[My bolding]
A Periodic Report - March 2008
I wanted to update you on our progress during the last quarter and share some insights into the current year.
First, a few administrative details. As many of you know, the company has primarily done business as Applied Nanotech Inc. on a daily operating basis and has used Nano-Proprietary, Inc. as our public face. I haven't been with the company long enough to fully understand the reasoning behind this, but I think you will agree it no longer makes sense. At the annual meeting this year, one of the items on the agenda will be a change of the name of NPI to Applied Nanotech Holdings, Inc. This change, along with a standardization of logos and stationary is designed to present a more consistent image to the world and remove some of the confusion as to who we are. Our subsidiary, Applied Nanotech, Inc. will continue to exist primarily due to ongoing contractual obligations.
We have scheduled our annual shareholder meeting for May 20, 2008 at the Austin Renaissance Hotel. Following the meeting, which will start at 10:00 am, we will be conducting tours at our headquarters facilities. For those of you who have never had the opportunity to visit us, this is the ideal opportunity.
The last quarter, bringing 2007 to a close and ending my first year at NPI, was certainly an unexpectedly busy time. The financial results are best told by reviewing the 10K, but in summary, our 4th quarter sales of $1,077,149 and net loss of $965,511 were in line with our expectations. Adding these to our already strong year to date numbers (by historical company standards) gave us our best showing from operations in the company history. Losses were, of course, impacted by our huge legal fees from on-gong litigation. We expect these type expenses to be significantly lower in 2008. On the Canon matter, we are primarily waiting for the appeals process to grind forward. Keesmann related expenses will be sharply reduced due to the additional defendants (those other than Keesmann) offer to pay a settlement to us while simultaneously withdrawing their financial support of Keesmann. We are asking the court for an expeditious trial in the Keesmann matter with the hope of resolving this matter during 2008.
Working on the Keesmann matter was only one of the things that kept the fourth quarter busy. Final work on the hydrogen sensor and supporting the integration into our customer's product occupied the sensor team. This customer, who has already entered into a royalty bearing license and technology transfer agreement, is planning an April product announcement. We expect this agreement to be royalty bearing during 2008.
I also couldn't be happier with the progress we are making on printable copper inks. We have met our customers’ design specifications and are capable of manufacturing consistent batches of material in sufficient quantity to allow the delivery of samples to our customers' prospects. Our current activity revolves around securing sufficient quantities of nano-particles to allow production lot sizes to be manufactured by our customer. We fully expect this project to leave the development phase during 2008 resulting in a production license and royalties.
Mitsui has made the initial payment extending their "option to a license" agreement with us and we are actively negotiating a Master License with Mitsui that would allow them to issue sub-licenses within their market areas. Although we do not have complete transparency through to the end potential licensee, Mitsui has asked us to approve negotiating guidelines for two of the potential sub-licensees that they are working with. We believe they are working with a total of five potential licensees.
As significant as our business results have been, the progress in obtaining new patents and expanding the geographical coverage of our portfolio overshadows them because they are at the heart of future results. We have had our first patent issued in Japan (see press release dated 1/31/08) and our recent nano-biological patent (see press release dated 2/28/08) are key milestones.
As I am writing this, we are expecting our quarterly revenue for the almost completed first quarter to be in the $800 - $900,000 range, consistent with the past few quarters. After these billings, we will have at least $3.3 million in research backlog. We, of course, have sales efforts underway across our business lines to generate additional research projects that will hopefully yield IP with lasting value.
I continue to be optimistic about the prospects for the business and hope you will make an effort to join us for our annual shareholder meeting.
Sincerely,
Thomas F. Bijou
http://www.nano-proprietary.com/InvestorRelations/ShareHolderCommunications.asp
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