Bauer - Director of Intercell Corp., Ph.D. in Materials Science and Engineering Oregon Graduate Center)
Nanopierce Technologies, Inc. is a reporting company with the Securities and Exchange Commission.
Biographical Information on Officers, Directors and a Significant Employee
Paul H. Metzinger - President and Chief Executive Officer of the Company from February 26, 1998 to May 6, 1998 and has served in that same capacity from December 1, 1998 to present. He has been a director of the Company since February 26,1998. Mr. Metzinger has been the Chief Financial officer of the Company since January 1, 1999. In addition, he serves as the President and Chief Executive Officer and a Director of Intercell Corporation. Prior to becoming a director and officer of the Company, Mr. Metzinger served as Intercell's General Counsel and practiced securities law in Denver, Colorado for over 32 years. Mr. Metzinger received his J.D. degree in 1967 from Creighton University Law School and his L.L.M. from Georgetown University in 1969.
Herbert J. Neuhaus, PH.D. - Dr. Neuhaus has been the Executive Vice President of Marketing and Technology and a Director of the Company since January 1, 1999. Dr. Neuhaus previously served as the Managing Director of Particle Interconnect Corporation from August 18, 1997 to November 1, 1997. From August 1989 to August 1997, he was associated with Electronic Material Venture Group in the new Business Development Department of Amoco Chemical Company, Naperville, Illinois. While associated with Amoco chemical Company he held among other positions: Business Development Manager/Team Leader; Project Manager --High Density Interconnect; Product Manager MCM Products and as a research scientist. His professional efforts and responsibilities at Amoco were directed towards the identification, analysis and development of new market opportunities for Amoco's electronic materials products, the development of new applications for such products, including multichip module products, polyamide coatings and processes for multichip module applications.
Dr. Neuhaus received his Ph.D. degree in Physics from the Massachusetts Institute of Technology, Cambridge, Massachusetts in 1989 and his BS in Physics from Clemson University, Clemson, South Carolina in 1980.
He has served with numerous associations in the capacities of project leader and technical chair including: Interconnection Technology Research Institute (ITRI), International Microelectronics and Packaging Society (IMAPS), Surface Mount Technology Association (SMTA) and The Institute for Interconnecting and Packaging Electronic Circuits (IPC).
Michael E. Wernle, PH.D. - Executive Vice President - Strategic Business Development and Director since October 26, 1999. Dr. Wernle is widely regarded as the foremost European authority on the markets and technologies for Smart Card and RF ID Tags. Before joining Nanopierce Technologies, Inc. Dr. Wernle most recently held the position of Vice President and Chief Operating Officer of Meinen, Ziegel & Co., München, Germany, a leading manufacturer of production equipment for the Smart Card industry. Dr. Wernle has broad experience in this field. Before joining Meinen, Ziegel, Dr. Wernle was Director of Production of Mikron/Philips-Graz, Graz, Austria. Mikron is specialized in the development and production of RF ID Systems and Contactless Smart Cards, where Dr. Wernle was responsible for the development of an advanced production technology for RF ID Tags and Contactless Smart Cards in cooperation with international partners and customers.
Dr. Wernle received his Ph.D. degree in Applied Physics from the Technical University of Vienna, Austria, in 1990 and a Masters Degree in Industrial Electronics and Robotics in 1988.
Dr. Wernle has published numerous scientific and technical works and a keynote speaker at many international industry conferences, conventions and seminars all over the world. The text of one of those technical papers "CCT Technology: A New Approach to the Manufacturing of Contactless Smart Cards"can be accessed at: http://icma.com/company/ccttechnology7899.htm
Kristi J. Kampmann - Ms. Kampmann has been Secretary of the Company since February 1998. In addition, she has served as the Secretary of Intercell, since July 28, 1999. Since June 1997, she has been the administrative assistant to the Chief Executive Officer, Chief Financial Officer and the Executive Vice President of Technology & Marketing and paralegal for both the Company and Intercell. From April 1996 to June 1997, she served as a paralegal and administrative assistant for Paul H. Metzinger, P.C. Ms. Kampmann graduated from the Denver Paralegal Institute in 1996. Ms. Kampmann received a B.A. from the University of Minnesota in Morris in 1995, majoring in Political Science with a minor in Business Management. She currently is attending the University of Colorado at Denver, where she is completing work on an M.B.A.
A Brief History of Nanopierce Technologies, Inc.
On Feb. 26, 1998, Intercell Corporation (OTC-Bulletin Board: INCE), a technology holding company announced the closing of an agreement with Sunlight Systems, Ltd. (OTC-Bulletin Board: SUNY) relating to its particle interconnect technology. In connection with the transaction, Sunlight effected a reverse stock split and changed its name to Nanopierce Technologies, Inc. and now trades under the symbol NPCT.
Under the agreement, Intercell Corporation received from Nanopierce 7.25 million post-split common shares and 100 Series A, 8%, Voting, Convertible, Cumulative, Participating, Preferred shares. The preferred shares have the voting power of and are convertible into 7.25 million post-split common shares. At the time Paul H. Metzinger was appointed Sole Director of Nanopierce and elected President and Chief Executive Officer.
On February 26, 1998, the Company acquired the intellectual property rights related to the Company's patented Particle Interconnect Technology (the "PI Technology") from Particle Interconnect Corporation ("PI Corp"), a Colorado Corporation, a wholly owned subsidiary of Intercell Corporation ("Intercell"), a Colorado Corporation. In exchange for the assets of PI Corp the Company issued 7,250,000 shares of its common stock and 100 shares of the Company's Series A Preferred Stock (convertible into 7,250,000 common shares) to Intercell. The Company acquired the PI Technology in order to pursue a more focused, strategic application and development of the PI Technology.
The PI Technology utilizes 10 patents, 2 patent applications pending and 2 Patent disclosure documents in preparation, all of which are owned by the Company. Generally, the patents and patent applications relate to hard particles treated with a conductive material such as copper or nickel which is electrically deposited to a foundation such as a socket, connector or conductor to make superior electrical connections. The PI Technology can be used on many different bases, whether flexible, rigid, metallic or non-metallic.
The Company's Technology, now referred to as the NanoPierce Connection System (NCS), is a revolutionary and enabling technology used to make highly reliable electrical connections without the need for soldering or traditional pin-in-hole connectors. Microscopic diamond particles coated with metal work like "conductive sandpaper." The particles serve as force concentrators, multiplying the pressure applied to the contact area. The particles pierce though oxides or other films on the contact.
The resulting electrical connection is extremely inexpensive to manufacture compared to competitive technologies; has excellent electrical properties; has no moving parts simplifying miniaturization and use in complex assemblies; has very high reliability; is made at room temperature enabling the use of lower cost materials
To date, most commercial applications of NCS are based on low-cost industrial diamond dust, but other materials with even lower costs can be used and have demonstrated equal characteristics.
It is important to note that the NCS manufacturing process is simple and low cost. According to Dr. Neuhaus, almost any plating bath can be modified to apply NCS. No unusual steps are required and it is easily inserted into existing manufacturing operations.
NCS has already proven itself in several niche markets including use in automated test equipment for packaged semiconductor ICs, which includes an existing license agreement with Exatron Automatic Test Equipment Inc. for use in the field of sockets in the automated handling and testing of integrated circuits. More information on that application is readily available on the Exatron web site at: http://www.exatron.com/new-index.html then click on PI Samples to read more about it. According to Exatron on their web site, "PI is unsurpassed for high speed or high frequency test requirements, and offers true controlled impedance, tested up to 18 Ghz." In relation to that statement, the following information is of great importance.
On August 10, 1998 the U.S. Semiconductor Industry and the Federal government announced the formation of a new microelectronics "Focus Center Research Program" (FCRP) which is "targeting the most challenging technological problems the industry faces in the future. . ."The aim of the FCRP is to ensure a continuing supply of new ideas to fuel advances in silicon integrated circuit technology. One of the first two areas for attention in the new FCRP was interconnect technology. According to the FRCP's executive summary document - Interconnections for Gigascale Integration - "The most severe limits to (gigascale and terascale integration) will not be imposed by transistors performing computing functions. . . . In this context, fundamental, material, device, circuit and system limits without exception dictate the wiring imperative to keep interconnects short in order to reduce response time---as well as power dissipation, signal contamination and failure rates---to the smallest possible values."
The Company believes that additional high growth market segments can be penetrated without additional technology development and the Company has already been approached by a large number of companies in various sectors that have expressed an interest in exploring other possible applications and manufacturing processes such as in chip attach for semi-conductor wafers and flexible circuits. It's technology is applicable to virtually any electronic product sensitive to cost, speed, performance and/or size. Examples include consumer goods such as cell phones, camcorders, Smart Cards/Smart Labels, automotive electronics, test equipment, and advanced military electronics.
