NPCT Progress Report:
Dear Nanopierce Shareholders,
As most of you are aware, stock market conditions prevailing at this time reflect a high degree of uncertainty and investors are exercising extreme caution about making investments. At best the market can be described as anemic. These conditions have obviously also affected the price and activity level of our stock when combined with the absence of announcements reflecting developments within the Company. Despite the lack of announcements, the Company continues to achieve demonstrable progress in the principal lines of its business activities. I thought that this progress report might help alleviate some of the concerns of our shareholders.
We are very pleased with the results being reported from the first testing protocols conducted by the companies we are dealing with. This provides us with increased confidence in the validity of our WaferPierce technology in applications where wafer volumes are large enough upon which to build a company. Continued testing is underway at these companies and we believe that almost all testing will be completed by early September. Keep in mind the size of the companies we are dealing with and it will help you appreciate that they do not want to jeopardize their reputations without first being totally satisfied that the adoption of this disruptive (to use Mr. John Hoback’s colorful description), new technology by them will not prove to be an embarrassment and subject them to potential liability. I remain convinced that once the first of such global players adopts our technology, competitive pressure on the remaining players will be very intense to also embrace our technology. Application at the wafer level, as we have so often stated, affects all of our strategic markets, which you know are measured in units of billions. We remain very focused on WaferPierce and the activity level in Colorado Springs is incredibly intense.
ExypnoTech will conduct pre-acceptance tests, take delivery of, install and make final acceptance of the Delvotec equipment in July. Production will thereafter commence. We have hired a Production Manager, with significant levels of experience, who will undertake this important responsibility. We said we were going into production and we mean it. Our marketing team in Germany has been aggressively pursuing orders and contracts for these RFID products. We are encouraged by the initial reception we are receiving for our new product offering. There will be much to report in the future about these operations. Nanopierce Connection Systems, Inc., will ship treated wafers to ExypnoTech for use in manufacturing smart inlays. The Colorado Springs facility is production ready and capable of supplying all of the initial wafer requirements of ExypnoTech. This obviously means that it is production ready for wafer treatment beyond test wafers.
Our marketing team in the US is cultivating the numerous leads that we have developed over the last two years. We are receiving test wafers for WaferPierce application from major companies who are paying us for our services. These payments will be reflected in future financial statements. While initially revenues will be modest they can be expected to show demonstrable growth as market acceptance accelerates. These companies are conducting testing and we cannot accelerate their programs by insistent pressure for fear it would produce exactly the opposite result.
Our team in Germany is working closely with Elcos in developing the application of our technology to LED arrays and they are making excellent progress. Many of you have read recent news published by OptoTech, which shows the size and anticipated growth of the LED market. We have an excellent partner in OptoTech and we expect to benefit from it market position and technical competency.
Financing is obviously a big concern to many of the shareholders for two reasons. First, there is the fear that we will run out of money and fail almost when the big game is to be won. Second, there is a strong aversion to the continued dilution, which is inevitably tied in with any financing. We have access to sufficient acceptable financing, we believe, to continue the business operations of the Company for the indefinite future. Obviously, we would prefer to obtain financing at higher price levels but the important thing is to assure the continuation of the company since the alternative is unacceptable to all of us. Dilution resulting from financing we believe is not unacceptably high in light of prevailing industry standards. We have been advised that our public float is not unreasonable in view of anticipated institutional investors taking positions in our stock. I am in frequent conversations with institutional investors who began following our stock after we announced that both our Colorado Springs and Munich operation were going into production. We are also implementing internal steps to help reduce overhead expenses. We have applied to the proper governmental authorities for subsidies and other benefits, which will further enhance our cash position. The Board of Directors is committed to the success of the company no matter how temporarily painful it might be to all of us.
While some have expressed concerns about the threat of fire dangers afflicting some area of Colorado, rest assured that the Company’s facilities and the lives and homes of our team remain unthreatened. We are very appreciative of the solicitude expressed by our shareholders.
I realize that patience has finite limits. We have a large, loyal, supportive shareholder base most of whom are in for the long haul no matter what it takes. The supportive communications I receive outnumber the complainants five to one. I think most will have to honestly admit that we have held up extremely well in very adverse market conditions compared to many stocks, especially those on the bulletin board.
I can assure you of one indispensable truth, the members of the Nanopierce team, collectively and individually, have an almost fanatical dedication to assuring the success of the Company. They work with total commitment, dedication, loyalty and relentless effort. I just wish you had the opportunity to meet each one of them, because if you did, your confidence in the ultimate success of the Company and the inherent future value of your investment would be unassailable.
Sincerely,
Paul H. Metzinger
President and Chief Executive Officer
June 14, 2002 |
