<PAGE>
As filed with the Securities and Exchange Commission on March 14, 2000
Registration No. 333-31118
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
_______________
NANOPIERCE TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
NEVADA 84-0992908
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
370 Seventeenth Street, Suite 3580
Denver, Colorado 80202
(303) 592-1010
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Paul H. Metzinger
President and Chief Executive Officer
Nanopierce Technologies, Inc.
370 Seventeenth Street, Suite 3580
Denver, Colorado
(303) 592-1010
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
With copies sent to:
Robert J. Ahrenholz, Esq.
Joshua M. Kerstein, Esq.
Kutak Rock LLP
717 Seventeenth Street, Suite 2900
Denver, Colorado 80202
(303) 297-2400
Approximate date of commencement of the proposed sale to the public: From
time to time after this Registration Statement becomes effective.
_______________
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Title of each class Amount maximum maximum Amount of
of securities to to be offering price aggregate offering registration
be registered registered per share(1) price(1) fee(2)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Warrants(3) 630,000 $2.915 $1,836,450 $ 485
- -------------------------------------------------------------------------------------------==================
Common stock underlying 630,000 -- -- --
warrants(4)
- -------------------------------------------------------------------------------------------==================
Common stock underlying 6% 1,029,160 $2.915 $1,500,000 $ 396
convertible debentures
- -------------------------------------------------------------------------------------------==================
Common stock underlying the 1,715,266 $2.915 $2,500,000 $ 660
conditional warrant to
purchase $2,500,000 principal
amount of 6% convertible
debentures(5)
- -------------------------------------------------------------------------------------------==================
Total -- -- $5,836,450 $1,541(6)
=============================================================================================================
</TABLE>
____________
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Registration fee calculations are based on the filing fee of $264 per
$1,000,000 of securities registered.
(3) Includes 250,000 warrants that are exercisable upon exercise of the
conditional warrant. Registration fee is calculated pursuant to Rule 457(g)
based on the exercise price of the warrants at the time of the filing of this
registration statement. Pursuant to Rule 416, this registration statement also
covers the shares of common stock as may be issuable pursuant to the anti-
dilution provisions of the warrants. Pursuant to Rule 457(g), no separate
registration fee is payable with respect to the common stock underlying the
exercise of the warrants.
(4) Pursuant to Rules 457(i) and 457(g), no separate registration fee is
payable with respect to the common stock underlying the warrants. Pursuant to
Rule 416, this registration statement also covers the shares of common stock as
may be issuable pursuant to the anti-dilution provisions of the warrants.
(5) Pursuant to Rule 416, this registration statement also covers the shares of
common stock as may be issuable pursuant to the anti-dilution provisions of the
debentures. Pursuant to Rule 457(g), no separate registration fee is payable
with respect to the common stock underlying the conversion of the debentures
into common stock.
(6) Of the $1,541 registration fee, $1,387 was previously paid with the
Registration Statement filed on February 25, 2000. The additional registration
fee of $154 is paid with this amendment.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment that specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933, as amended or until this registration statement
shall become effective on such date as the commission, acting pursuant to
section 8(a), may determine.
<PAGE>
The information in this prospectus is not complete and may be changed. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. We may not sell these securities until that
registration statement becomes effective. This prospectus is not an offer to
sell securities and it is not soliciting an offer to buy these securities in any
state where the offer or sale is not permitted.
Subject to completion, dated March 14, 2000
PROSPECTUS
NANOPIERCE TECHNOLOGIES, INC.
-----------------------------
370 Seventeenth Street, Suite 3580
Denver, Colorado 80202
3,374,426 shares of common stock
630,000 common stock purchase warrants
The sellers: All of the securities offered by this prospectus are offered
from time to time by the selling security holders identified
in this prospectus.
Market for
securities: Our common stock is traded on the over-the-counter market and
is quoted on the OTC Bulletin Board under the symbol "NPCT."
The common stock is also traded on the Third Market Segment
of the Frankfurt Stock Exchange under the symbol "NPI." There
is no market for the warrants offered by this prospectus and
you should not expect one to be established in the future.
Investing in the common stock or the warrants involves a high degree of
risk. See "RISK FACTORS" beginning on page 5.
The shares of common stock offered by this prospectus represent about
6.33% of our issued and outstanding common stock as of
February 1, 2000, assuming that, as of that date, all of our
outstanding convertible securities are exercised and
converted into common stock, the warrants in this offering
are converted into common stock and all of our outstanding
convertible debentures are converted into the maximum number
of shares provided by the debenture. On March 13, 2000, the
last reported sale price of the common stock was $6.13 per
share. See "DESCRIPTION OF THE SECURITIES--Common Stock."
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved any of these securities
or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The date of this prospectus is March __, 2000.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
-----
<S> <C>
FORWARD-LOOKING STATEMENTS........................ 1
PROSPECTUS SUMMARY................................ 2
RISK FACTORS...................................... 5
USE OF PROCEEDS................................... 12
THE COMPANY....................................... 13
DESCRIPTION OF SECURITIES......................... 22
SELLING SECURITY HOLDERS.......................... 25
PLAN OF DISTRIBUTION.............................. 25
EXPERTS........................................... 27
AVAILABLE INFORMATION............................. 27
ADDITIONAL INFORMATION............................ 27
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE... 27
</TABLE>
FORWARD-LOOKING STATEMENTS
This prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities and
Exchange Act of 1934. We base these forward-looking statements on our current
expectations and projections about future events. These forward-looking
statements are subject to risks, uncertainties, and assumptions about our
company, including:
. the rate of market development and acceptance of the interconnect
technology in the industry within which we are concentrating our
business activities;
. the limited revenues and significant operating losses generated to date;
. the possibility of significant ongoing capital requirements and our
ability to secure financing as and when necessary;
. our ability to compete successfully with the other providers of
interconnect technologies;
. our ability to retain the services of our key management, and to attract
new members of the management team; and
. our ability to obtain and retain appropriate patent, copyright and
trademark protection of our intellectual properties and any of our
products.
You should only rely on the information contained in this prospectus. We
have not authorized any person to provide you with different information. If
anyone provides you with different or inconsistent information, you should not
rely on it. We are not making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus is accurate as of the date on the
front cover of this prospectus only. Our business, financial condition, results
of operations and prospects may have changed since that date.
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<PAGE>
PROSPECTUS SUMMARY
The following summary highlights certain information contained throughout
this prospectus. It is not complete and may not contain all of the information
that you should consider before investing in the securities offered by this
prospectus. To understand this offering fully, you should read this entire
prospectus carefully, including the risk factors.
The Company
We were incorporated on June 22, 1996 as Sunlight Systems, Ltd, a Nevada
corporation. Our corporate offices are located at 370 - 17th Street, Suite
3580, Denver, Colorado 80202, and our telephone number is (303) 592-1010. Our
common stock is traded on the over-the-counter market and is quoted on the OTC
Bulletin Board under the symbol "NPCT." Our common stock also is traded on the
Third Market Segment of the Frankfurt Stock Exchange under the symbol "NPI."
On February 26, 1998, we changed our name to Nanopierce Technologies, Inc.
and we acquired the intellectual property rights related to our patented
Particle Interconnect Technology (the "particle technology") from Particle
Interconnect Corporation, a Colorado Corporation, a wholly owned subsidiary of
Intercell Corporation, also a Colorado Corporation and our affiliate. We
acquired the particle technology to pursue a more focused, strategic application
and development of the particle technology. We have designated and are
commercializing our particle technology as the Nanopierce Connection System (the
"connection system").
Our particle technology is protected by 10 patents, two pending patent
applications and two patent disclosure documents that are currently in
preparation, all of which we now own. The particle technology is based on
modifying a contact surface by depositing on that surface metal-coated
microscopic particles. Generally, the patents and patent applications relate to
hard particles coated with a conductive material such as copper or nickel which
are deposited onto a foundation such as a printed circuit board, a thin plate
onto which electronic components are placed, a socket, connector or conductor to
make electrical connections with what we believe is superior conductivity. See
"THE COMPANY - The particle technology."
Our market strategy is to offer the connection system in products, services
and technology packages into market segments and commercial applications in
which the connection system either has a significant cost advantage or is
enabling, in that it enables electronic manufacturers to successfully produce
products that may not be otherwise possible. We intend to adopt and have begun
to implement a three-part approach to commercialize our particle technology.
