Einstieg !! Nanopierce zu 0,35 Cent

Hab mir grad ein Sack voll Nanopierceaktien gekauft !

Gibts im Sonderangebot in Frankfurt !!  

eher EURO = TEURO  

 

liest das Ende - da steht das eher zusammengefasst,; eine Riesenmeldung, habe nur das ende gelesen. vielleicht lieset einer von Euch alles :))))



Form 10KSB/A for NANOPIERCE TECHNOLOGIES INC


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25-Feb-2004

Annual Report


ITEM 6. MANAGEMENT`S DISCUSSION AND ANALYSIS
Certain statements contained in this Form 10-KSB contain " forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties that could cause actual results to differ materially from the results, financial or otherwise, or other expectations described in such forward-looking statements. Any forward-looking statement or statements speak only as of the date on which such statements were made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statements are made or reflect the occurrence of unanticipated events. Therefore, forward-looking statements should not be relied upon as prediction of actual future results.

The independent auditors` report on the Company`s financial statements as of June 30, 2003, and for each of the years in the two-year period then ended, includes a " going concern" explanatory paragraph, that describes substantial doubt about the Company`s ability to continue as a going concern. Management`s plans in regard to the factors prompting the explanatory paragraph are discussed below and also in Note 2 to Notes to the Consolidated Financial Statements.


RESULTS OF OPERATIONS


On April 1, 2003, NCT filed insolvency with the Courts of Munich, Germany. The insolvency filing was necessary, in the view of the Company, in order to comply with specific German legal requirements. NCT is presented as discontinued operations in the Company`s consolidated financial statements. During the year ended June 30, 2003, NCT had losses of $882,718 compared to losses of $782,858 during the year ended June 30, 2002. In September 2003, the court rejected the application for insolvency and the Company is now under self-liquidation in accordance with German law.

The Company recognized $37,017 of revenues from continuing operations during the fiscal year ended June 30, 2003 compared to $4,737 in the fiscal year ended June 30, 2002. Revenues recognized by discontinued operations were $128,947 during the fiscal year ended June 30, 2003 and $151,392 for the fiscal year ended June 30, 2002. The revenue generated from discontinued operations was from various software development contracts generated by NanoPierce Card and the remaining $37,017 was from the preparation of samples using WaferPierce for potential customers by NanoPierce Connection ($3,900) and the sale of inlays by ExypnoTech ($33,117). The


Company expects to continue to generate revenues through its subsidiaries, NanoPierce Connection and ExypnoTech.

The Company recognized $7,251 in interest income during the fiscal year ended June 30, 2003 compared to $98,574 during the fiscal year ended June 30, 2002. The decrease of $91,323 is due primarily to the need for capital to support operations throughout the year.

Total operating expenses from continuing operations during the fiscal year ended June 30, 2003 were $3,179,297, compared to $4,049,525 for the fiscal year ended June 30, 2002. The decrease of $870,228 is attributable to a decrease in operational activities and spending over the year, as described below.

General and administrative expenses during the fiscal year ended June 30, 2003 were $2,414,077 compared to $3,516,534 for the fiscal year ended June 30, 2002. The decrease of $1,102,457 is mainly attributable to decreases in legal expenses, payroll and press releases, website development and other investor relations matters. In April 2001, the Company issued 3,125,000 of its common shares, valued at $1,000,000 in connection with legal costs related to the Harvest Court Litigation, as part of a Contingency Fee Agreement, to cover expenses to be incurred on its behalf. The Company amortized the value of the shares over a one-year period. Prior to July 1, 2001, $175,343 was amortized. The remaining $824,657 was amortized during the fiscal year ended June 30, 2002. Selling and marketing expenses during the fiscal year ended June 30, 2003 were $238,817 compared to $112,178 during the fiscal year ended June 30, 2002. The increase of $126,639 was due to an increase in marketing activities, including appearances at various trade shows. Research and development expenses during the fiscal year ended June 30, 2003 were $316,403 compared to $316,438 for the fiscal year ended June 30, 2002.

During the fiscal year ended June 30, 2003, the Company incurred an expense of $200,000 in connection with the impairment of the original intellectual property owned by the Company. The decision to record an impairment of the intellectual property was based primarily on the overall age of the patents underlying the intellectual property combined with the Company`s current operational status. This impairment is not indicative of the value of the technology and the current value of the separate and independent patent applications and trademark applications the Company has filed both in the United States and internationally.