NCS has already been tested by Meinen Ziegel against the ISO standards for smart cards and has exceeded the usual standard by a multiple of eight times!
The Company has developed a detailed Strategic Business Plan to commercialize NCS in the manufacture of SmartCards and related products such as RF ID Tags or Smart Labels. In this application, NCS will be used to connect the semiconductor chip to other internal components, replacing the more expensive, conventional chip connection technologies.
Business Description
Every electrical device – whether a sophisticated missile guidance system, a cellular telephone, or a simple flashlight – requires two or (sometimes many) more electrical connections. The most commonly used technology for these connections is either solder or spring-loaded connectors, both familiar to every hobbyist.
As the electronics industry continues to reduce the size, increase the functionality and operating speeds and lower the cost of products, the standard methods used to connect components have proven unable to keep up with performance and cost demands. Today's electronics industry needs completely new connection approaches in order to manufacture systems at target costs. NanoPierce Connection System is just such a technology.
NanoPierce Connection System (NCS) is a revolutionary and enabling technology used to make reliable, high-performance electrical connections without the need for soldering or spring-loaded connectors. NCS is based on standard manufacturing processes and is easily implemented in existing production operations without new capital investment. Because it replaces conventional connection techniques, it facilitates miniaturization. Most importantly, NCS reduces manufacturing cost by eliminating manufacturing steps and unnecessary materials.
NanoPierce Technologies, Inc. will create shareholder value through commercial exploitation of its proprietary, patented, state-of-the-art connection system in the electronics industry. This strategic business plan embraces a combination of related ventures, all wholly or partly based on NCS. Commercialization approaches span from simple technology licensing to production operations, as indicated below.
Segment - Specific Commercialization Strategies
Strategy - Sale of royalty-bearing licenses
Reasoning - Applicable in market segments or regions with high barriers to entry or limited growth potential.
Strategy - Joint Ventures with established industry participants
Reasoning - Tap into existing market and/or manufacturing leadership in markets requiring special skills or high capital investment.
Strategy - Operating subsidiaries that produce components and/or systems utilizing NCS
Reasoning - First Mover can dominate emerging market segments. Also, the Company can capture additional value by controlling production in segments with low capital requirements.
Market Opportunity
Electronics represents the world's largest industry. The worldwide value of electronic equipment manufactured in 1999 will be over $1,100 billion. The materials used in this equipment are valued at over $67 billion. The Company estimates that there are at least 2.4 trillion electrical connections manufactured worldwide annually. This number is growing at an estimated rate of 10%. At an industry accepted average value of 1¢ per connection this results in a total worldwide market of $24 billion annually. Ultimately, NCS can compete for this entire market.
The Company believes, based on interviews with industry leaders, that NCS has the potential to enable electronics manufacturers to move to the next level of high performance, low-cost systems. As products continue to decrease in size and increase in functionality, the need for NCS will continue to grow through the foreseeable future.
The Company believes that NCS will offer a compelling cost and performance advantage in the majority of this market. However, limited market presence and real and perceived switching costs represent the greatest challenges to the Company. As a result, the Company has elected to focus initially on segments with the most aggressive product cycle times. The Company will later leverage early adoption by OEMs to penetrate semiconductor and other component manufacturers leading to broad, industry-wide adoption.
The Smart Card market is growing rapidly - between 30% and 40% per year. RF ID Tags are poised for literally explosive growth as the International Air Transportation Association (IATA) prepares to replace paper bar-coded luggage tags with Smart Labels in the near future. Adoption of Smart Labels by courier delivery services, such as Federal Express, is also anticipated.
SALES AND MARKETING STRATEGY
Market Strategy
In short, the Market Strategy is to offer NCS in products, services and technology packages into market segments and commercial applications in which NCS either has a significant cost advantage or is enabling.
In cases where NCS offers clear advantages but the Company cannot effectively compete due to high capital requirements or entrenched competitors, Technology Transfer will be strongly favored. The Company will teach market leaders to practice the technology in return for a royalty or share of the return (JV). While royalties usually represent only a portion of the value created, Technology Transfer entails very little risk and virtually no overhead.
However, wherever the capital required to enter is low and there are no entrenched competitors, the Company will strongly prefer to control the application of the Technology through production. This route allows the Company to capture a far greater portion of the value created by the application of the technology than in simple licensing.
Implementation Plan
The implementation of this strategy is embodied in the following organization structure. Each part of this organization is described below.
Technology Division
The Application Development Team, based in the Technology Division, will play a role analogous to Corporate R&D or Engineering, developing new applications for internal (NanoPierce Subsidiaries) and external customers. This team will also allocate a portion of its resources for technology enhancement.
Although not a profit center, it is anticipated that the Technology Division may be used to provide fee-based development services to some customers.
Business Development
Business Development will support all profit centers with Sales and Marketing initially. Later the SmartLabel and WaferPierce Subsidiaries will assume responsibility for their own marketing, while Business Development will continue to represent Technology Transfer to the industry. Business Development will also monitor the industry for acquisition and other strategic growth opportunities.
Technology Transfer
The Technology Transfer Unit represents the "virtual" profit center based on commercial use of NCS outside of the Company through licensees and other strategic partners. This unit will support the Company's licensees and partners with installation of NCS and related training and support. Personnel for these activities will be drawn from the Technology Division, but costs directly associated with Technology Transfer activities (e.g. travel) will be charged to this profit center.
Operating SubsidiariesOperating Subsidiaries
The Operating Subsidiaries will act as independent profit centers. Both subsidiaries will support only a minimal level of technology and/or engineering effort, instead relying on the Technology Division. This way the Company will minimize redundant technology development efforts.
Nanopierce has adopted and is in the process of implementing a two-part approach to the commercial exploitation of its NCS Technology. The first part of its strategy involves the generation of royalty or other revenues through forming strategic relationships with, or licensing the NCS Technology to, established companies in the markets in which the Company plans to compete. The Company believes that the licensing of its technology to major industry partners will provide for faster implementation and adoption of the NCS Technology and will help establish "brand" recognition for the NCS Technology.
Commencing in January 1999, the Company successfully introduced its technology to applications in the manufacturing of smart cards and smart labels. Of particular significance to manufacturers of contactless smart cards and smart labels is their desire to obtain a secure, efficient connection between the microprocessor chip and the radio antenna in what are known as combicards or dual interface smart cards, contactless smart cards and contactless smart labels.
Smart Cards are plastic, flexible credit card size devices embedded with a powerful microchip, designed to store and process information. The microchip is connected to the circuits, which make the card function. Reliable connections in flexible applications are crucial to the card's operation. Smart Cards, which are "Electronic Purses", are used as: Phone Cards, Health Cards, ID Cards, Pay TV Cards, Meter Cards, GSM Cards, Bank Cards, Transport Tickets, Access Control Cards and Automatic Dispenser Cards.
A smart label is a paper thin identification label with a programmable integrated circuit inside and an antenna connected to it. It communicates through radio frequency signals with a fixed position or hand held reader/writer over distances more than one meter. Smart Labels collect the energy to operate from a radio frequency field emitted by a fixed or handheld reader device; therefore they do not need a battery, contactless smart cards operates on the same principle. Its substrate is paper or plastic yielding a paper-thin flexible label, which can be self-adhesive and be printed on. Uses for contactless smart labels include: labels applied to shipping/courier parcels; as airline baggage tags; as retail labels applied directly by the manufacturer to the product, identifying the manufacturer, product type, production lot and a digital signature to prove genuineness, as labels for inventory control; and as labels for rental services, i.e. libraries, video stores, etc.
The market for smart cards and smart labels is poised for explosive growth. However, there is a critical bottleneck holding the industry back: the lack of a cost effective and reliable system for electrical connection of the microchip to the contacts plate and/or antenna. The industry cannot satisfy the market demands for cost effective and reliable contactless smart cards and smart labels with current technologies. The Company believes it has the solution for the industry, using its NCS Technology in the Nanopierce Connection System ("NCS").
The Company is strategically positioned to become a major participant in the large and growing smart card/smart label market. Current technologies cannot satisfy the cost and reliability demands of this market. NCS can meet cost and reliability demands because it provides single step low-cost manufacturing procedures; it provides reliable connection on flexible substrates; and is thin enough to be used in the manufacturing of smart labels.
As previously stated, commencing in the Spring of 1999, the Company began the implementation of its strategic business plan by forming strategic alliances intended to result in joint ventures to develop applications for its technology in the smart card/ smart label industry. In that regard, it successfully concluded three such strategic alliances with participants in the industry.
On April 15, 1999, the Company entered into an Application Development Agreement with Multitape, GmbH & Co., KG, of Paderborn, Germany to develop the application of its technology on chip module substrate tapes manufactured by Multitape. Multitape is a major supplier of chip module substrate tapes to numerous card manufacturers including virtually all of the largest card manufacturers in the world. Should the tests prove successful to the satisfaction of the Company and Multitape, a more formal arrangement will be entered into between the Company and Multitape to commercially exploit the
opportunity.