The first part of our strategy is to generate royalty revenues by forming
strategic relationships with, or licensing the particle technology to,
established companies in the markets in which the connection system is
applicable. The second part of our strategy is to establish joint ventures with
established industry participants. The third part of our strategy is to
organize operating subsidiaries that produce components or systems utilizing the
connection system. See "THE COMPANY."
The Offering
This offering includes:
. warrants to purchase 630,000 shares of our common stock and
. 3,374,426 shares of our common stock that will be issued upon the
exercise of all of the warrants and conversion of all of our 6%
convertible debentures into common stock. The warrants and
convertible debentures include those that may be issued upon
exercise of a
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<PAGE>
conditional warrant purchased by Equinox Investors
LLC described elsewhere in this prospectus.
Warrants
The warrants offered include 150,000 warrants issued to Equinox Investors
LLC, 230,000 warrants issued to EBI Securities Corporation and 250,000 warrants
to be issued to Equinox Investors LLC upon the exercise of the conditional
warrant purchased by Equinox Investors LLC.
Common Stock
The 3,374,426 shares of common stock offered in this prospectus includes:
. 380,000 shares of common stock issued upon on the exercise of the
warrants;
. 514,580 shares of common stock issued upon the conversion of
$1,500,000 of our 6% convertible debentures based upon the price of
our common stock on February 24, 2000 and up to an additional
1,372,213 shares of common stock issuable upon conversion of our 6%
convertible debentures if the price of our common stock declines
below that price;
. 250,000 shares of common stock based on the exercise of the
warrants to be issued under the conditional warrant purchased by
Equinox Investors LLC;
. 857,633 shares of common stock based on the exercise of the
conditional warrant purchased by Equinox Investors LLC to purchase
$2,500,000 of our 6% convertible debentures and the conversion of
these debentures into common shares at a conversion price of $2.915
per share as described more fully in this prospectus. We are not
offering the debentures in this prospectus.
Use of Proceeds
We have received $1,500,100 in proceeds from the sale of convertible
debentures, warrants to purchase shares of common stock and a conditional
warrant to Equinox Investors LLC. We expect to receive an additional $4,336,450
in proceeds if:
. the conditional warrant purchased by Equinox Investors LLC is
exercised;
. the warrants for 150,000 shares of common stock previously sold to
Equinox Investors LLC are exercised at an exercise price of $2.915
per share;
. the additional 6% debentures in principal amount of $2,500,000 are
purchased by Equinox Investors LLC;
. additional warrants to purchase 250,000 shares of common stock are
issued to Equinox Investors LLC pursuant to the conditional warrant
and are exercised at an exercise price of $2.915 per share; and
. the warrants for 230,000 shares of common stock previously sold to
EBI Securities Corporation are exercised at an exercise price of
$2.915 per share.
We cannot assure you that the conditional warrant or any of the warrants
will be exercised or that the additional debentures will be purchased. We will
not receive any proceeds from the conversion of the debentures into common
shares.
We have used or we expect to use the proceeds from the sale of the
convertible debentures, the warrants and the conditional warrant to fund
operations, production, marketing, sales and, possibly, to
3
<PAGE>
acquire other technologies. We intend to use the proceeds from the exercise of
the warrants or the additional debentures for working capital purposes. See "USE
OF PROCEEDS."
Risk Factors
Your investment in the warrants and the common stock offered in this
prospectus involves a high degree of risk. See "RISK FACTORS" on page 5.
4
<PAGE>
RISK FACTORS
When deciding whether or not to purchase the warrants or common stock
offered in this prospectus, you should carefully consider the risks and
uncertainties described below and the other information in this prospectus. If
any of the following risks or uncertainties actually occurs, our business,
financial condition and operating results would likely suffer. In that event,
you could lose all or part of the money you paid to buy our common stock or our
warrants.
We have a limited operating history
Our operating history that is relevant to our new business plan is limited,
and we have limited experience or business history marketing the particle
technology and no experience licensing any products that use the particle
technology. We cannot assure you that products using the particle technology
will ever be brought to the market, even if we hire experienced personnel and go
through the product testing process.
Our revenues depend on bringing the particle technology to the marketplace
We do not anticipate generating revenues until products utilizing the
particle technology are developed, marketed, manufactured and brought to the
marketplace. We anticipate that developing our particle technology and products
will be expensive. The costs that we expect to incur include application
engineering expenses, marketing costs and other general and administrative
expenses. Even if we successfully develop the particle technology, we may be
unable to compete successfully in the marketplace, or the development of the
technology may not generate enough revenue to offset our operating costs.
We have a history of losses because our operating expenses exceed our revenues
We recently have incurred increased operating expenses without a
corresponding increase in revenues. We reported a net loss of $487,092,
$1,137,334 and $3,139,439 for the fiscal years ended June 30, 1997, 1998 and
1999. Of the net loss in 1999, approximately $2,056,275 was attributable to
non-cash transactions involving the issuance of stock for services or in lieu of
interest payments. As of December 31, 1999, our total indebtedness was
$728,964. As of December, 31, 1999 our 33% shareholder, Intercell Corporation,
owed us $123,865. We do not know when Intercell Corporation will be able to pay
us these funds.
We may not be able to continue as a going concern
Our independent auditors' report of our financial statements as of June
30, 1999 includes an explanatory paragraph expressing substantial doubt about
our ability to continue as a going concern. If we are unable to secure
significant additional financing, we may be obligated to seek protection under
the bankruptcy laws and our shareholders may loose their investment.
We do not expect to pay dividends in the foreseeable future
We have never paid cash dividends on our common stock. We do not
expect to pay cash dividends on our common stock at any time in the foreseeable
future. The future payment of dividends directly depends upon our future
earnings, capital requirements, financial requirements and other factors that
our board of directors will consider. Since we do not anticipate paying cash
dividends on our
5
<PAGE>
common stock, return on your investment, if any, will depend solely on an
increase, if any, in the market value of our common stock.
We only have informal joint ventures or partnerships in place and cannot
guarantee that any formal or additional agreements will be entered into in the
future
We believe that our long-term profitability and growth depends on entering
into licensing or joint venture relationships with various manufacturers to
develop and market products using the particle technology. We have recently
entered into some informal agreements but have not entered into any formal
agreements to date. We cannot assure you that any additional informal
agreements will ever be entered into, or that any formal agreements that we
enter into in the future will be profitable. Our business could be negatively
impacted if we fail to enter into formal agreements or more informal
arrangements. See "THE COMPANY--Sales and Marketing Strategy--Strategic
Alliances."
Our inability to establish a market presence with our particle technology could
cause consumers to use alternative technologies
We believe that it is important to establish a market presence for our
particle technology within the next two years. Any delay in establishing the
particle technology could cause prospective customers to use alternative
technologies. To achieve a market presence, we have begun negotiating to enter
into joint ventures, licensing or other similar arrangements with one or more
manufacturers. However, we cannot assure you that these attempts will be
successful. Any loss of our potential customers to alternative technologies
could adversely affect our business and financial condition.
We may be unable to meet our ongoing needs for additional capital
We cannot accurately predict how much money we will need to implement our
strategic business plan or to continue operations. Our future capital
requirements, the likelihood that we can obtain money and the terms of any
financing will be influenced by many different factors, including:
. our revenues,
. the status of competing products in the marketplace,
. our performance in the marketplace,
. our overall financial condition,
. our business prospects,
. the perception of our growth potential by the public,
including potential lenders,
. our ability to enter into joint venture or
licensing relationships to achieve a market presence and
. our progress in developing, marketing and selling the particle
technology.
While we are confident, based on recent discussions, that we will be able
to obtain adequate financing in a timely fashion, if we cannot obtain adequate
financing or if the terms on which we are able to acquire financing are
unfavorable, our business and financial condition could be negatively affected.
We may have to delay, scale back or eliminate some or all of our development and
manufacturing programs, if any. We may also have to go to third parties to seek
financing, and in exchange, we may have to give up rights to some of our
technologies, patents, potential products or other assets.