During the fiscal year ended June 30, 2003, the Company incurred an expense of $10,000 in connection with the impairment of the WaferPierce System bought and modified by Company for the application of NCS on wafers. This impairment is not indicative to the value of the technology, nor does the Company believe that it limits the Company`s ability to market NCS. The Company does not believe that there has been any impairment to other long-lived assets as of June 30, 2003.

During the fiscal year ended June 30, 2002, the Company incurred an expense of $104,375 in connection with the impairment of equipment built by the Company to develop the application of the NanoPierce Connection System (NCS(TM)) on flexible substrates. Given the Company`s focus on the application of NCS at the wafer-level and based on management`s operational plans and developments for the future, it was decided that because the equipment had no resale value to the Company, to write off the carrying value of the equipment. This write off is not indicative to the value of the technology, nor does the Company believe that it limits the Company`s ability to market NCS in markets using flexible substrates.

During the fiscal year ended June 30, 2003, the Company recognized a net loss of $4,017,785 compared to a net loss of $4,729,072 during the fiscal year ended


June 30, 2002. The decrease of $711,287 is explained by the decrease of $870,228 in operating expenses, offset by a $91,323 decrease in interest income and a $99,860 increase in the loss from discontinued operations between 2003 and 2002.


LIQUIDITY AND FINANCIAL CONDITION


Net cash used in operating activities from continuing operations in 2003 was $1,754,247, compared to net cash used in operating activities from continuing operations in 2002 of $2,777,705. In 2003, the net cash used represented a net loss of $4,017,785, adjusted for the loss from discontinued operations of $882,718, amortization and depreciation expense of $416,250, impairment charges of $210,000, and changes in operating assets and liabilities and other adjustments which net to $754,570.

In 2002, the net cash used represented a net loss of $4,729,072, adjusted for the loss from discontinued operations of $782,858, amortization and depreciation expense of $1,142,334, impairment charges of $104,375, and changes in operating assets and liabilities and other adjustments which net to ($78,200).

During the year ended June 30, 2003 the Company sold 7,340,348 shares of common stock and granted warrants to purchase 6,024,525 shares of common stock at exercise prices ranging from $0.15 to $0.60 for $1,826,766 (net of offering costs of $75,500). The warrants are exercisable through 2008 and contain a cashless exercise provision. The funds were raised to support operations.

During the fiscal year ended June 30, 2003, the Company entered into a 12-month financial advisory and exclusive placement agent agreement with a third party (the " Placement Agent" ). Under the terms of the agreement, the Placement Agent is to act as the financial advisor to the Company and as its exclusive placement agent for a private placement of equity securities during the twelve-month term of the agreement. Compensation consists of a retainer fee (deferred consulting costs of approximately $230,400), which consists of a warrant to purchase up to 450,000 shares of the Company`s common stock. Compensation also includes a $10,000 monthly advisory fee, payable in cash, beginning in June 2003. In addition, the Company is exploring other financing opportunities to support continuing operations.

In June 2003, Mr. Metzinger, the President, Chief Executive Officer and a director of the Company, loaned $10,000 to the Company in exchange for an unsecured 7% note payable due in December 2003, the proceeds of which were utilized for operational purposes.

In April 2002, the Company entered into a $2,000,000 equity financing. The Company received the first of two available tranches of $1,000,000 per tranche ($900,000 net of $100,000 of offering costs) and in return issued 800,000 free trading common shares to the investor. In addition, the Company issued 1,073,000 of its free-trading common shares, which are being held by an escrow agent for the potential issuance upon exercise of the warrants issued in connection with the financing. Such warrants have a term of five years, with an exercise price of $1.45 per share. The second tranche of $1,000,000 was made available to the Company sixty days after the take down of the first. The Company declined to take down the second tranche, due to depressed market conditions, at that time, and possible dilutive effects on its stock. The second tranche is no longer available to the Company, pursuant to the terms of the agreement with the investor.

During the fiscal year ended June 30, 2001, the Company loaned $500,000 to an unrelated third party, Global Capital Partners, Inc. (" Global" ) in exchange for a 12% note receivable due in November 2001. Through June 30, 2002, principal


payments of $230,291 were received. In October 2002 the remaining principal of $144,709 was received.

In April 2002, the Company loaned $50,000 to a representative of the unrelated third party, which had been assigned the Global note, in exchange for a unsecured, 8% note receivable due in October 2002. In May 2002, the Company received $23,930. In September 2002, the remaining principal balance of $26,859 was received.