On May 17, 1999, the Company entered in a Technology Cooperation Agreement with Meinen, Zeigel & Co., Munich, Germany to develop applications of its technology for dual interface smart card modules and the qualification and industrialization of a chip module embedding process on Meinen, Zeigel & Co. equipment. Meinen, Zeigel & Co. is a developer, manufacturer and supplier of equipment used in the production of smart cards. Many of the world's largest smart card manufacturers utilize Meinen, Zeigel & Co. equipment to produce standard smart cards, contactless smart cards and dual interface cards. It is likely that Meinen, Zeigel & Co. will design new equipment based around the new manufacturing process enabled by adoption of the Company's technology. Adoption of the Company's technology by the industry will enable equipment manufacturers, specifically Meinen, Zeigel & Co., to design less expensive, more efficient, higher throughput, simpler production equipment. The Company contemplates entering into a formal joint venture agreement with Meinen, Ziegel & Co. to further implement the commercial exploitation of its technology.
On June 11, 1999, the Company entered into a Technology Development Agreement with ORGA Kartensystemes, GmbH, one of the world's largest smart card manufacturers. ORGA Kartensystemes, GmbH of Flintbek, Germany, is working with the Company relating to the application of NCS to the design and manufacture of dual interface smart cards, particularly as it relates to the connection of the antenna to the chip modules. If all testing and qualifications standards are met, the Company contemplates entering into a formal joint venture or direct licensing of ORGA Kartensystemes, GmbH relating to the application of its technology and dual interface smart cards.
In addition to the Application Development Agreements described above, the Company has also entered into an Agreement-In-Principle to form a joint venture or limited liability partnership with Cirexx Corporation, Santa Clara, California. The proposed joint venture or limited liability partnership will be organized to commercially exploit NCS in all applications. Cirexx Corporation is a world leader in the quick turn prototype design and production manufacturer of high technology, digital, RF, and analog flexible circuits and mixed technologies.
The Company has entered into a Confidential Disclosure Agreement with Schlumberger Systems, S.A. effective July 8, 1999. The Company is in the process of exchanging information with Schlumberger Systemes, S.A. relating to the application of its technology to dual interface smart cards and other applications.
In addition to the strategic alliances described above, the Company is in discussions with other companies in the smart card industry relating to possible application of its technology to their product lines. Further, the Company is expanding the scope of its strategic business activities to now embrace potential applications of NCS in the connector market. The Company is currently in discussions with Taiko Denki, Ltd., one of Japan's leading connector manufacturers relating to the application of its technology to the
connector products of Taiko Denki, Ltd. The Company has submitted a formal Proposal to Taiko Denki, Ltd. relating to the formation of a strategic business relationship.
Financial Information:
Nanopierce's current operations are not generating positive cash flow and the Company's current cash reserves are not sufficient to fund the Company's strategic business plan over the next 12 months. The independent auditors' report on the Company's latest 10K SEC filing contains a "going concern" explanatory paragraph, that describes substantial doubt about the Company's ability to continue as a going concern. To address that concern Nanopierce is vigorously pursuing additional financing through several investment bankers and financial institutions. Paul Metzinger, the President and CEO of Nanopierce, has expressed full confidence that all of the necessary funding will be obtained in the near future.
Nanopierce is not fully without funding as they have obtained interim funding through various private placements. The funding being pursued is for a much larger financing in the range of between $10 to $20 million to fund new divisions being planned to execute on the Nanopierce strategic business plan and to fund a facility in Germany in order to execute plans for the manufacture of Smart Tags and Smart Labels. This is anticipated to be the single most important part of the Nanopierce future revenue stream.
Nanopierce does not yet recognize any revenues from the agreements it has signed, however the company believes that sales of the Nanopierce Technologies, Inc. products (NCS) and technology licenses will provide sufficient funds to meet the Company's capital requirements for the next two years. This assumption is based on the signing of a Technology Cooperation Agreement with Meinen, Ziegel & Co., a Technology Development Agreement with ORGA Kartensystemes, GmbH, an agreement to form a joint venture with Cirexx Corporation and an Application and Development Agreement with Multitape, GmbH & Co during the Spring of 1999. Nanopierce is in also in talks with various other companies to develop agreements applying its technology to their products and advancing those agreements that have already been executed.
Nanopierce has recently hired a very significant employee, Dr. Michael E. Wernle, the new Executive Vice President of Strategic Business Development, who is heading up a new division in Munich, Germany where offices have already been set up. Plans are under way to add between one to three employees to administrative and application areas in the US and up to four more employees in Munich, contingent upon the receipt of funding.
Nanopierce currently maintains its executive and administrative office in space provided by Intercell Corporation, its parent company at 370 Seventeenth Street, Suite 3580, Denver, Colorado 80202. The Company also has a small laboratory facility located at 770 Maroonglenn Court, Colorado Springs, Colorado 80906, which is the residence of Dr. Herbert J. Neuhaus, Executive Vice President and a Director of the Company.
Recent significant news:
On October 26, 1999 - Nanopierce announced the very significant news that Dr. Michael E. Wernle, who is recognized as one of the top experts in the Smart Card/Smart Label industry, has joined the Nanopierce management team. Dr. Wernle was appointed Executive Vice President - Strategic Business Development and also become a Director of the Company.
In the same press release it was announced that Nanopierce Technologies has also opened executive offices in Munich, Germany to exploit the new business opportunity in Smart Cards/Smart Labels. Dr. Wernle and his core team will be responsible for the worldwide Smart Card/Smart Label business operations of Nanopierce which will be based in Munich. In addition, Dr. Wernle has been given the authority to exploit any other application of Nanopierce's NCS Technology.
Dr. Wernle said, ``I am very glad and proud to be part of this unique team. To ramp up a business in the smart card market/smart label market is a real challenge. With the strong background of Nanopierce's intellectual properties we will be able to offer the market very attractive technological solutions.''
On September 21, 1999 - Nanopierce announced the signing of an agreement with IBIS Associates Inc. to initiate a focused marketing campaign to promote the company's proprietary NCS Technology, as well as other services of Nanopierce.
IBIS Associates, with headquarters in Wellesley, Mass., is a leading management consulting firm assisting clients in the materials manufacturing industries in the development of new business programs and marketing strategies. Representative IBIS clients include: Daimler-Chrysler, Hughes, Exxon, Amoco and DARPA of the United States Department of Defense. IBIS was founded in 1987 as a spin off of the Materials System Laboratory of M.I.T. (Massachusetts Institute of Technology.)
John Busch, President of IBIS, said, ``Due to our close working relationship with many leading technology companies, we are confident that IBIS can accelerate the introduction of Nanopierce and its patented NCS technology at the highest levels within those organizations.''
On July 22, 1999 - Nanopierce announced that Dr. Herbert J. Neuhaus, executive vice president of technology and marketing and director of the company, has accepted an appointment from the International Microelectronics and Packaging Society (IMAPS) to serve as guest editor for the Special Materials Edition of the prestigious industry publication, "Advancing Microelectronics,'' to be published next summer.
Dr. Neuhaus will have the honor of writing an editorial column, soliciting papers for publication and selecting the cover photo.
Dr. Neuhaus recently attended the 32nd International Symposium on Microelectronics, IMAPS '99, Oct. 26-28, at the Chicago Hilton and Towers in Chicago, where he presented a paper on "Manufacturing and Reliability of Chip Module to Antenna Coil Contacts in Dual Interface Smart Cards.''
For more information on IMAPS check its Web site at http://www.imaps.org/.
On July 21, 1999 - Nanopierce announced that independent tests conducted by Meinen Ziegel & Co., Munich, Germany, conclusively established that the Nanopierce Connection System (NCS) exceeded all applicable ISO standards for smart cards. The tests were conducted to determine the performance and reliability of the chip module to antenna connection, utilizing chip modules treated with NCS for a dual-interface smart-card application.
The International Standards Organization (ISO) has promoted the broad acceptance of smart cards by establishing detailed specifications. Although ISO has not yet established a standard specifically for dual-interface smart cards, the industry has adopted the existing smart-card specifications as the de facto dual-interface standard.
ISO standards require smart cards to withstand a minimum of 1,000 flexes to simulate typical handling. The independent tests performed by Meinen Ziegel revealed Nanopierce's NCS survived more than 8,000 cycles, exceeding the ISO standard by a factor of eight.
Flex-test reliability is particularly important to dual-interface smart cards because, unlike conventional smart cards in which all electronic components are located on the module, the module-to-antenna connection in dual-interface smart cards is potentially susceptible to damage during flexing.
In other words, conventional smart cards fail the flex testing when the plastic card body fails, while dual-interface cards tend to suffer an electrical failure at the module-to-antenna connection. NCS has proven to solve this problem.