6
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We cannot guarantee the quality, performance or reliability of our products
We have no prior experience in taking technology to the manufacturing or
production stage. We plan to have licensees or co-joint venturers manufacture
products using the particle technology. We expect that the customers of these
products will demand quality, performance and reliability. We cannot assure you
that our future licensees or co-joint venturers will be able to meet the quality
control standards that may be established by equipment manufacturers and other
customers of products utilizing the particle technology.
There may be insufficient demand for our particle technology
We must convince our potential customers that the particle technology is
technologically sound and can be manufactured efficiently and cost-effectively
before connector manufacturers and electronic equipment manufacturers will be
willing to use our technology. To create this consumer demand, we have to
successfully market and sell our new technology. Even after these efforts, our
particle technology may not be viewed by consumers as an improvement over
existing technologies and may not achieve commercial acceptance.
We may be unable to hire and retain key personnel
Our future success depends in part on the continued contributions of our
key technical and senior management personnel. Our success also depends on our
ability to attract and retain additional qualified technical personnel with
experience in manufacturing and personnel with experience in marketing. We may
be unable to attract or retain these necessary personnel. If we fail to attract
or retain skilled employees, or if a key employee fails to perform in his or her
current position, we may be adversely affected.
We may be unable to successfully compete in the marketplace
The interconnect market is highly competitive. We will compete with
suppliers of other interconnect technologies such as Thomas and Betts, Alpha
Metals and major electronic technology manufacturing leaders such as Philips,
Siemens and IBM. We are disadvantaged competing against these competitors in
several different areas, including:
. financial resources;
. technological resources;
. manufacturing capabilities;
. diversity of revenue sources and business opportunities;
. personnel and human resources; and
. research and development capabilities.
Our larger competitors have long-term advantages over us in research and
new product development and have a greater ability to withstand periodic
downturns in the interconnect market because they have diverse product lines
that can provide revenue even when there is a downturn in the interconnect
market.
We are also in competition with new technologies and products that have not
yet been developed. Our ability to compete successfully depends in part on our
capability to upgrade our products and quality
7
<PAGE>
control procedures and to adapt to technological changes and advances in the
electronics industry. To compete, we must make sure that products that are
introduced with our technology remain compatible with evolving generations of
electronic components and manufacturing equipment. We cannot assure you that we
will be successful in these endeavors.
Changes in technology could render our particle technology obsolete
The interconnect market is subject to rapid technology changes. New
products are introduced, old products are enhanced and others become obsolete.
The entire interconnect market may be replaced by a newer form of technology.
To be competitive in this quickly evolving market, we must develop, market and
sell our products on a timely and cost-effective basis. We also must respond to
the ever changing requirements and demands of our customers. Our success in
developing new or enhanced technologies depends on successful new product
selection and integration of our particle technology into products. Our success
will also depend on how quickly competitors can design and develop competing
products and technologies. We cannot assure that we will be successful in
selecting, developing, and marketing new technologies or that errors or flaws in
the new technologies will not prevent or delay market acceptance. If we cannot
introduce technologies and products that satisfy market demands in a timely
manner, we may be negatively affected.
We may be unable to obtain and retain appropriate patent, copyright and
trademark protection of our products
We protect our intellectual property rights through patents, trademarks,
trade names, trade secrets and a variety of other measures. However, these
measures may be inadequate to protect our intellectual property or other
proprietary information.
. Trade secrets may become known by third parties. Our trade secrets or
proprietary technology may become known or be independently developed
by competitors.
. Rights to patents and trade secrets may be invalidated. Disputes may
arise with third parties over the ownership of our intellectual
property rights. Patents may be invalidated, circumvented or
challenged, and the rights granted under those patents that provide us
with a competitive advantage may be nullified.
. Problems with future patent applications. Pending or future patent
applications may not be approved, or the scope of the granted patent
may be less than the coverage sought.
. Infringement claims by third parties. Infringement, invalidity, right
to use or ownership claims by third parties or claims for
indemnification may be asserted by third parties in the future. If
any claims or actions are asserted against us, we can attempt to
obtain a license for that third party's intellectual property rights.
However, the third party may not provide a license under reasonable
terms, or may not provide us with a license at all.
. Third parties may develop similar products. Competitors may develop
similar products, duplicate our products or may design around the
patents that are owned by us.
. Laws in other countries may insufficiently protect intellectual
property rights abroad. Foreign intellectual property laws may not
adequately protect our intellectual
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property rights abroad. Our failure to protect these rights could
adversely affect our business and financial condition.
. Litigation may be required to protect intellectual property rights.
Litigation may be necessary to protect our intellectual property
rights and trade secrets, to determine the validity of and scope of
the rights of third parties or to defend against claims of
infringement or invalidity by third parties. Such litigation could be
expensive, would divert resources and management's time from our sales
and marketing efforts, and could have a materially adverse effect on
our business, financial condition and results of operations and on our
ability to enter into joint ventures or partnerships with others.
License rights to particle technology may limit our ability to compete
Before we acquired the patents, patent applications and licenses from the
original owners of the particle technology, the inventor of the particle
technology granted five companies exclusive and non-exclusive licenses to use
the patents and patent applications relating to the particle technology. At
this time, only two of the five licensees are using our technology and none of
these licenses relate to either smart card or smart label technology. These
licenses restrict us as follows:
. Exclusive licenses prevent us from competing against the exclusive
licenses. We cannot compete in the fields in which exclusive licenses
have been granted. An exclusive license was granted in the field of
sockets for use in the automated handling and testing of integrated
circuits, a type of semiconductor in which a number of transistors and
other elements are combined to form a more complicated circuit .
. Non-exclusive licenses allow licensees to compete against us in
certain areas. The licensees with non-exclusive licenses can compete
directly with us or our other future licensees. Non-exclusive licenses
have been granted to use the particle technology for electrically
conductive components, laminate-based and metal-based products and
semiconductor products. If the present licensees decide to compete
with us or our future licensees, this competition could adversely
affect our business.
No market exists for the warrants
No public market exists to trade the warrants offered in this prospectus
and we do not intend to have the warrants listed on any national securities
exchange or quoted through the NASDAQ automated quotation system. We cannot
assure you that there will be a market to sell the warrants, or the price at
which holders would be able to sell their warrants. The price that holders
would be able to obtain depends on many factors, including our operating results
and the market for similar securities. See "DESCRIPTION OF SECURITIES -
Warrants."
State Blue Sky Laws may prevent sales of securities
Before we or any seller can sell any securities to a purchaser, state
securities laws require that the securities be registered or qualified for sale
in the state where the purchaser resides, or else fall within an exemption from
registration. We will not issue common stock to persons who want to convert
their debentures into common shares, or allow persons to exercise their
warrants, unless the debentures, the warrants, and underlying common stock are
registered or fall under an exemption from registration in the state in which
the purchaser resides. We will not knowingly sell the securities to purchasers
in jurisdictions in which the securities are not registered or otherwise
qualified for sale or exempt. However, there is a risk that purchasers may buy
the securities in the after-market or may move to jurisdictions in
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which the securities are not registered, qualified, or exempt. We cannot
guarantee that any purchaser will be able to effect any required registration or
qualification. See "DESCRIPTION OF SECURITIES - Warrants."
Federal laws may prevent conversion of debentures and exercise of warrants
For the warrants to be exercisable, and for the debentures, that are not
offered in this prospectus, to be convertible into common stock, that is offered
in this prospectus, we must maintain a current registration statement on file
with the SEC. This can be done by filing post-effective amendments to this
registration statement or by filing a new registration statement to reflect the
exercise of debentures and warrants. We have agreed to use our best efforts to
file and maintain a current registration statement with the SEC relating to the
warrants and underlying shares of common stock to the warrants and to the
debentures included in this prospectus. However, we cannot assure you that the
securities covered by this prospectus will continue to be registered. The value
of the warrants could be adversely affected at some point in the future if there
is no effective registration statement to cover the warrants. See "DESCRIPTION
OF SECURITIES."
This offering and the sale of securities by current security holders could cause
dilution of existing holders of the common stock by decreasing the price of our
common stock
The market price of the common stock could be adversely affected by sales
of substantial amounts of common stock in the public market after this offering,
by the perception that those types of sales could occur or by the fact or
perception of events which would have a dilutive effect on the market for the
common stock. As of February 1, 2000, we had 34,453,791 shares of our common
stock outstanding. After this offering, we could have up to an additional
3,374,426 shares of common stock outstanding, or 9.79%, of the issued and
outstanding stock as of February 1, 2000. If all of our outstanding convertible
securities were also converted into common stock, we would increase our
outstanding common stock in an amount of up to 35.40%, and we could have up to
53,330,717 shares of common stock outstanding. Future transactions with other
investors could further depress the price of our common stock because of
additional dilution. See "DESCRIPTION OF SECURITIES."
