"7/17/02 - NPCT -Transcript of Paul Metzinger’s interview with Europeanalyst..."
Dear Investor to Investor readers:
I have spent quite a few hours transcribing the interview of Paul Metzinger which is available to listen to on the Europeanalyst.com web site. A lot of people have been telling me that they could not hear the interview because they were having difficulty getting it to play even though they have one or both of the media players listed on the site. I, personally, had trouble and have both players latest editions in my computer. I finally heard it using AOL Media Player. I am providing a copy of this transcript to Europeanalyst.com as a courtesy since I have transcribed it from their site’s audio interview. Since they were not paid to do the interview, I doubt they will be doing their own transcript.
Kathy Knight-McConnell
Investor to Investor
investortoinvestor.com
The interview was conducted by Rogier Groen of Europeanalyst.com.
Rogier: With us today is Paul Metzinger, the CEO of NanoPierce Technologies. The ticker symbol is NPCT and it trades on the Over-the-Counter Bulletin Board. Hello, Paul, nice to have you on the show today.
Paul: Thank you very much. It’s my pleasure.
Rogier: Okay, well, let’s begin with a brief description of your company and tell me something more about yourself.
Paul: Yes, Rogier, you summarized it pretty succinctly there. NanoPierce Technologies is a small developmental, publically held company who is the proprietary owner of a patented process whereby we use metalized hard particles such as industrial diamond dust applied to a contact point. And, that permits electrical connections to be made between a chip and a rigid or flex circuit board without using traditional connection technology such as wire bonding or conventional flip chip.
That means the elimination of high temperatures and a number of factors like that currently are plaguing the industry, and our connection technology is a very competitive alternative to that.
My own personal background. I practiced corporate and securities law here in the United States for thirty-three years before I took over the presidency of NanoPierce in March of 1998. So I bring a background of heavy experience in corporate finance and structuring of public companies to exploit the very strong and compelling opportunity we have here at NanoPierce.
Rogier: Okay, thanks, that’s very clear. Now can you tell us something more about the NanoPierce connection system, your main technology?
Paul: Yeah, in essence, what we do is either electrolytically or in electroless fashion, we deposit these metalized hardened particles onto contact surfaces. That allows you to attach a chip or other electronic componentry to a printed or flex circuit board without using wire or solder and you can merely use a non-conductive glue to attach that component.
That has captured the attention of many of the major players, global players, in the semiconductor industry. The most compelling application is where we do it in an electroless fashion. We deposit these tiny particles onto the contact pads on each chip on a wafer, all at the same time. Now that has enormous implications for the semiconductor industry because when you can do it at the wafer level, you have now applied our technology at the most basic level that is known in the semiconductor industry.
We have reason to believe that because of the compelling competitive advantages, particularly cost effectivewise, that is the reason we are getting the attention and the active discussions with most of the major semiconductor manufacturers.
Rogier: Okay, that’s very interesting and exciting to hear. Right now I want to talk to you about your links of the company with Germany because this is especially very interesting for our European visitors.
Paul: Yes, we have two subsidiaries in Germany. They are very important subsidiaries to the overall corporate strategy and the penetration of our strategic markets.
Dr. Michael E. Wernle is President and Chief Executive Officer of NanoPierce Card Technologies GmbH based in Munich, Germany. They are responsible for application development and worldwide marketing of our various products and services.
We have another subsidiary recently announced that will go into production, Exypnotech GmbH. They will be based in Rudolstadt, Germany. They will go into the actual production of what are called RFID components, primarily smart inlays.
A smart inlay is merely a chip connected to a very thin substrate used to manufacture smart labels. That is one of our largest identified strategic markets. We have approximately, I believe, about 15 employees now combined between those two subsidiaries. We have a very competent staff that assists Dr. Wernle, but those will become increasingly important as we go forward in the future. Our presence in Germany and in Europe is going to become larger all the time.
Rogier: Now you’ve brought up Exypnotech, let’s talk a little bit more about your subsidiary there in Germany, especially can you give us some more details of your latest press release on the 21st of June?
Paul: Well, it means a lot to the company because Schreiner is our first publically announced major customer. As you know Schreiner is one of Germany’s, and certainly Europe, if not the world’s recognized pre-eminent producers of labels. Rigorous testing protocols were completed with Schreiner to the point where we developed an inlay that we will produce for Schreiner for use by that company of manufacturing all types of labels, particularly, I understand that one of the major applications is going to be in the pharmaceutical industry that he supplies labels to.
The company brings a lot of competitive and marketing savvy to NanoPierce and Exypnotech. We are very privileged and pleased to have Schreiner labels as one of our very first customers. It is one of many, by the way.
Rogier: Thanks for detailing that. I want to go back to the core market of NanoPierce now and as you said before, contacting technology for microchip and semiconductor with your technology. How big do you estimate this market is and how NanoPierce is going to target this market?
Paul: Well, all of the major markets that we have identified, they are smart cards, smart labels which are RFID products and LED devices or LED arrays, such as are manufactured by Elcos of Germany.