Nanopierce applied its NCS technology to chip modules supplied by Multitape, GmbH & Co. KG for use in connection with the testing.
Paul Metzinger, president and chief executive officer, said: ``These tests conclusively establish the superiority of the NCS technology over the competition in terms of cost, performance and reliability for the application. We have been able to show that NCS meets and exceeds the industry's requirements while the competition has insisted on compromise.
``We remain firmly convinced that NCS technology will become the standard of the industry. Of even greater potential impact is the application of our technology to smart labels. Put simply, we have the connection solution.''
Metzinger further explained that the company would provide chip modules to ORGA Kartensystemes for further testing and application by this world-class smart-card-manufacturing firm.
On June 14, 1999 - Nanopierce announced the signng of a Technology Development Agreement with privately held ORGA Kartensysteme GmbH of Paderborn, Germany, to jointly develop Dual Interface Smart Cards using Nanopierce's NCS (Nanopierce Connection System) proprietary technology.
ORGA is a world leader in manufacturing of Advanced Smart Cards, and a dominant player in the development and production of Smart Cards for commercial enterprises, banks, insurance companies, public health systems, access control systems and identification systems.
ORGA was founded in 1972 and is majority (75%) owned by the printing agency (Bundesdruckerei) of the Federal Republic of Germany through UNIQA GmbH. A Deutsche Telekom AG subsidiary, Deutsche Telepost Consulting GmbH DETECON, owns the 25% balance.
Under the Agreement, Nanopierce and Multitape GmbH and Co., KG, Paderborn, will provide ORGA with chip module substrate tapes treated with Nanopierce Connection System (NCS) designed for use in Dual Interface Smart Cards, popularly known as CombiCards.
This co-operative effort includes all design, testing and final review activities, with the ultimate goal of winning EMV approval culminating in a more formal business venture exploiting the technology. EMV is a Smart Card specification adopted by all major card manufacturers.
Paul Metzinger, president and CEO, said, ``ORGA has established a solid, world-wide reputation for high-quality product engineering within the Smart Card industry. It has aggressively pursued new technologies to maintain a leading edge, and has a reputation as being a premier innovator of advanced smart card products. Combined with Nanopierce's contributions, we will demonstrate to the market the technological superiority and cost effectiveness of NCS in manufacturing and marketing of Smart Cards in this very competitive and price sensitive industry.''
On June 1, 1999 - Nanopierce announced the signing of an agreement to form a Joint Venture with privately held Cirexx Corporation of San Jose, Calif. to commercially exploit NCS (Nanopierce Connection System) with the services and products of Cirexx. The initial project of the joint venture involves the application of NCS on a flex circuit for Boeing (NYSE:BA), Seattle. Boeing has specified the use of NCS for the flex circuit. Boeing solicited Cirexx to submit a pricing quotation for the prototype flex circuit.
Cirrexx Corporation is a world leader in the quick turn prototype, design and production manufacture of high technology digital, R.F., and analog flexible circuits and mixed technologies. Cirexx, founded in 1980, has manufactured circuit boards and similar products for most every major high tech company in Silicon Valley and around the world. Its current worldwide customer base consists of over 800 corporate clients.
Cirexx is partnered with Asia's premier printed circuit board manufacturer, Elec Eltek, Inc. (E&E). Founded in 1972, E&E has eight manufacturing plants throughout Southeast Asia and 14 sales offices worldwide, making it one of the industry's global leaders in large volume production of circuit boards.
Paul Metzinger, president and CEO, said, "Cirexx Corporation has established a solid reputation for high quality engineering and excellence of service in the electronics industry. This joint venture will accelerate the introduction of NCS on a global basis by accessing the world-wide customer base and benefiting from the marketing presence of Cirexx Corporation and its partner E&E."
On May 26, 1999 - Nanopierce announced the signing of a Technology Cooperation Agreement with Munich, Germany-based Meinen, Ziegel & Co., one of the world's leading producers of equipment and systems for the integrated production and personalization of Smart Cards. Meinen, Ziegel & Co. is majority owned by DataCard Group (Minneapolis, Minnesota), which is a leading global provider of innovative financial card issuance systems, photo ID cards, printers, identification systems and health care patient identification systems.
Under the agreement Nanopierce and Meinen, Ziegel will cooperate in the development, qualification and industrialization of a chip module embedding process utilizing Nanopierce Connection System and Meinen, Ziegel equipment for Dual Interface Smart Cards, known better as CombiCards. Meinen, Ziegel, using the process, can modify existing models and manufacture new models of its full line of equipment.
Paul H. Metzinger, President & CEO, said, "We anticipate this agreement will lead to the increased globalization of our technology. The excellent reputation and market presence of Meinen, Ziegel and DataCard in the smart card industry should prove valuable in the acceptance and application of our Nanopierce Connection System." The combined customer/potential customer database of Meinen, Ziegel and DataCard will be used to exploit those markets, which will have the greatest card volumes for Dual Interface Smart Cards, such as Southeast Asia, Korea, Japan, India and South America. Nanopierce management indicated that an independent market research firm, Killen & Associates, sites the current market for Smart Card manufacturers is growing at 59% annually, with US$7.6 billion forecast for 2000, reaching US$16 billion by 2005.
On April 19, 1999 - Nanopierce announced the signing of an Application Development Agreement with Multitape GmbH & Co. KG, Paderborn, Germany, one of the world's leading manufacturers of components used in the manufacturing of Smart Cards.
Under the Agreement, Nanopierce and Multitape will develop a chip module substrate tape utilizing Nanopierce Connection System for Dual Interface Smart Cards. A leading smartcard manufacturer has agreed to conduct field trails on the product designed to qualify it for ISO 9000 standards and eventual commercial production.
Multitape is an established supplier of chip module tapes and antenna coils
for use in Smart Cards to many manufacturers, including such industry leaders
as Siemens Semiconductor Group (Germany) (SMAWY, OTC BB:Foreign), Philips
Semiconductors (Holland) (NYSE: PHG - news), Orga Kartensysteme, GmbH
(Germany) and PPC Card Systems, GmbH (Germany).
Dr. Herbert J. Neuhaus, executive vice president of marketing and technology
said, ``This venture with one of Europe's most innovative participants in the
Smart Card industry presents Nanopierce with a strategic opportunity to
insert its technology into the products of multiple manufacturers. We intend
to become the standard for chip to antenna connection technology in the
multi-billion dollar, worldwide, Smart Card industry which is now
experiencing explosive growth.''
Dr. Neuhaus noted that according to the respected market research firm,
Killen & Associates, the worldwide market opportunity for smart card
manufacturers will grow at a 59% rate (CAGR) typical of emerging markets to
$7.6 billion in 2000, reaching $16 billion in 2005.
On December 16, 1998 - Nanopierce announced that Dr. Herbert J. Neuhaus has agreed to become the Executive Vice President of Technology Development and Marketing.
Mr. Metzinger, President and CEO, stated, "We are delighted to welcome Dr.
Neuhaus to the management team of Nanopierce. He brings the technical
competency and industry recognition we need to successfully exploit the
Particle Interconnect Technology."
Dr. Neuhaus stated, "I am thrilled to join the management team of Nanopierce.
The technology is truly enabling, and I am confident we can develop this
exciting opportunity into a profitable business. Unlike so many new
technologies, Nanopierce does not require extensive development or market
identification. Instead, the key to achieving our goals will be to execute a
highly disciplined and focused strategy. We have the right team in place to do
that."
Upcoming Conferences:
Cartes 1999 in France November 16th & 17th, 1999
http://www.eurosmart.com/Activities/Events.htm#event01
Scantech Convention in Cologne, Germany November 18th & 19th
http://www.scantech-europe.com/
Cardtech/Securetech West in San Francisco November 30th - December 2nd, 1999
http://www.ctst.com/
Symbol: NPCT OTC:BB
370 17th Street, Suite 3580
Denver, Colorado, USA 80202
303-592-1010 (Phone)
303-592-1054 (Fax)
Web site: http://www.nanopierce.com
Email: Paul@nanopierce.com or kampmakj@classic.msn.com
German Subsidiary:
Nanopierce Card Technologies GmbH
Lise-Meitner Strausse
Hohenbrunn D-85622
Phone 011-49-81 0 2786155
Shares Outstanding: 33,155,585 (as of January 12, 2000)
Affiliates (insiders):
*Intercell Holdings: 12,237,550 (parent company) 36.9%
*Management's 1,526,731 (4.6%)
(Beneficial Ownership)
Non-Affiliates: 17,130,333 (including public float) 51.6%
*Estimated Public Float: 16,349,834 (49.3%)
(Held by non-affilates**)
*Based on common shares only, does not include outstanding options and warrants held by management and others.