Common stock price could be effected by the ability of holders of our common
stock to sell their stock
The market price of the our common will be influenced by the ability of
common stock holders to sell their stock.
. Freely Transferable Shares. Of the 34,453,791 shares of our common
stock that were outstanding as of February 1, 2000, approximately
16,349,834 shares currently are freely transferable and constitute the
"float" in the public market for the common stock. Of the 37,828,217
shares of our common stock that could be outstanding after this
offering, the "float" in the public market for the common stock would
remain at 16,349,834 shares.
. Restricted Shares. Of the 34,453,791 shares of our common stock that
were outstanding as of February 1, 2000, approximately 18,103,957
shares currently are "restricted" or "control" securities within the
meaning of Rule 144 under the Securities Act. Of the 37,828,217
shares of our common stock that could be outstanding after this
offering, up to 21,478,383 shares of the common stock would be
"restricted" or "control" securities. These restricted securities
cannot be sold unless they are registered under the Securities Act, or
unless an exemption from registration is otherwise available,
including
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the exemption that is contained in Rule 144. Under Rule 144, a person
that is holding our common stock can sell shares based generally on
certain limitations as described below.
. Affiliates. Any "affiliate," as that term is defined under the
Securities Act, who has beneficially owned our common stock for at
least a year, can sell shares of our common stock subject to the
following volume limitation: in any three-month period, the
affiliate cannot sell more shares of our common stock than the
greater of 1% of the then outstanding shares of common stock or
the average weekly trading volume of the then outstanding shares
of common stock during the four calendar weeks preceding the sale.
. Non-affiliates. A person who is not deemed our "affiliate" who
has beneficially owned shares of our common stock for at least a
year can sell shares of our common stock subject to the same
volume limitation described above. Alternatively, a person who is
not our "affiliate" who has beneficially owned shares of our
common stock for at least two years can sell shares of our common
stock without regard to this volume limitation. See "DESCRIPTION
OF SECURITIES," and "PLAN OF DISTRIBUTION. "
We could issue preferred stock that could adversely effect the rights of the
common stock holders
We are authorized to issue up to 5,000,000 shares of our preferred stock,
$.0001 par value per share. Our articles of incorporation gives our board of
directors the authority to issue preferred stock without approval of our
stockholders. We may issue preferred stock to finance our operations. We may
authorize the issuance of our preferred stock in one or more series. In
addition, we may set several of the terms of the preferred stock, including:
. dividend and liquidation preferences,
. voting rights,
. conversion privileges,
. redemption terms, and
. other privileges and rights of the shares of each authorized series.
The issuance of large blocks of preferred stock could have a dilutive
effect on our existing shareholders and it can negatively impact our existing
stockholders' liquidation preferences. In addition, while we include preferred
stock in our capitalization to improve our financial flexibility, we could
possibly issue or preferred stock to third parties as a method of discouraging,
delaying or preventing a change in control in our present management.
The resale of our common stock by you may be limited because of its low price
which could make it more difficult for broker/dealers to sell our common stock
The Securities Enforcement and Penny Stock Reform Act of 1990 requires
additional disclosure relating to the market for penny stocks in connection with
trades in any stock defined as a penny stock. Regulations enacted by the SEC
generally define a penny stock as an equity security that has a market price of
less than $5.00 per share, subject to some exceptions. Unless an exception
applies, a disclosure
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schedule explaining the penny stock market and the risks associated with
investing in penny stocks must be delivered before any transaction in penny
stock can occur.
In addition, if our securities are not quoted on NASDAQ or if they do not
meet an exception to the penny stock regulations cited above, trading in our
securities would be covered by Rule 15g-9 promulgated under the Securities
Exchange Act of 1934. Under this rule, broker/dealers who recommend penny
stocks to persons that are not established customers or accredited investors
must make a special determination in writing for the purchaser that the
investment is suitable, and must also obtain the purchaser's written agreement
to a transaction before the sale.
The regulations could limit the ability of broker/dealers to sell our
securities and thus the ability of purchasers of our securities to sell their
securities in the secondary market if our common stock has a market price of
less than $5.00 per share.
USE OF PROCEEDS
Under the terms of the Securities Purchase Agreement (the "Securities and
Purchase Agreement") between us and Equinox Investors LLC, dated as of January
11, 2000, for an aggregate purchase price of $1,500,100, we sold to Equinox
Investors LLC:
. warrants to purchase 150,000 shares of common stock (the "initial
Equinox warrants"),
. 6% debentures in the principal amount of $1,500,000 (the "initial
Equinox debentures") and
. a conditional warrant (the "conditional warrant") to purchase
. 6% convertible debentures in the principal amount of up to
$2,500,000 (the "additional Equinox debentures") and
. warrants to purchase up to 250,000 shares of common stock
(the "additional Equinox warrants").
Together, the initial Equinox debentures and the additional Equinox debentures
are referred to as the "Equinox debentures" and the initial Equinox warrants and
the additional Equinox warrants are collectively referred to as the "Equinox
warrants."
We also issued to EBI Securities Corporation warrants to purchase 230,000
shares of common stock (the "EBI warrants").
We expect to collect up to a total of $5,836,550 if all the securities
issued by us are converted or exercised as described in this prospectus. The
proceeds that we expect to collect includes the $1,500,100 that we have already
received from the offering of initial Equinox warrants, the initial Equinox
debentures and the conditional warrant and an additional $4,336,450 in proceeds
that we will receive if the following conditions are met:
. The conditions to exercising the conditional warrant that are as
specified in the conditional warrant are met,
. The 150,000 initial Equinox warrants are exercised at an exercise
price of $2.915 per share;
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. All of the additional Equinox debentures in principal amount of
$2,500,000 are purchased;
. All of the additional Equinox warrants to purchase 250,000 shares of
common stock are issued to Equinox Investors LLC pursuant to the
conditional warrant and are exercised at an exercise price of $2.915
per share; and
. All 230,000 of the EBI warrants are exercised at an exercise price of
$2.915 per share.
We have used or we intend to use the proceeds from the sale of the initial
Equinox warrants, the initial Equinox debentures and the conditional warrant to
fund operations, to expand production, marketing and sales and possibly to
acquire other technologies. We expect to use substantially all of the proceeds
received from the sale of the additional Equinox debentures and the exercise of
the additional Equinox warrants and the EBI warrants, for general working
capital purposes. However, no assurance can be given that any of the Equinox
debentures will be purchased or that proceeds will be generated from the
exercise of the Equinox warrants or the EBI warrants.
We will not receive any proceeds from the conversion of the Equinox
debentures into common stock. To the extent they are resold by Equinox Investors
LLC, we will not receive any proceeds from the resale of the Equinox warrants or
from the sale of common stock issuable upon the exercise of the Equinox warrants
or the conversion of any of the Equinox debentures into common stock. We will
not receive any proceeds from the sales, if any, of any shares of common stock
or the EBI warrants by EBI Securities Corporation. See "DESCRIPTION OF
SECURITIES - Warrants."
THE COMPANY
We were incorporated on June 22, 1996 as Sunlight Systems, Ltd., a Nevada
corporation. Our corporate offices are located at 370 - Seventeenth Street,
Suite 3580, Denver, Colorado 80202, and our telephone number is (303) 592-1010.
Our common stock is traded on the over-the-counter market and is quoted on the
OTC Bulletin Board under the symbol "NPCT." Our common stock is also traded on
the Third Market Segment of the Frankfurt Stock Exchange under the symbol "NPI."
Overview
We were incorporated as Sunlight Systems, Ltd. From June 22, 1996 through
November 1996, we were engaged in limited activities as a dealer and distributor
of sun tunnels. This business, however, was discontinued and substantially all
assets were sold in November of 1996. From that time until February 1998, we
were generally inactive and reported no significant operating revenues.