At July 1, 2001, the Company also had a $300,000 loan receivable from an unaffiliated third party. In September 2001, the outstanding amount was paid in full.

At July 1, 2001, the Company had an unsecured note receivable from Intercell of $92,500. During the year ended June 30, 2002, the Company advanced an additional $35,000 to Intercell. The entire amount was paid in full by June 30, 2002.

During the fiscal year ended June 30, 2003, the Company made investments in machinery and equipment of approximately $351,431 in continuing operations ($8,358 by NanoPierce Card, presented in discontinued operations) to support its expanded activities at ExypnoTech, as compared to $188,755 in continuing operations ($12,136 by NanoPierce Card, presented in discontinued operations) during the fiscal year ended June 30, 2002. In August 2002, ExypnoTech accepted delivery on machinery to begin the production of RFID components for usage in Smart Labels.

During the fiscal year ended June 30, 2003, the Company expanded the scope of its patent and trademark applications. The patent and trademark applications are being amortized using the straight-line method over ten years. On June 30, 2003, the Company has patent and trademark applications costs of $431,286, compared to $242,646 on June 30, 2002. The increase of $188,640 was due in part to the filing of trademark applications at the international level and the filing of new patent applications in connection with development and advancement of the technology.


PLAN OF OPERATIONS


The Company has signed various nondisclosure and cooperation agreements with companies both overseas and in the United States. The agreements are applicable to the application of the Company`s NCS technology and/or its WaferPierce method for various products in the smart card/smart label industries, the LED industry and in the semiconductor industry. Management is pursuing the development of further similar agreements both nationally and internationally with additional companies in not only these but other industries. The Company is also involved in creating samples and testing in connection with these agreements.

In September 2003, the Company formed a joint venture with Scimaxx, LLC. The joint venture, Scimaxx Solutions, LLC is to handle marketing of the Company`s technology. Scimaxx LLC, is owned by an officer and director of the Company and two former employees of the Company. In return for 50% ownership of the Scimaxx Solutions, LLC, the Company contributed a license to utilize its technology and the facilities and equipment of NanoPierce Connections. The Company is not required to make any cash contributions to the joint venture. Operating capital will be provided by Scimaxx, LLC.

Effective September 22, 2003, the Company signed a letter of intent with Meshed Systems, GmbH (" Meshed Systems" ), in which Meshed Systems is to make a 100,000 Euro investment in ExypnoTech for a 51% equity interest. The letter of intent provides for Meshed Systems to manage the operations of ExypnoTech and to


provide ExypnoTech with working capital on an as needed basis. The Company is to grant ExypnoTech a non-exclusive, non-royalty bearing worldwide license to practice its ultrasonic technology. Profit sharing is to based on the equity ownership. The license will also allow ExypnoTech to sublicense the intellectual property. Meshed Systems is managed by a former officer and director of the Company.

The Company is continuing to look for additional financing through marketing of its NCS though the pursuit of licensing, joint ventures, co-manufacturing or other similar arrangements with industry partners. The failure to secure such a relationship will result in the Company requiring substantial additional capital and resources to bring its NCS to market. To the extent the Company`s operations are not sufficient to fund the Company`s capital requirements, the Company may enter into a revolving loan agreement with financial institutions or attempt to raise capital through the sale of additional capital stock or through the issuance of debt. At the present time the Company does not have a revolving loan agreement with any financial institution nor can the Company provide any assurance that it will be able to enter into any such agreement in the future or be able to raise funds through the further issuance of debt or equity in the Company. The Company continues to evaluate additional merger and acquisition opportunities.


RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS


In May 2003, the Financial Accounting Standards Board (" FASB" ) issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity. SFAS No. 150 establishes new standards on how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. Under previous guidance, issuers could account for many of those instruments as equity. SFAS No. 150 requires that those instruments be classified as liabilities in statements of financial position. SFAS No. 150 is effective for all financial instruments entered into or modified after may 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The Company believes that the adoption of SFAS No. 150 will not have a material impact on its results of operations or financial condition.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure. This statement amends SFAS No. 123, Accounting for Stock Based Compensation, and establishes two alternative methods of transition for the intrinsic value method to the fair value method of accounting for stock-based employee compensation. In addition, SFAS No. 148 requires prominent disclosure about the effects on reported net income (loss) and requires disclosure for these effects in interim financial information. The Company adopted the disclosure only provisions of SFAS No. 148 in 2003 and plans to continue accounting for stock-based compensation under APB 25.