**Excludes "restricted shares" held by non-affiliates and certain free trading shares held by non-affiliates who are close to management and considered unlikely to trade their shares. This includes shares held by funds and institutions.
19 Active Market Makers: DLCR, FLTT, FRAN, GAIN. GVRC, HILL, HRZG, MASH, MHMY, MULE, NAIB, NITE, OLIE, PBLC, PGON, SHRP, SHWD, SPIN, WIEN
Investor Relations: Stock Enterprises James Stock, 702-614-0003 jamestock@aol.com
European Division (Munich, Germany)
Contact: Dr. Michael E. Wernle 011-49-810-299 9372 Michael@nanopierce.com
or MICHEAL.E.WERNLE@t-online.de
Directors and Officers:
Paul H. Metzinger - President, Chief Executive Officer, Director
Dr. Herbert J. Neuhaus - Executive Vice President, Technology and Marketing, Director
Dr. Michael E. Wernle - President & CEO, Nanopierce Card Technologies GmbH (subsidiary), Director
Kristi J. Kampmann - Director of Investor Relations
Related Expert:
Charles E. Bauer - Director of Intercell Corp., Ph.D. in Materials Science and Engineering Oregon Graduate Center)
Nanopierce Technologies, Inc. is a reporting company with the Securities and Exchange Commission.
Biographical Information on Officers, Directors and a Significant Employee
Paul H. Metzinger - President and Chief Executive Officer of the Company from February 26, 1998 to May 6, 1998 and has served in that same capacity from December 1, 1998 to present. He has been a director of the Company since February 26,1998. Mr. Metzinger has been the Chief Financial officer of the Company since January 1, 1999. In addition, he serves as the President and Chief Executive Officer and a Director of Intercell Corporation. Prior to becoming a director and officer of the Company, Mr. Metzinger served as Intercell's General Counsel and practiced securities law in Denver, Colorado for over 32 years. Mr. Metzinger received his J.D. degree in 1967 from Creighton University Law School and his L.L.M. from Georgetown University in 1969.
Herbert J. Neuhaus, PH.D. - Dr. Neuhaus has been the Executive Vice President of Marketing and Technology and a Director of the Company since January 1, 1999. Dr. Neuhaus previously served as the Managing Director of Particle Interconnect Corporation from August 18, 1997 to November 1, 1997. From August 1989 to August 1997, he was associated with Electronic Material Venture Group in the new Business Development Department of Amoco Chemical Company, Naperville, Illinois. While associated with Amoco chemical Company he held among other positions: Business Development Manager/Team Leader; Project Manager --High Density Interconnect; Product Manager MCM Products and as a research scientist. His professional efforts and responsibilities at Amoco were directed towards the identification, analysis and development of new market opportunities for Amoco's electronic materials products, the development of new applications for such products, including multichip module products, polyamide coatings and processes for multichip module applications.
Dr. Neuhaus received his Ph.D. degree in Physics from the Massachusetts Institute of Technology, Cambridge, Massachusetts in 1989 and his BS in Physics from Clemson University, Clemson, South Carolina in 1980.
He has served with numerous associations in the capacities of project leader and technical chair including: Interconnection Technology Research Institute (ITRI), International Microelectronics and Packaging Society (IMAPS), Surface Mount Technology Association (SMTA) and The Institute for Interconnecting and Packaging Electronic Circuits (IPC).
Michael E. Wernle, PH.D. - Executive Vice President - Strategic Business Development and Director since October 26, 1999. Dr. Wernle is widely regarded as the foremost European authority on the markets and technologies for Smart Card and RF ID Tags. Before joining Nanopierce Technologies, Inc. Dr. Wernle most recently held the position of Vice President and Chief Operating Officer of Meinen, Ziegel & Co., München, Germany, a leading manufacturer of production equipment for the Smart Card industry. Dr. Wernle has broad experience in this field. Before joining Meinen, Ziegel, Dr. Wernle was Director of Production of Mikron/Philips-Graz, Graz, Austria. Mikron is specialized in the development and production of RF ID Systems and Contactless Smart Cards, where Dr. Wernle was responsible for the development of an advanced production technology for RF ID Tags and Contactless Smart Cards in cooperation with international partners and customers.
Dr. Wernle received his Ph.D. degree in Applied Physics from the Technical University of Vienna, Austria, in 1990 and a Masters Degree in Industrial Electronics and Robotics in 1988.
Dr. Wernle has published numerous scientific and technical works and a keynote speaker at many international industry conferences, conventions and seminars all over the world. The text of one of those technical papers "CCT Technology: A New Approach to the Manufacturing of Contactless Smart Cards"can be accessed at: http://icma.com/company/ccttechnology7899.htm
Kristi J. Kampmann - Ms. Kampmann has been Secretary of the Company since February 1998. In addition, she has served as the Secretary of Intercell, since July 28, 1999. Since June 1997, she has been the administrative assistant to the Chief Executive Officer, Chief Financial Officer and the Executive Vice President of Technology & Marketing and paralegal for both the Company and Intercell. From April 1996 to June 1997, she served as a paralegal and administrative assistant for Paul H. Metzinger, P.C. Ms. Kampmann graduated from the Denver Paralegal Institute in 1996. Ms. Kampmann received a B.A. from the University of Minnesota in Morris in 1995, majoring in Political Science with a minor in Business Management. She currently is attending the University of Colorado at Denver, where she is completing work on an M.B.A.
A Brief History of Nanopierce Technologies, Inc.
On Feb. 26, 1998, Intercell Corporation (OTC-Bulletin Board: INCE), a technology holding company announced the closing of an agreement with Sunlight Systems, Ltd. (OTC-Bulletin Board: SUNY) relating to its particle interconnect technology. In connection with the transaction, Sunlight effected a reverse stock split and changed its name to Nanopierce Technologies, Inc. and now trades under the symbol NPCT.
Under the agreement, Intercell Corporation received from Nanopierce 7.25 million post-split common shares and 100 Series A, 8%, Voting, Convertible, Cumulative, Participating, Preferred shares. The preferred shares have the voting power of and are convertible into 7.25 million post-split common shares. At the time Paul H. Metzinger was appointed Sole Director of Nanopierce and elected President and Chief Executive Officer.
On February 26, 1998, the Company acquired the intellectual property rights related to the Company's patented Particle Interconnect Technology (the "PI Technology") from Particle Interconnect Corporation ("PI Corp"), a Colorado Corporation, a wholly owned subsidiary of Intercell Corporation ("Intercell"), a Colorado Corporation. In exchange for the assets of PI Corp the Company issued 7,250,000 shares of its common stock and 100 shares of the Company's Series A Preferred Stock (convertible into 7,250,000 common shares) to Intercell. The Company acquired the PI Technology in order to pursue a more focused, strategic application and development of the PI Technology.
The PI Technology utilizes 10 patents, 2 patent applications pending and 2 Patent disclosure documents in preparation, all of which are owned by the Company. Generally, the patents and patent applications relate to hard particles treated with a conductive material such as copper or nickel which is electrically deposited to a foundation such as a socket, connector or conductor to make superior electrical connections. The PI Technology can be used on many different bases, whether flexible, rigid, metallic or non-metallic.
The Company's Technology, now referred to as the NanoPierce Connection System (NCS), is a revolutionary and enabling technology used to make highly reliable electrical connections without the need for soldering or traditional pin-in-hole connectors. Microscopic diamond particles coated with metal work like "conductive sandpaper." The particles serve as force concentrators, multiplying the pressure applied to the contact area. The particles pierce though oxides or other films on the contact.
The resulting electrical connection is extremely inexpensive to manufacture compared to competitive technologies; has excellent electrical properties; has no moving parts simplifying miniaturization and use in complex assemblies; has very high reliability; is made at room temperature enabling the use of lower cost materials
To date, most commercial applications of NCS are based on low-cost industrial diamond dust, but other materials with even lower costs can be used and have demonstrated equal characteristics.
It is important to note that the NCS manufacturing process is simple and low cost. According to Dr. Neuhaus, almost any plating bath can be modified to apply NCS. No unusual steps are required and it is easily inserted into existing manufacturing operations.
NCS has already proven itself in several niche markets including use in automated test equipment for packaged semiconductor ICs, which includes an existing license agreement with Exatron Automatic Test Equipment Inc. for use in the field of sockets in the automated handling and testing of integrated circuits. More information on that application is readily available on the Exatron web site at: http://www.exatron.com/new-index.html then click on PI Samples to read more about it. According to Exatron on their web site, "PI is unsurpassed for high speed or high frequency test requirements, and offers true controlled impedance, tested up to 18 Ghz." In relation to that statement, the following information is of great importance.