On February 26, 1998, we changed our name to Nanopierce Technologies, Inc.
and we acquired the intellectual property rights related to our patented
Particle Interconnect Technology (the "particle technology") from Particle
Interconnect Corporation, a Colorado Corporation, a wholly owned subsidiary of
Intercell Corporation, a Colorado Corporation and our affiliate. In exchange
for the assets of Particle Interconnect Corporation, we issued 7,250,000 shares
of our common stock and 100 shares of our Series A Preferred Stock, convertible
into 7,250,000 shares of common stock to Intercell Corporation. We acquired the
particle technology to pursue a more focused, strategic application and
development of the particle technology.
The particle technology--Nanopierce Connection System
Our particle technology is protected by 10 patents, two patent applications
and two patent disclosure documents that are currently in preparation, all of
which we now own. The particle technology
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can be used to make highly reliable electrical connection without the need for
soldering or traditional connector methods. The particle technology is based on
modifying a contact surface by depositing on that surface metal-coated
microscopic particles. Generally, the patents and patent applications relate to
hard particles coated with a conductive material such as copper or nickel which
are deposited onto a foundation such as a printed circuit board, a socket,
connector or conductor to make electrical connections with what we believe is
superior conductivity. The particle technology can be used on many different
bases, whether flexible, rigid, metallic or non-metallic.
The particle technology begins with metallized, treated diamonds or other
hard particles, which have been closely screened to a specified size. The
particles are tightly classified in sizes ranging from 5 microns to 125 microns,
depending upon the product application. These electrically conductive particles
are attached onto contact sites using standard printed circuit board
manufacturing processes. The embedded particles create a surface with many
points that provide numerous parallel electrical paths by allowing electricity
to penetrate through an oxide, which is a non-conductive material, without
requiring the wiping action of conventional contacts. Wiping action refers to
the mechanical removal of oxides by sliding or rubbing the contact surfaces
together. We believe that our non-wiping, oxide penetrating particle technology
is capable of penetrating surface contamination and oils to create an effective
and reliable electrical contact.
The particles concentrate any contact force that is applied into a very
small area or point. This concentration of contact force gives the particle the
pressure, the force per square unit area, required to pierce oxides and other
contaminants on most surfaces without requiring large amounts of force on the
connector contact. The particle technology allows reliable connections to be
made with as little as 10 grams of force per contact. This low level of force
is sufficient to drive the particles through any oxides on an electrical contact
surface, such as an input/output pad on an individual integrated circuit which
is attached to a supporting surface. Moreover, the particles do insignificant
damage to the mating surface. This provides a long service life in which many
reconnections are possible because there is very little degradation of the
contact surface.
These particles can be applied to a variety of "substrates," which are
foundations that provide a supporting surface, which can be flexible, rigid,
metallic or non-metallic in nature.
We have designated our particle technology in commercial settings as the
Nanopierce Connection System (the "connection system").
Sales and Marketing Strategy
Our market strategy is to offer the connection system in products, services
and technology packages in those market segments and commercial applications in
which the connection system has a significant cost advantage or is enabling, in
that it enables electronic manufacturers to successfully produce products that
may not be otherwise possible. This strategy has, until recently, taken longer
than expected due to litigation which has been resolved in our favor. See "--
Legal Proceedings."
We intend to adopt and have begun to implement a three-part approach to
commercialize our particle technology. The first part of our strategy is to
generate royalty revenues by forming strategic relationships with, or licensing
the particle technology to, established companies in the markets in which we
plan to compete and which generally have high entry barriers, including markets
with entrenched competitors or foreign laws that effectively prohibit
competition. We believe that the licensing of our technology to major industry
partners will increase the speed at which particle technology is implemented and
adopted and will also help to establish "brand" recognition for the particle
technology.
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The second part of our strategy is to establish joint ventures with
established industry participants. This strategy is designed to tap into
existing markets and to establish leadership in markets requiring special skills
or high capital investment. We have begun negotiations to establish these joint
ventures. See "-Strategic Alliances" herein.
The third part of our strategy is to organize two operating subsidiaries
that produce components or systems utilizing the connection system in new market
segments which have few or no established competitors and in which we believe we
may be able to dominate with our technology. This strategy is designed to
permit us to become one of the first to act within the emerging markets that are
created by newly available technology advances or improvements. Also, we
believe that we can capture additional value by controlling production in
segments that have low capital requirements. We recently organized one
operating subsidiary (as described below) to produce smart labels, which has low
capital requirements and at the current time has no entrenched competitors. The
second subsidiary that we propose to organize would apply our technology to
"semiconductor wafers," that would eliminate the need for wire bond connections
between the semiconductor and the system. The capital requirements for this
second subsidiary would be very low and would involve technology that we believe
would be completely new to the worldwide industry.
Implementation Plan
We also intend to implement our sales and marketing strategy through
various proposed divisions in addition to the subsidiaries described above.
Technology Division
The "technology division" will include an application development team that
will play a role analogous to corporate research and development or engineering
by developing new applications for internal and external customers. This team
also will allocate a portion of its resources for technology enhancement.
Business Development Division
Initially, the "business development division" will support all departments
conducting revenue generating activities with sales and marketing. Later, the
smart label subisdiary that was recently organized and the proposed
semiconductor wafer subsidiary will each assume responsibility for its own
marketing, while the business development division will continue to represent
the technology transfer division (as defined below) to the industry. The
business development division will also monitor the industry for acquisition and
other strategic growth opportunities.
Technology Transfer Division
The "technology transfer division" represents a department which will
conduct revenue generating activities based on commercial use of the connection
system outside our company through licensees and other strategic partners. This
division will support our licensees and partners with the installation of the
connection system and the related training and support. Personnel for these
activities will be drawn from the technology division, but costs that are
directly associated with technology transfer activities will be charged to this
division.
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Operating Subsidiaries
On January 19, 2000, we incorporated a wholly owned subsidiary, NanoPierce
Card Technologies GmbH, a German corporation in Munich, Germany. The subsidiary
was formed to focus all of our business activities relating to the emerging
smart card and smart label markets, and to better capitalize on our expectations
of these applications, including the licensing of our technology.
We also propose to organize a second subsidiary that would apply our
technology to "semiconductor wafers." This would eliminate the need for wire
bond connections between the semiconductor and the system.
These operating subsidiaries would each act as independent divisions which
will conduct revenue generating activities. Both of the subsidiaries would
support a minimal level of technology and engineering effort and will rely on
the technology transfer division for technology and engineering efforts. This
allocation strategy will minimize redundant technology development efforts among
divisions.
Smart Cards and Smart Labels
Commencing in January 1999, we successfully introduced our technology to
applications in the manufacturing of smart cards. Of particular significance to
manufacturers of contactless smart cards is the desire to obtain a secure,
efficient connection between the microprocessor chip and the radio antenna in
what are known as dual interface smart cards and contactless smart cards.
Smart cards are plastic, flexible credit-card size devices embedded with a
powerful microchip, designed to store and process information. Reliable
connections in flexible applications are crucial to the card's operation. Smart
cards are used as phone cards, health cards, identification cards, pay
television cards, meter cards, bank cards, transportation tickets, access
control cards and automatic dispenser cards. Contactless smart cards collect
the energy to operate from a radio frequency emitted by a fixed or handheld
reader device; therefore, they do not need a battery.
A smart label is a paper thin identification label with a programmable
integrated circuit inside and an antenna connected to it. The smart label
communicates through radio frequency signals with a fixed position or hand held
reader or writer over distances up to 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. The "substrate," or the
foundation that provides a supporting surface, for a smart label is paper or
plastic yielding a paper-thin flexible label, which can be self-adhesive and can
be printed on. Uses for contactless smart labels include:
. labels applied to shipping or courier parcels;
. airline baggage tags;
. retail labels applied directly by the manufacturer to the product,
identifying the manufacturer, product type, production lot and a
digital signature to prove genuineness;
. labels for inventory control; and
. labels for rental services, such as libraries and video stores.
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We believe that the market for smart cards and smart labels is poised for
explosive growth. However, the lack of a cost-effective and reliable system for
electrical connection of the microchip to the contact plate or antenna is a
critical bottleneck holding the industry back. The industry cannot satisfy the
market demands for cost-effective and reliable contactless smart cards and smart
labels with the current technologies. We believe that the particle technology
in the connection system may be the solution for the industry.