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which addresses accounting and financial reporting for the impairment or disposal of long-lived assets. The Company adopted SFAS No. 144 effective July 1, 2002, and has applied the provisions of SFAS No. 144 in connection with its accounting for the impairment of long-lived assets, discussed above. Management does not believe the application of SFAS No. 144 resulted in a 2003 impairment charge different from that under previous accounting standards. The provisions of SFAS No. 144 were also applied in connection with the Company`s accounting for discontinued operations.



CRITICAL ACCOUNTING POLICIES


The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to deferred revenues; depreciation or fixed assets, amortization of intangible assets such as our intellectual property, financing operations, currency valuations and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The Company believes that the following are some of the more significant accounting policies and methods used by the Company:

- stock based compensation; - valuation of intellectual property, patent and trademark

applications and other long-lived assets;
- international operations;
- revenue recognition and deferred revenue;
- litigation; and
- contractual obligations.

Stock-based compensation
SFAS No. 123, Accounting for Stock Based Compensation, defines a fair-value-based method of accounting for stock-based employee compensation plans and transactions in which an entity issues its equity instruments to acquire goods or services from non-employees, and encourages but does not require companies to record compensation cost for stock-based employee compensation plans at fair value.

The Company has chosen to account for employee stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25 (APB No. 25), Accounting for Stock Issued to Employees, and related interpretations. Accordingly, employee compensation cost for stock options is measured as the excess, if any, of the estimated fair value of the Company`s stock at the date of the grant over the amount an employee must pay to acquire the stock.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure. This statement amends SFAS No. 123, Accounting for Stock Based Compensation, and establishes two alternative methods of transition for the intrinsic value method to the fair value method of accounting for stock-based employee compensation. In addition, SFAS No. 148 requires prominent disclosure about the effects on reported net income (loss) and requires disclosure for these effects in interim financial information. The Company adopted the disclosure only provisions of SFAS No. 148 in 2003 and plans to continue accounting for stock-based compensation under APB 25.

Valuation of intellectual property, patent and trademark applications and other long-lived assets


The Company assesses the impairment of long-lived assets and intangible assets such as intellectual property and patent and trademark applications whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors the Company considers important which could trigger an impairment review include negative projected operating performance by the Company and significant negative industry or economic trends. At June 30, 2003, management assessed the carrying value of intellectual and other long-lived assets for impairment, and based on this assessment the Company believed that impairment was necessary in the case of both the original intellectual property and the WaferPierce System located at NanoPierce Connections. During 2003, the Company recognized an impairment of $200,000 on the intellectual property and an impairment of $10,000 on the WaferPierce System. The Company does not believe that there has been any other impairment to long-lived assets as of June 30, 2003.

International operations

The Company`s two foreign subsidiaries (NanoPierce Card and ExypnoTech) operations are located in Germany. NanoPierce Card and ExypnoTech transactions are conducted in currencies other than the U.S. dollar, (the currency into which the subsidiaries` historical financial statements have been translated) primarily the Euro. As a result, the Company is exposed to adverse movements in foreign currency exchange rates. In addition, foreign political and economic environment, trade barriers, managing foreign operations and potentially adverse tax consequences. Any of these factors could have a material adverse effect on the Company`s financial condition or results of operations in the future.

Revenue recognition and deferred revenue

The Company`s revenue recognition policy is significant because future revenue could be a key component of its results or operations. Revenue results are difficult to predict, and any shortfall in revenue or delay in recognizing revenue could cause operating results to vary significantly.

The Company derived most of its revenue through discontinued operations of its German subsidiary, NanoPierce Card, which performed various software development and implementation services for third parties. These services are substantially unrelated to the development and marketing of the PI Technology. Revenues from these services are generally recorded as the services are preformed and when no significant obligations remain related to implementation. Revenues are deferred if significant future obligations are to be fulfilled or if connection is not probable.

Litigation

The Company is involved in certain legal proceedings, as described in Note 8 and 9 to the consolidated financial statements included in this report.

The Company intends to vigorously prosecute these legal proceedings and does not believe the outcome of these proceedings will have a material adverse effect on the financial condition, results of operations or liquidity of the Company. However, it is too early at this time to determine the ultimate outcome of these matters.

Contractual obligations

For more information on the Company`s contractual obligations on operating leases, refer to Note 10 of the Consolidated Financial Statements. At June 30,


2003, the Company`s commitments under these obligations were as follows (in thousands):


OPERATING LEASES
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Year ending June 30,
2004 $ 125
2005
91
2006
67
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$ 283
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