On August 10, 1998 the U.S. Semiconductor Industry and the Federal government announced the formation of a new microelectronics "Focus Center Research Program" (FCRP) which is "targeting the most challenging technological problems the industry faces in the future. . ."The aim of the FCRP is to ensure a continuing supply of new ideas to fuel advances in silicon integrated circuit technology. One of the first two areas for attention in the new FCRP was interconnect technology. According to the FRCP's executive summary document - Interconnections for Gigascale Integration - "The most severe limits to (gigascale and terascale integration) will not be imposed by transistors performing computing functions. . . . In this context, fundamental, material, device, circuit and system limits without exception dictate the wiring imperative to keep interconnects short in order to reduce response time---as well as power dissipation, signal contamination and failure rates---to the smallest possible values."
The Company believes that additional high growth market segments can be penetrated without additional technology development and the Company has already been approached by a large number of companies in various sectors that have expressed an interest in exploring other possible applications and manufacturing processes such as in chip attach for semi-conductor wafers and flexible circuits. It's technology is applicable to virtually any electronic product sensitive to cost, speed, performance and/or size. Examples include consumer goods such as cell phones, camcorders, Smart Cards/Smart Labels, automotive electronics, test equipment, and advanced military electronics.
NCS has already been tested by Meinen Ziegel against the ISO standards for smart cards and has exceeded the usual standard by a multiple of eight times!
The Company has developed a detailed Strategic Business Plan to commercialize NCS in the manufacture of SmartCards and related products such as RF ID Tags or Smart Labels. In this application, NCS will be used to connect the semiconductor chip to other internal components, replacing the more expensive, conventional chip connection technologies.
Business Description
Every electrical device – whether a sophisticated missile guidance system, a cellular telephone, or a simple flashlight – requires two or (sometimes many) more electrical connections. The most commonly used technology for these connections is either solder or spring-loaded connectors, both familiar to every hobbyist.
As the electronics industry continues to reduce the size, increase the functionality and operating speeds and lower the cost of products, the standard methods used to connect components have proven unable to keep up with performance and cost demands. Today's electronics industry needs completely new connection approaches in order to manufacture systems at target costs. NanoPierce Connection System is just such a technology.
NanoPierce Connection System (NCS) is a revolutionary and enabling technology used to make reliable, high-performance electrical connections without the need for soldering or spring-loaded connectors. NCS is based on standard manufacturing processes and is easily implemented in existing production operations without new capital investment. Because it replaces conventional connection techniques, it facilitates miniaturization. Most importantly, NCS reduces manufacturing cost by eliminating manufacturing steps and unnecessary materials.
NanoPierce Technologies, Inc. will create shareholder value through commercial exploitation of its proprietary, patented, state-of-the-art connection system in the electronics industry. This strategic business plan embraces a combination of related ventures, all wholly or partly based on NCS. Commercialization approaches span from simple technology licensing to production operations, as indicated below.
Segment - Specific Commercialization Strategies
Strategy - Sale of royalty-bearing licenses
Reasoning - Applicable in market segments or regions with high barriers to entry or limited growth potential.
Strategy - Joint Ventures with established industry participants
Reasoning - Tap into existing market and/or manufacturing leadership in markets requiring special skills or high capital investment.
Strategy - Operating subsidiaries that produce components and/or systems utilizing NCS
Reasoning - First Mover can dominate emerging market segments. Also, the Company can capture additional value by controlling production in segments with low capital requirements.
Market Opportunity
Electronics represents the world's largest industry. The worldwide value of electronic equipment manufactured in 1999 will be over $1,100 billion. The materials used in this equipment are valued at over $67 billion. The Company estimates that there are at least 2.4 trillion electrical connections manufactured worldwide annually. This number is growing at an estimated rate of 10%. At an industry accepted average value of 1¢ per connection this results in a total worldwide market of $24 billion annually. Ultimately, NCS can compete for this entire market.
The Company believes, based on interviews with industry leaders, that NCS has the potential to enable electronics manufacturers to move to the next level of high performance, low-cost systems. As products continue to decrease in size and increase in functionality, the need for NCS will continue to grow through the foreseeable future.
The Company believes that NCS will offer a compelling cost and performance advantage in the majority of this market. However, limited market presence and real and perceived switching costs represent the greatest challenges to the Company. As a result, the Company has elected to focus initially on segments with the most aggressive product cycle times. The Company will later leverage early adoption by OEMs to penetrate semiconductor and other component manufacturers leading to broad, industry-wide adoption.
The Smart Card market is growing rapidly - between 30% and 40% per year. RF ID Tags are poised for literally explosive growth as the International Air Transportation Association (IATA) prepares to replace paper bar-coded luggage tags with Smart Labels in the near future. Adoption of Smart Labels by courier delivery services, such as Federal Express, is also anticipated.
SALES AND MARKETING STRATEGY
Market Strategy
In short, the Market Strategy is to offer NCS in products, services and technology packages into market segments and commercial applications in which NCS either has a significant cost advantage or is enabling.
In cases where NCS offers clear advantages but the Company cannot effectively compete due to high capital requirements or entrenched competitors, Technology Transfer will be strongly favored. The Company will teach market leaders to practice the technology in return for a royalty or share of the return (JV). While royalties usually represent only a portion of the value created, Technology Transfer entails very little risk and virtually no overhead.
However, wherever the capital required to enter is low and there are no entrenched competitors, the Company will strongly prefer to control the application of the Technology through production. This route allows the Company to capture a far greater portion of the value created by the application of the technology than in simple licensing.
Implementation Plan
The implementation of this strategy is embodied in the following organization structure. Each part of this organization is described below.
Technology Division
The Application Development Team, based in the Technology Division, will play a role analogous to Corporate R&D or Engineering, developing new applications for internal (NanoPierce Subsidiaries) and external customers. This team will also allocate a portion of its resources for technology enhancement.
Although not a profit center, it is anticipated that the Technology Division may be used to provide fee-based development services to some customers.
Business Development
Business Development will support all profit centers with Sales and Marketing initially. Later the SmartLabel and WaferPierce Subsidiaries will assume responsibility for their own marketing, while Business Development will continue to represent Technology Transfer to the industry. Business Development will also monitor the industry for acquisition and other strategic growth opportunities.
Technology Transfer
The Technology Transfer Unit represents the "virtual" profit center based on commercial use of NCS outside of the Company through licensees and other strategic partners. This unit will support the Company's licensees and partners with installation of NCS and related training and support. Personnel for these activities will be drawn from the Technology Division, but costs directly associated with Technology Transfer activities (e.g. travel) will be charged to this profit center.
Operating SubsidiariesOperating Subsidiaries
The Operating Subsidiaries will act as independent profit centers. Both subsidiaries will support only a minimal level of technology and/or engineering effort, instead relying on the Technology Division. This way the Company will minimize redundant technology development efforts.
Nanopierce has adopted and is in the process of implementing a two-part approach to the commercial exploitation of its NCS Technology. The first part of its strategy involves the generation of royalty or other revenues through forming strategic relationships with, or licensing the NCS Technology to, established companies in the markets in which the Company plans to compete. The Company believes that the licensing of its technology to major industry partners will provide for faster implementation and adoption of the NCS Technology and will help establish "brand" recognition for the NCS Technology.
Commencing in January 1999, the Company successfully introduced its technology to applications in the manufacturing of smart cards and smart labels. Of particular significance to manufacturers of contactless smart cards and smart labels is their desire to obtain a secure, efficient connection between the microprocessor chip and the radio antenna in what are known as combicards or dual interface smart cards, contactless smart cards and contactless smart labels.
Smart Cards are plastic, flexible credit card size devices embedded with a powerful microchip, designed to store and process information. The microchip is connected to the circuits, which make the card function. Reliable connections in flexible applications are crucial to the card's operation. Smart Cards, which are "Electronic Purses", are used as: Phone Cards, Health Cards, ID Cards, Pay TV Cards, Meter Cards, GSM Cards, Bank Cards, Transport Tickets, Access Control Cards and Automatic Dispenser Cards.
A smart label is a paper thin identification label with a programmable integrated circuit inside and an antenna connected to it. It communicates through radio frequency signals with a fixed position or hand held reader/writer over distances more than one meter. Smart Labels collect the energy to operate from a radio frequency field emitted by a fixed or handheld reader device; therefore they do not need a battery, contactless smart cards operates on the same principle. Its substrate is paper or plastic yielding a paper-thin flexible label, which can be self-adhesive and be printed on. Uses for contactless smart labels include: labels applied to shipping/courier parcels; as airline baggage tags; as retail labels applied directly by the manufacturer to the product, identifying the manufacturer, product type, production lot and a digital signature to prove genuineness, as labels for inventory control; and as labels for rental services, i.e. libraries, video stores, etc.
The market for smart cards and smart labels is poised for explosive growth. However, there is a critical bottleneck holding the industry back: the lack of a cost effective and reliable system for electrical connection of the microchip to the contacts plate and/or antenna. The industry cannot satisfy the market demands for cost effective and reliable contactless smart cards and smart labels with current technologies. The Company believes it has the solution for the industry, using its NCS Technology in the Nanopierce Connection System ("NCS").