We believe that we are strategically positioned to become a major
participant in the large and growing smart card and smart label market. Current
technologies cannot satisfy the cost and reliability demands of this market.
The connection system can meet the cost and reliability demands because (a) it
provides single-step, low-cost manufacturing procedures; (b) it provides
reliable connection on flexible substrates; and (c) it is thin enough to be used
in the manufacturing of smart labels. Moreover, none of the outstanding
licenses that have been granted with respect to the connection system relate to
either smart card or smart label technology.
Strategic Alliances
In the Spring of 1999, we implemented our strategic business plan by
forming strategic alliances intended to result in joint ventures to develop
applications for our technology in the smart card and smart label industry. In
that regard, we have successfully concluded three strategic alliances with
participants in the industry and have also entered into four other informal
agreements or discussions, each as described below. No assurances can be given
to you that any of these agreements will generate revenues for us or will be
profitable to us.
MULTITAPE GMBH & CO., KG AGREEMENT
- ----------------------------------
On April 15, 1999, we entered into an application development agreement
with Multitape, GmbH & Co., KG, of Paderborn, Germany to develop an application
of the particle technology on chip module substrate tapes manufactured by
Multitape. Multitape is a major supplier of chip module substrate tapes to
numerous card manufacturers, including most all of the largest card
manufacturers in the world, and continues to supply us with these tapes for
testing with our technology. Should the ongoing tests of the technology on the
substrate tapes and in various electronic applications prove successful to our
satisfaction and to the satisfaction of Multitape, we have agreed with Multitape
to enter into a more formal arrangement to commercialize the opportunity. As a
result of our recent business developments including the completion of a
financing, we anticipate that our business activities with Multitape will
increase.
MEINEN, ZEIGEL & CO. AGREEMENT
- ------------------------------
On May 17, 1999, we entered into a technology cooperation agreement with
Meinen, Zeigel & Co. ("Meinen"), a company based in Munich, Germany, to develop
applications of our technology for dual interface smart card modules and the
qualification and industrialization of a chip module embedding process on Meinen
equipment. Meinen 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 equipment to produce standard smart cards,
contactless smart cards and dual interface cards. When we entered into this
technology cooperation agreement with Meinen, we expected that Meinen would
design new equipment based around the new manufacturing process enabled by
adoption of our technology, which would allow them to design less expensive,
more efficient, higher output, simpler production equipment. Due to internal
corporate changes in Meinen, however, currently we are unable to predict if
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we will be able to enter into a formal joint venture agreement with Meinen to
further implement the commercial exploitation of our technology.
ORGA KARTENSYSTEMES, GMBH AGREEMENT
- -----------------------------------
On June 11, 1999, we entered into a technology development agreement with
ORGA Kartensystemes, GmbH ("ORGA"), of Flintbek, Germany, one of the world's
largest smart card manufacturers. ORGA is working with us to apply the
connection system to the design and manufacture of dual interface smart cards,
particularly the connection between antenna and chip modules. We are still in
the process of meeting the testing and qualification standards of ORGA. If the
testing and qualification standards are met, we anticipate that we will enter
into a formal joint venture or direct licensing of ORGA relating to this
application of our technology.
CIREXX CORPORATION AGREEMENT
- ----------------------------
In addition to the three agreements described above, we have also entered
into an agreement-in-principle to form a joint venture or limited liability
partnership with Cirexx Corporation located in Santa Clara, California. Cirexx
Corporation is a world leader in the quick turn prototype design and production
manufacturer of high technology, digital, radio frequency and analog flexible
circuits and mixed technologies.
The proposed joint venture or limited liability partnership will be
organized to commercially exploit the connection system in all applications for
which an exclusive license to others has not been issued. We are in the process
of developing a joint marketing plan to address anticipated consumer demand for
the connection technology in Cirexx products and processes and the equipment
modifications and other technical working arrangements that must be made in
order for Cirexx Corporation to be able to market and apply the connection
technology from their facilities.
SCHLUMBERGER SYSTEMES, S.A.
- ---------------------------
We have entered into a confidential disclosure agreement with Schlumberger
Systemes, S.A. effective July 8, 1999. We are currently in the process of
exchanging information with Schlumberger Systemes, S.A. relating to the
application of our technology to dual interface smart cards and other
applications.
TAIKO DENKI, LTD. PROPOSAL
- --------------------------
In addition to the strategic alliances described above, we are in
discussions with other companies in the smart card industry relating to possible
application of our technology to their product lines. Further, we are expanding
the scope of our strategic business activities to now embrace potential
applications of the connection system in the connector market. For example, we
are currently in discussions with Taiko Denki, Ltd. ("Taiko"), one of Japan's
leading connector manufacturers relating to the application of our technology to
the connector products of Taiko. We have submitted a formal proposal to Taiko
relating to the formation of a strategic business relationship. No assurances
can be given that any proposal will be adopted.
Research and Development
To date, we have not incurred any significant amount on research and
development costs and we do not intend to incur any material research and
development costs during the next fiscal year. We hope
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to avoid incurring substantial research and development cash requirements by
entering into joint ventures with others for the development of future products
utilizing the particle technology.
Financing
In addition to the financing described in this prospectus, we recently
entered into a letter agreement dated February 14, 2000, with Ladenburg Thalmann
& Co. Inc., in which they would act as agent for up to $30 million in additional
financing on a best-efforts basis over a period of up to 24 months. We cannot
give you any assurances that this financing will be successfully completed.
Competition
Competition in the electronic connector market is fierce. The principal
competitive factors are product quality, performance, price and service. While
we are unaware of any competitors using hard particles as an interconnect
material, we and our licensees face competition from well established firms with
other interconnect technologies. However, most of these competitors apply their
technologies to very narrow markets or applications and most have had only
limited success in mass commercialization of their technologies.
We will face competition from the development of existing and future
competing technologies. There currently exist approximately 28 different
technologies that can be used to create interconnect solutions, including:
. soldering, which uses an easily melted metal alloy to form a permanent
joint between two parts;
. wire bonding, which uses a wire connection created by applying heat and
pressure;
. dendrite crystals, a pointed crystal used to make connections by IBM;
. gold dot technology, which is connection technologies that use gold
bumps;
. elastomers, which uses rubber-like synthetic materials; and
. conductive adhesives, which glues two metal surfaces together to form an
electrical connection.
These technologies currently are produced by materials and chemical suppliers,
flexible and rigid printed circuit board manufacturers, as well as electronics
manufacturers who produce their own materials and interconnect systems. Many of
these competitors have substantially greater financial and other resources than
we do. We believe that each existing technology currently has unacceptable
limitations with regard to electrical and mechanical performance,
manufacturability or cost as compared to the particle technology. However,
there are no assurances that our particle technology can successfully compete
with current or future technologies.
Intellectual Property
We will rely on a combination of patents, patent applications, trademarks,
copyrights and trade secrets to establish and protect our proprietary rights in
the particle technology. As previously described, we currently own ten U.S.
patents, which expire from February 14, 2006 to October 15, 2013, two pending
patent applications, two patent applications in preparation and other
intellectual property relating to the particle technology.
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Before our acquisition of the particle technology, Louis DiFrancesco, the
inventor of the particle technology or the companies controlled by him granted
the following exclusive and nonexclusive licenses to pursue the patents and
patent applications relating to the particle technology:
. an exclusive license to Exatron Automatic Test Equipment Inc.
("Exatron") for use in the field of sockets in the automated handling
and testing of integrated circuits and some non-exclusive rights;
. an exclusive license, that has since been terminated, to MicroModule
Systems, Inc. for use in the field of some Multi-Chip Module thin film
bases, except attached or associated products including integrated
circuits, socket, lids, heat sinks, housings and printed circuit boards;
. a non-exclusive license to Johnson-Matthey Semiconductor Packagings,
Inc. ("Johnson-Matthey") for use in the field of laminate-based base
products;
. a non-exclusive license to Multiflex, Inc. for use in the field of the
laminate-based bases and metal bases; and
. a non-exclusive license to Myers Consulting, Inc. for use in the field
of laminate-based bases, metal bases, and wafer or semiconductor
products.
These licenses have indefinite terms and, provided that the conditions specified
in the licenses are met, can be terminated by either party by written notice.