Those markets are all measured in units, of potential units, of billions. Many of them are involved in one time use, disposable devices, such as smart labels, that is used to track say a parcel shipment. So those volumes in those markets are measured in billions. We believe that we are going to successfully penetrate those markets over the next five years upwards of 10-15% with aggressive marketing and proper financing. So we are anticipating very large revenues from those strategic markets in the future.
You have to keep in mind that the fundamental advantage we believe that we have relates back to that WaferPierce application, where we put our NCS material on all of the chips on a given wafer in one single operation. That is a major competitive advantage we believe that we have.
Rogier: So your time frame is five years for a market? Can you provide us with more information about your capital requirements?
Paul: Of course, when I say five years, obviously you don’t capture that large a market share in one year, but we believe that we can do that in five years. What it means is that we will need to arrange the necessary financing in addition to what we already have on hand.
I am, personally, leaving to go to Hong Kong here very shortly on July 4th. We are seeking to raise a total of $15 million US, not only just from contacts in Hong Kong, but here in the United States. We have very good financial sources available to us. We are confident we will get the money and with that type of financing, NanoPierce and its consolidated subsidiaries, I think, will very successfully implement our strategic business plan.
Rogier: Is that money enough to reach break even point?
Paul: That is, yes, absolutely.
Rogier: Okay, so because in this market environment investors are very focused on profits and revenue, can you give us more information about when your company’s technology will generate sales?
Paul: We will have sales beginning in August this year from the production of smart inlays by Exypnotech. We will also have revenues generated by our Colorado Springs, Colorado facility where our white room is located. That is where they apply NCS (NanoPierce Connection System) technology to the wafer and that process is called wafer piercing. That is done in Colorado Springs and they will commence making revenues in the same time frame. We are receiving more and more wafers, test wafers, from major, and I’m telling you these are the biggest companies in the United States and throughout the world. Test wafers, and as soon as those testing protocols are all completed, we anticipate that the WaferPierce revenue contribution to the consolidated returns and performance of the company is going to achieve increasing ascendency of importance and contribution to our revenue stream.
Rogier: All right, your company obviously has unique technology, but what about the competition in your core market?
Paul: Well, that’s a good question. There is always competition in any given industry. As I’ve indicated, there’s two alternative forms of what you might call conventional or traditional connections. One is the wire bonding everybody is familiar with. If you look inside your computer, you see all those tiny little wire filaments going from components to the printed circuit board. Very traditional, been out there a long time. Works well under certain applications, but let me just give you an example of where it won’t work.
A smart label is made out of paper, you can’t hardly solder or wirebond a chip to a piece of paper. It will burn the paper up. So new technologies are called for. The old conventional flip chip where you have solder balls that are on the contact surface of pads of the chip, in order for them to be connected to whatever they are being connected to, you have to apply a very high level of heat to melt those solder balls. That obviously cannot be used in many applications including, for instance, smart labels. So, yeah, there is conductive technology out there.
Another one is called conductive adhesive. This is glue or an adhesive that has got little tiny metal balls in it that when pressed down make the connection. Unfortunately, it suffers some very severe drawbacks, including the fact that it have a very high degree of ability to short out. It has poor radio frequency characteristics and therefore it is not a real strong contender for the smart label and the contactless smart card market. But its, probably, biggest drawback is that it takes time for that conductive adhesive to cure and because you cannot test whether you have a valid connection right away, your throughput is drastically effected, because you may find that you have produced hundreds, if not thousands, of defective connections. Our technology permits immediate testing as soon as that contact is made.
Rogier: I have on question regarding stock price.
Paul: Yes, uh huh?
Rogier In January of this year from around 67 cents to 1.7 dollars. Probably because of the bad market today your stock has dropped back just to under a dollar. Do you think that it is undervalued at this level?
Paul: I think our stock is seriously undervalued. I think that additional announcements of revenue production, contracts, financing, I think, is going to have a very strong upward pressure on our stock and I am confident that eventually the market will put the correlation between the market price of the stock and the inherent value of the company’s technology in the semiconductor market. The semiconductor market is the largest in the world and we are a participant and going to become an increasingly, I think, recognized participant in that market.
So, I think, yes, the stock price will match the inherent value of what we are doing.
Rogier: About those announcements, do you expect to announce them in the next three months or can you give us a time frame?
Paul: There will be significant announcements over the next six months, particularly, because so much of the activity that we have been engaged in for the last year and a half, much like the Schreiner opportunity, we have been in deep discussions and negotiations with Schreiner for over a year and a half and it finally came to fruition. We have many such activities with major and small companies that have been pursuing that same parallel track and we see these now starting to come to conclusion and, I think, the next six months is going to be particularly eventful for the company because these things are, like I say, all finally starting to come to what we believe successful conclusion.
Rogier: Okay, Paul, thanks for the interview and thanks for being on the show.
Paul: Thank you.
Rogier: This was Europeanalyst.com with Paul Metzinger, CEO of NanoPierce Technologies, ticker symbol NPCT and it trades on the Over-the-Counter Bulletin Board. Thank you for listening.
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