The Company is strategically positioned to become a major participant in the large and growing smart card/smart label market. Current technologies cannot satisfy the cost and reliability demands of this market. NCS can meet cost and reliability demands because it provides single step low-cost manufacturing procedures; it provides reliable connection on flexible substrates; and is thin enough to be used in the manufacturing of smart labels.
As previously stated, commencing in the Spring of 1999, the Company began the implementation of its strategic business plan by forming strategic alliances intended to result in joint ventures to develop applications for its technology in the smart card/ smart label industry. In that regard, it successfully concluded three such strategic alliances with participants in the industry.
On April 15, 1999, the Company entered into an Application Development Agreement with Multitape, GmbH & Co., KG, of Paderborn, Germany to develop the application of its technology on chip module substrate tapes manufactured by Multitape. Multitape is a major supplier of chip module substrate tapes to numerous card manufacturers including virtually all of the largest card manufacturers in the world. Should the tests prove successful to the satisfaction of the Company and Multitape, a more formal arrangement will be entered into between the Company and Multitape to commercially exploit the
opportunity.
On May 17, 1999, the Company entered in a Technology Cooperation Agreement with Meinen, Zeigel & Co., Munich, Germany to develop applications of its technology for dual interface smart card modules and the qualification and industrialization of a chip module embedding process on Meinen, Zeigel & Co. equipment. Meinen, Zeigel & Co. is a developer, manufacturer and supplier of equipment used in the production of smart cards. Many of the world's largest smart card manufacturers utilize Meinen, Zeigel & Co. equipment to produce standard smart cards, contactless smart cards and dual interface cards. It is likely that Meinen, Zeigel & Co. will design new equipment based around the new manufacturing process enabled by adoption of the Company's technology. Adoption of the Company's technology by the industry will enable equipment manufacturers, specifically Meinen, Zeigel & Co., to design less expensive, more efficient, higher throughput, simpler production equipment. The Company contemplates entering into a formal joint venture agreement with Meinen, Ziegel & Co. to further implement the commercial exploitation of its technology.
On June 11, 1999, the Company entered into a Technology Development Agreement with ORGA Kartensystemes, GmbH, one of the world's largest smart card manufacturers. ORGA Kartensystemes, GmbH of Flintbek, Germany, is working with the Company relating to the application of NCS to the design and manufacture of dual interface smart cards, particularly as it relates to the connection of the antenna to the chip modules. If all testing and qualifications standards are met, the Company contemplates entering into a formal joint venture or direct licensing of ORGA Kartensystemes, GmbH relating to the application of its technology and dual interface smart cards.
In addition to the Application Development Agreements described above, the Company has also entered into an Agreement-In-Principle to form a joint venture or limited liability partnership with Cirexx Corporation, Santa Clara, California. The proposed joint venture or limited liability partnership will be organized to commercially exploit NCS in all applications. Cirexx Corporation is a world leader in the quick turn prototype design and production manufacturer of high technology, digital, RF, and analog flexible circuits and mixed technologies.
The Company has entered into a Confidential Disclosure Agreement with Schlumberger Systems, S.A. effective July 8, 1999. The Company is in the process of exchanging information with Schlumberger Systemes, S.A. relating to the application of its technology to dual interface smart cards and other applications.
In addition to the strategic alliances described above, the Company is in discussions with other companies in the smart card industry relating to possible application of its technology to their product lines. Further, the Company is expanding the scope of its strategic business activities to now embrace potential applications of NCS in the connector market. The Company is currently in discussions with Taiko Denki, Ltd., one of Japan's leading connector manufacturers relating to the application of its technology to the
connector products of Taiko Denki, Ltd. The Company has submitted a formal Proposal to Taiko Denki, Ltd. relating to the formation of a strategic business relationship.
Financial Information:
Nanopierce's current operations are not generating positive cash flow and the Company's current cash reserves are not sufficient to fund the Company's strategic business plan over the next 12 months. The independent auditors' report on the Company's latest 10K SEC filing contains a "going concern" explanatory paragraph, that describes substantial doubt about the Company's ability to continue as a going concern. To address that concern Nanopierce is vigorously pursuing additional financing through several investment bankers and financial institutions. Paul Metzinger, the President and CEO of Nanopierce, has expressed full confidence that all of the necessary funding will be obtained in the near future.
Nanopierce is not fully without funding as they have obtained interim funding through various private placements. The funding being pursued is for a much larger financing in the range of between $10 to $20 million to fund new divisions being planned to execute on the Nanopierce strategic business plan and to fund a facility in Germany in order to execute plans for the manufacture of Smart Tags and Smart Labels. This is anticipated to be the single most important part of the Nanopierce future revenue stream.
Nanopierce does not yet recognize any revenues from the agreements it has signed, however the company believes that sales of the Nanopierce Technologies, Inc. products (NCS) and technology licenses will provide sufficient funds to meet the Company's capital requirements for the next two years. This assumption is based on the signing of a Technology Cooperation Agreement with Meinen, Ziegel & Co., a Technology Development Agreement with ORGA Kartensystemes, GmbH, an agreement to form a joint venture with Cirexx Corporation and an Application and Development Agreement with Multitape, GmbH & Co during the Spring of 1999. Nanopierce is in also in talks with various other companies to develop agreements applying its technology to their products and advancing those agreements that have already been executed.
Nanopierce has recently hired a very significant employee, Dr. Michael E. Wernle, the new Executive Vice President of Strategic Business Development, who is heading up a new division in Munich, Germany where offices have already been set up. Plans are under way to add between one to three employees to administrative and application areas in the US and up to four more employees in Munich, contingent upon the receipt of funding.
Nanopierce currently maintains its executive and administrative office in space provided by Intercell Corporation, its parent company at 370 Seventeenth Street, Suite 3580, Denver, Colorado 80202. The Company also has a small laboratory facility located at 770 Maroonglenn Court, Colorado Springs, Colorado 80906, which is the residence of Dr. Herbert J. Neuhaus, Executive Vice President and a Director of the Company.
Recent significant news:
On October 26, 1999 - Nanopierce announced the very significant news that Dr. Michael E. Wernle, who is recognized as one of the top experts in the Smart Card/Smart Label industry, has joined the Nanopierce management team. Dr. Wernle was appointed Executive Vice President - Strategic Business Development and also become a Director of the Company.
In the same press release it was announced that Nanopierce Technologies has also opened executive offices in Munich, Germany to exploit the new business opportunity in Smart Cards/Smart Labels. Dr. Wernle and his core team will be responsible for the worldwide Smart Card/Smart Label business operations of Nanopierce which will be based in Munich. In addition, Dr. Wernle has been given the authority to exploit any other application of Nanopierce's NCS Technology.
Dr. Wernle said, ``I am very glad and proud to be part of this unique team. To ramp up a business in the smart card market/smart label market is a real challenge. With the strong background of Nanopierce's intellectual properties we will be able to offer the market very attractive technological solutions.''
On September 21, 1999 - Nanopierce announced the signing of an agreement with IBIS Associates Inc. to initiate a focused marketing campaign to promote the company's proprietary NCS Technology, as well as other services of Nanopierce.
IBIS Associates, with headquarters in Wellesley, Mass., is a leading management consulting firm assisting clients in the materials manufacturing industries in the development of new business programs and marketing strategies. Representative IBIS clients include: Daimler-Chrysler, Hughes, Exxon, Amoco and DARPA of the United States Department of Defense. IBIS was founded in 1987 as a spin off of the Materials System Laboratory of M.I.T. (Massachusetts Institute of Technology.)
John Busch, President of IBIS, said, ``Due to our close working relationship with many leading technology companies, we are confident that IBIS can accelerate the introduction of Nanopierce and its patented NCS technology at the highest levels within those organizations.''
On July 22, 1999 - Nanopierce announced that Dr. Herbert J. Neuhaus, executive vice president of technology and marketing and director of the company, has accepted an appointment from the International Microelectronics and Packaging Society (IMAPS) to serve as guest editor for the Special Materials Edition of the prestigious industry publication, "Advancing Microelectronics,'' to be published next summer.
Dr. Neuhaus will have the honor of writing an editorial column, soliciting papers for publication and selecting the cover photo.
Dr. Neuhaus recently attended the 32nd International Symposium on Microelectronics, IMAPS '99, Oct. 26-28, at the Chicago Hilton and Towers in Chicago, where he presented a paper on "Manufacturing and Reliability of Chip Module to Antenna Coil Contacts in Dual Interface Smart Cards.''
For more information on IMAPS check its Web site at http://www.imaps.org/.
On July 21, 1999 - Nanopierce announced that independent tests conducted by Meinen Ziegel & Co., Munich, Germany, conclusively established that the Nanopierce Connection System (NCS) exceeded all applicable ISO standards for smart cards. The tests were conducted to determine the performance and reliability of the chip module to antenna connection, utilizing chip modules treated with NCS for a dual-interface smart-card application.