We retain the right to exclude all other companies from using our patented
technology without a license. We may license other companies as we choose,
provided the licenses are consistent with the exclusive licenses previously
granted and other licensing restrictions that may appear in the prior licenses.
None of these licenses apply to smart cards or to smart labels.
All but the Exatron and Johnson-Matthey license agreements have been idle
since their acquisition by us and, as a result, have not produced any royalty
fees for us. Royalties under the Exatron agreement are being held and will
continue to be held in an escrow account, and maintenance payments on one
license are being held in a reserve account, outside of our control, until
various legal issues are resolved. Louis DiFrancesco has the right and the
obligation to pursue any royalties due under the Johnson-Matthey license
agreement and, to the extent that he has been unable to obtain judgment and
payment from Johnson-Matthey on royalties for a six month period that has
already expired, we are obligated to guarantee any unpaid royalty balance and
retain a right to pursue Johnson-Matthey for the unpaid balance. We have not
been advised whether Mr. DiFrancesco has obtained any royalty payments from
Johnson-Matthey and we estimate that the total amount of our guarantee to Mr.
DiFrancesco could be as much as approximately $170,000. See "--Legal
Proceedings."
In addition, a two-year non-exclusive license has been issued to Louis
DiFrancesco. Pursuant to the license, Mr. DiFrancesco is entitled to produce
all sockets for all customers (except for sockets used in the automated handling
and testing of integrated circuits) as well as layer to layer interconnections
for one confidential customer. The license expires two years from its date of
issuance, and is renewable for an additional two year period and will continue
to be renewable for two year periods so long as a minimum payment of $25,000 on
royalties from actual application of the technology are paid. See "--Legal
Proceedings."
In December 1998, MicroModule Systems, Inc. terminated all of its business
operations and sold its assets to an industry associate. As a result of this,
we have terminated the license of MicroModule Systems, Inc.
There can be no assurance that patents will be issued from any of the
pending applications, or that any claims allowed from existing or pending
patents will be sufficiently broad enough to protect our
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particle technology. While we intend to vigorously protect our intellectual
property rights, there can be no assurance that any patents held by us will not
be challenged, invalidated or circumvented, or that the rights granted
thereunder will provide competitive advantages to us. Litigation may be
necessary to enforce our patents, patent applications, trade secrets, licenses
and other intellectual property rights, to determine the validity and scope of
the proprietary rights of others or to defend against claims of infringement.
This type of litigation could result in substantial costs and diversion of
resources and could have a material adverse effect on our business and results
of operations regardless of the final outcome of the litigation. Despite our
efforts to maintain and safeguard our proprietary rights, there can be no
assurances that we will be successful in doing so or that our competitors will
not independently develop or patent technologies that are substantially
equivalent or superior to our technologies.
The semiconductor and interconnect industries are characterized by
uncertain and conflicting intellectual property claims. We have in the past and
may in the future become aware of the intellectual property rights of others
that we may be infringing, although we do not believe that we are infringing any
third-party proprietary rights at this time. To the extent that we deem it
necessary, we may license the right to use technologies that are patented by
others in products that they manufacture. There can be no assurance we will not
in the future be notified that we are infringing other patent or intellectual
property rights of third parties. In the event of infringement, there can be no
assurance that a license to the technology in question could be obtained on
commercially reasonable terms, if at all, that litigation will not occur or that
the outcome of this litigation will not be adverse to us. The failure to obtain
necessary licenses or other rights, the occurrence of litigation arising out of
infringement claims or an adverse outcome from infringement litigation could
have a material adverse effect on our business. In any event, patent litigation
is expensive, and our operating results could be materially adversely affected
by any infringement litigation, regardless of its outcome.
We intend to protect our trade secrets and proprietary technology, in part,
through confidentiality and non-competition agreements. There can be no
assurance that these agreements will not be breached, that we will have adequate
remedies for any breach, or that our trade secrets will not otherwise become
known to or independently developed by others.
In addition, the laws of some foreign countries do not offer protection of
our proprietary rights to the same extent as do the laws of the United States.
Government Regulation
We believe that we are in substantial compliance with all material federal
and state laws and regulations governing our limited operations. Compliance
with federal and state environmental laws and regulations did not have a
material effect on our capital expenditures, earnings or competitive position
during the year ended June 30, 1999 or the fiscal quarters ended September 30,
1999 and December 31, 1999.
Employees
As of December 31, 1999, we had five employees. All four key employees
have signed employment agreements with us. In January of 2000, our newly formed
subsidiary, Nanopierce Card Technologies, had one new employee, Karl Heinz Kuhn
and had another employee, Michael Kober, scheduled to begin work in March of
2000. We anticipate that we will enter into employment agreements
21
<PAGE>
with both of those individuals. None of our employees are represented by a labor
union or are subject to a collective bargaining agreement. We believe that our
relations with our employees are excellent.
Legal Proceedings
We were involved in litigation with Louis DiFrancesco, the inventor of the
particle technology, relating to ownership of our intellectual property and the
rights as to who should receive royalty payments from licenses. We negotiated a
settlement to that litigation and, based on a declaratory judgment entered on
November 30, 1999, we own all of the right, title and interest to the
intellectual property that was under litigation. Mr. DiFrancesco is entitled to
royalty payments, maintenance fees and other amounts from the licensees relating
to the patents that were outstanding as of September 3, 1996 and is granted a
license to produce sockets and for layer to layer interconnections for one
customer as described more fully above under "--Intellectual Property."
DESCRIPTION OF SECURITIES
Our authorized capital stock consists of 100,000,000 shares of common
stock, $.0001 par value per share, and 5,000,000 shares of our preferred stock,
$.0001 par value per share. As of February 1, 2000, we had 34,453,791 shares of
common stock and no shares of preferred stock issued and outstanding. We have
outstanding warrants to purchase 11,957,500 shares of common stock, options to
purchase 3,875,000 shares of common stock and debentures which, if converted,
would total 1,372,213 shares of common stock and up to an additional 1,372,213
shares of common stock may be issuable upon the change in conversion rate on the
convertible debentures based on a decrease in the price of our common stock.
These numbers include the warrants and the convertible debentures that were sold
to Equinox Investors LLC that are described below, as well as the warrants that
were sold to EBI Securities Corporation. Overall, we would have a total of
53,330,717 shares of common stock issued and outstanding if all of our
outstanding convertible securities are exercised and converted into common
stock.
Common Stock
Each share of common stock is entitled to one vote on each matter submitted
to a vote of the stockholders and is equal to each other share with respect to
voting, liquidation and dividend rights. Holders of the common stock are
entitled to receive the dividends, if any, as may be declared by the Board of
Directors out of assets legally available therefor and to receive net assets in
liquidation after payment of all amounts due to creditors and any liquidation
preference due to preferred stockholders. Holders of the common stock have no
conversion rights and are not entitled to any preemptive or subscription rights.
The common stock is not subject to redemption or any further calls or
assessments. The common stock does not have cumulative voting rights in the
election of directors.
The transfer agent for the common stock is Corporate Stock Transfer, Inc.,
3200 South Cherry Creek Drive, Suite 430, Denver, Colorado 80209.
Dividend Policy
While there currently are no restrictions prohibiting us from paying
dividends to our stockholders, we have not paid any cash dividends on our common
stock, in the past and does not anticipate paying any dividends in the
foreseeable future. Earnings, if any, are expected to be retained to fund our
future operations. There can be no assurance that we will pay dividends at any
time in the future.
22
<PAGE>
Price Range of Common Stock
The common stock presently is traded on the over-the-counter market on the
OTC Bulletin Board maintained by the National Association of Securities Dealers,
Inc. ("NASD"). The NASDAQ symbol for the common stock is "NPCT." The common
stock is also traded on the Third Market Segment of the Frankfurt Stock Exchange
under the symbol "NPI."
The following table sets forth the range of high and low bid quotations for
the common stock of each full quarterly period during the last three fiscal
quarters, rounded to the nearest penny. The quotations were obtained from
information published by the NASD and reflect interdealer prices, without retail
mark-up, mark-down or commissions and may not represent actual transactions. The
average of the closing bid and asked prices for the common stock was $6.13 on
March 13, 2000.