The International Standards Organization (ISO) has promoted the broad acceptance of smart cards by establishing detailed specifications. Although ISO has not yet established a standard specifically for dual-interface smart cards, the industry has adopted the existing smart-card specifications as the de facto dual-interface standard.
ISO standards require smart cards to withstand a minimum of 1,000 flexes to simulate typical handling. The independent tests performed by Meinen Ziegel revealed Nanopierce's NCS survived more than 8,000 cycles, exceeding the ISO standard by a factor of eight.
Flex-test reliability is particularly important to dual-interface smart cards because, unlike conventional smart cards in which all electronic components are located on the module, the module-to-antenna connection in dual-interface smart cards is potentially susceptible to damage during flexing.
In other words, conventional smart cards fail the flex testing when the plastic card body fails, while dual-interface cards tend to suffer an electrical failure at the module-to-antenna connection. NCS has proven to solve this problem.
Nanopierce applied its NCS technology to chip modules supplied by Multitape, GmbH & Co. KG for use in connection with the testing.
Paul Metzinger, president and chief executive officer, said: ``These tests conclusively establish the superiority of the NCS technology over the competition in terms of cost, performance and reliability for the application. We have been able to show that NCS meets and exceeds the industry's requirements while the competition has insisted on compromise.
``We remain firmly convinced that NCS technology will become the standard of the industry. Of even greater potential impact is the application of our technology to smart labels. Put simply, we have the connection solution.''
Metzinger further explained that the company would provide chip modules to ORGA Kartensystemes for further testing and application by this world-class smart-card-manufacturing firm.
On June 14, 1999 - Nanopierce announced the signng of a Technology Development Agreement with privately held ORGA Kartensysteme GmbH of Paderborn, Germany, to jointly develop Dual Interface Smart Cards using Nanopierce's NCS (Nanopierce Connection System) proprietary technology.
ORGA is a world leader in manufacturing of Advanced Smart Cards, and a dominant player in the development and production of Smart Cards for commercial enterprises, banks, insurance companies, public health systems, access control systems and identification systems.
ORGA was founded in 1972 and is majority (75%) owned by the printing agency (Bundesdruckerei) of the Federal Republic of Germany through UNIQA GmbH. A Deutsche Telekom AG subsidiary, Deutsche Telepost Consulting GmbH DETECON, owns the 25% balance.
Under the Agreement, Nanopierce and Multitape GmbH and Co., KG, Paderborn, will provide ORGA with chip module substrate tapes treated with Nanopierce Connection System (NCS) designed for use in Dual Interface Smart Cards, popularly known as CombiCards.
This co-operative effort includes all design, testing and final review activities, with the ultimate goal of winning EMV approval culminating in a more formal business venture exploiting the technology. EMV is a Smart Card specification adopted by all major card manufacturers.
Paul Metzinger, president and CEO, said, ``ORGA has established a solid, world-wide reputation for high-quality product engineering within the Smart Card industry. It has aggressively pursued new technologies to maintain a leading edge, and has a reputation as being a premier innovator of advanced smart card products. Combined with Nanopierce's contributions, we will demonstrate to the market the technological superiority and cost effectiveness of NCS in manufacturing and marketing of Smart Cards in this very competitive and price sensitive industry.''
On June 1, 1999 - Nanopierce announced the signing of an agreement to form a Joint Venture with privately held Cirexx Corporation of San Jose, Calif. to commercially exploit NCS (Nanopierce Connection System) with the services and products of Cirexx. The initial project of the joint venture involves the application of NCS on a flex circuit for Boeing (NYSE:BA), Seattle. Boeing has specified the use of NCS for the flex circuit. Boeing solicited Cirexx to submit a pricing quotation for the prototype flex circuit.
Cirrexx Corporation is a world leader in the quick turn prototype, design and production manufacture of high technology digital, R.F., and analog flexible circuits and mixed technologies. Cirexx, founded in 1980, has manufactured circuit boards and similar products for most every major high tech company in Silicon Valley and around the world. Its current worldwide customer base consists of over 800 corporate clients.
Cirexx is partnered with Asia's premier printed circuit board manufacturer, Elec Eltek, Inc. (E&E). Founded in 1972, E&E has eight manufacturing plants throughout Southeast Asia and 14 sales offices worldwide, making it one of the industry's global leaders in large volume production of circuit boards.
Paul Metzinger, president and CEO, said, "Cirexx Corporation has established a solid reputation for high quality engineering and excellence of service in the electronics industry. This joint venture will accelerate the introduction of NCS on a global basis by accessing the world-wide customer base and benefiting from the marketing presence of Cirexx Corporation and its partner E&E."
On May 26, 1999 - Nanopierce announced the signing of a Technology Cooperation Agreement with Munich, Germany-based Meinen, Ziegel & Co., one of the world's leading producers of equipment and systems for the integrated production and personalization of Smart Cards. Meinen, Ziegel & Co. is majority owned by DataCard Group (Minneapolis, Minnesota), which is a leading global provider of innovative financial card issuance systems, photo ID cards, printers, identification systems and health care patient identification systems.
Under the agreement Nanopierce and Meinen, Ziegel will cooperate in the development, qualification and industrialization of a chip module embedding process utilizing Nanopierce Connection System and Meinen, Ziegel equipment for Dual Interface Smart Cards, known better as CombiCards. Meinen, Ziegel, using the process, can modify existing models and manufacture new models of its full line of equipment.
Paul H. Metzinger, President & CEO, said, "We anticipate this agreement will lead to the increased globalization of our technology. The excellent reputation and market presence of Meinen, Ziegel and DataCard in the smart card industry should prove valuable in the acceptance and application of our Nanopierce Connection System." The combined customer/potential customer database of Meinen, Ziegel and DataCard will be used to exploit those markets, which will have the greatest card volumes for Dual Interface Smart Cards, such as Southeast Asia, Korea, Japan, India and South America. Nanopierce management indicated that an independent market research firm, Killen & Associates, sites the current market for Smart Card manufacturers is growing at 59% annually, with US$7.6 billion forecast for 2000, reaching US$16 billion by 2005.
On April 19, 1999 - Nanopierce announced the signing of an Application Development Agreement with Multitape GmbH & Co. KG, Paderborn, Germany, one of the world's leading manufacturers of components used in the manufacturing of Smart Cards.
Under the Agreement, Nanopierce and Multitape will develop a chip module substrate tape utilizing Nanopierce Connection System for Dual Interface Smart Cards. A leading smartcard manufacturer has agreed to conduct field trails on the product designed to qualify it for ISO 9000 standards and eventual commercial production.
Multitape is an established supplier of chip module tapes and antenna coils
for use in Smart Cards to many manufacturers, including such industry leaders
as Siemens Semiconductor Group (Germany) (SMAWY, OTC BB:Foreign), Philips
Semiconductors (Holland) (NYSE: PHG - news), Orga Kartensysteme, GmbH
(Germany) and PPC Card Systems, GmbH (Germany).
Dr. Herbert J. Neuhaus, executive vice president of marketing and technology
said, ``This venture with one of Europe's most innovative participants in the
Smart Card industry presents Nanopierce with a strategic opportunity to
insert its technology into the products of multiple manufacturers. We intend
to become the standard for chip to antenna connection technology in the
multi-billion dollar, worldwide, Smart Card industry which is now
experiencing explosive growth.''
Dr. Neuhaus noted that according to the respected market research firm,
Killen & Associates, the worldwide market opportunity for smart card
manufacturers will grow at a 59% rate (CAGR) typical of emerging markets to
$7.6 billion in 2000, reaching $16 billion in 2005.
On December 16, 1998 - Nanopierce announced that Dr. Herbert J. Neuhaus has agreed to become the Executive Vice President of Technology Development and Marketing.
Mr. Metzinger, President and CEO, stated, "We are delighted to welcome Dr.
Neuhaus to the management team of Nanopierce. He brings the technical
competency and industry recognition we need to successfully exploit the
Particle Interconnect Technology."
Dr. Neuhaus stated, "I am thrilled to join the management team of Nanopierce.
The technology is truly enabling, and I am confident we can develop this
exciting opportunity into a profitable business. Unlike so many new
technologies, Nanopierce does not require extensive development or market
identification. Instead, the key to achieving our goals will be to execute a
highly disciplined and focused strategy. We have the right team in place to do
that."
Upcoming Conferences:
Cartes 1999 in France November 16th & 17th, 1999
http://www.eurosmart.com/Activities/Events.htm#event01
Scantech Convention in Cologne, Germany November 18th & 19th
http://www.scantech-europe.com/
Cardtech/Securetech West in San Francisco November 30th - December 2nd, 1999
http://www.ctst.com/
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