<TABLE>
<CAPTION>
2000 Fiscal Year High Low
- ----------------------------------------------- ---------------------------- --------------------------
<S> <C> <C>
December 31, 1999 $2.25 $1.81
September 30, 1999 $0.41 $0.34
June 30, 1999 $0.44 $0.42
</TABLE>
While a limited market did exist for the common stock under our former
names of Mendell-Denver Corporation and Sunlight Systems, Ltd., it was so
insignificant in volume that it was not representative of a true market or a
realistic market valuation of the common stock. Accordingly, any information
relating to former market activity is deemed immaterial and has not been
included herein. This information can be obtained from the NASD by anyone
interested in this type of historical data.
As of February 1, 2000, there were 135 holders of record of our 34,453,791
outstanding shares of common stock. Based upon information provided to us by
persons holding securities for the benefit of others, it is estimated that we
have in excess of 1,000 beneficial owners of our common stock as of February 1,
2000.
Warrants
For a complete description of the terms and conditions of the Equinox
warrants and the EBI warrants that are offered in this prospectus, as well as
the conditional warrant, please refer to the Equinox warrants, the EBI warrants
and the conditional warrant which are all filed as exhibits to the registration
statement. The descriptions of the Equinox warrants, the EBI warrants and the
conditional warrant in this prospectus that follow are qualified in their
entirety by reference to those exhibits.
Equinox Warrants
The initial Equinox warrants offered by Equinox Investors LLC entitle the
holder to purchase up to 150,000 shares of our common stock at an exercise price
of $2.915 per share at any time commencing on January 11, 2000, and ending at
5:00 p.m. Eastern Time on January 10, 2003.
Assuming the conditional warrant is exercised, the additional Equinox
warrants entitle the holder to purchase up to 250,000 shares of our common stock
at an exercise price of $2.915 per share from the time the conditional warrant
is exercised, and ending at 5:00 p.m. Eastern Time on January 10, 2003.
23
<PAGE>
The exercise price and number of shares of common stock or other securities
issuable upon exercise of the Equinox warrants is subject to adjustment in some
circumstances, including in the event of a stock dividend, recapitalization,
reorganization, merger or consolidation or our distribution to the holders of
common stock of cash, evidences of our indebtedness or other of our securities
or assets, other than cash dividends or distributions payable out of earned
surplus or net profits for the current or preceding year.
EBI Warrants
The EBI warrants offered by EBI Securities Corporation entitle the holders
to purchase up to 230,000 shares of our common stock at an exercise price of
$2.915 per share at any time commencing on January 11, 2000 and ending at
5:00p.m. Eastern Time on January 10, 2003.
Currently there exists no public market for any warrants and no assurances
can be given that a public market will develop in the future. See "RISK FACTORS
- - No market exists for warrants."
Conditional Warrant
The conditional warrant specifies that, from January 11, 2000 until June
11, 2000, upon the occurrence of various conditions that are specified in the
conditional warrant, including conditions regarding trading volume and price of
the common stock and a registration statement that includes the common stock
underlying the conditional warrant, we can demand the holder to purchase up to
$2,500,000 principal amount of the additional debentures and for each $1,000,000
of additional debentures to be purchased, to purchase 100,000 in additional
warrants. The holder of the conditional warrant does not have the right to
exercise the conditional warrant unless we demand the exercise and the
conditions that are specified in the conditional warrant are met.
Equinox Debentures
The Equinox debentures sold to Equinox Investors LLC under the Securities
Purchase Agreement are not offered in this prospectus. For a complete
description of the terms and conditions of the Equinox debentures, please refer
to the Equinox debentures which are filed as exhibits to the registration
statement. The description of the Equinox debentures in this prospectus is
qualified in its entirety by reference to those exhibits.
Each of the initial Equinox debentures held by the holder entitles the
holder to convert their initial Equinox debentures into shares of our common
stock at a conversion rate that is equal to the quotient obtained by dividing
the principal amount of the initial Equinox debentures by the lesser of (a)
$2.915 and (b) the product obtained by multiplying 0.80 by the average of the
three lowest daily closing bid prices during the 30 trading days immediately
preceding the date on which notice of conversion is provided.
If the conditional warrant is exercised, the additional Equinox debentures
held by the holder entitle the holder to convert the additional Equinox
debentures into common stock at a conversion rate that is the same as provided
for in the initial Equinox debentures.
As of February 1, 2000, if all $1,500,000 of the initial Equinox debentures
and all $2,500,000 of the additional Equinox debentures were converted into
common stock, the holders of those securities would be entitled to 1,372,213
shares of common stock and up to an additional 1,372,213 shares of common stock
if the conversion ratio of the debentures changes as a result of a decrease in
the price of our common stock.
24
<PAGE>
SELLING SECURITY HOLDERS
The securities offered in this prospectus are being sold for the account of
selling security holders based on the Securities Purchase Agreement. The
following table sets forth:
(a) the names of the selling holders,
(b) the nature of any position or other material relationship, if any,
which the selling holders have or have had with us, our predecessors or
affiliates during the past three years,
(c) the number of shares of common stock, and the number of warrants and
conditional warrants currently beneficially owned by the selling
holders,
(d) the amount of common stock and warrants offered by the selling holders
and
(e) the amount and, if 1% or more, the percentage of shares of common stock
and warrants that will be beneficially owned by the selling holders
after completion of the offering, assuming the sale of all of the
shares and warrants, respectively, as shown in (d) above.
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Material
relationship
with Amount of
Selling Nanopierce Amount of common common stock/
stockholder/ within the stock/warrants owned Amount of common warrants owned
warrant holder last 3 years before offering stock(1)/warrants offered after offering(2)
<S> <C> <C> <C> <C>
Equinox None 0/400,000 1,772,213/400,000 0/0
Investors LLC
EBI Securities None 0/230,000 230,000/230,000 0/0
Corporation
</TABLE>
(1) Assumes that the conditional warrant purchased by Equinox Investors LLC is
exercised and that all Equinox debentures, Equinox warrants and EBI warrants are
exercised and converted into shares of common stock at a conversion price and an
exercise price of $2.915 per share. However, if the conversion ratio changes
because of a decrease in the price of our common stock, the 1,772,213 shares of
common stock may increase to as many as 3,144,426 shares of common stock.
(2) Assumes that all of the shares and warrants being offered in this prospectus
are sold by the selling holders and that all convertible debentures are fully
converted into common stock. There is no assurance that the selling holders
will sell any or all of their shares or warrants offered in this prospectus.
We are offering for Equinox Investors LLC by this prospectus only the
number of shares of our common stock that is indicated in the table above. This
number of shares is based on the number of shares of our common stock that we
are required to register based on our agreement with Equinox Investors LLC. If
the number of shares of common stock issuable upon conversion of the Equinox
debentures increases because the price of our common stock decreases, we will
file a new registration statement under which any additional shares of common
stock can be sold.
PLAN OF DISTRIBUTION
Of the securities offered in this prospectus, the Equinox warrants have
been sold to Equinox Investors LLC based on the terms of the Securities Purchase
Agreement and the EBI warrants have been sold to EBI Securities Corporation.
The Equinox warrants, the EBI warrants and the shares of common stock issuable
upon conversion or exercise of the Equinox warrants, the EBI warrants and the
Equinox debentures, may be resold based on this prospectus.
We have been advised by the selling holders that they may sell or transfer
all or a portion of the common stock and warrants offered in this prospectus
from time to time to third parties (including purchasers) directly or by or
through brokers, dealers, agents or underwriters, who may receive compensation
in the form of underwriting discounts, concessions or commissions from the
selling holders
25
<PAGE>
and/or from purchasers of the common stock or warrants for whom they may act as
agent. These sales and transfers of the common stock, and where applicable the
warrants, may be effected from time to time in one or more transactions on the
OTC Bulletin Board, in the over-the-counter market, in negotiated transactions
or otherwise, at a fixed price or prices, which may be changed, at market prices
prevailing at the time of sale, at negotiated prices, or without consideration,
or by any other legally available means. Any or all of the shares of common
stock and warrants may be sold or transferred from time to time by means of :
. a block trade in which the broker or dealer so engaged will attempt to
sell the common stock or warrants as agent but may position and resell a
portion of the block as principal to facilitate the transaction;
. purchases by a broker or dealer as principal and resale by that broker
or dealer for its account based on this prospectus;
. ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
. the writing of options on the common stock or warrants;
. pledges as collateral to secure loans, credit or other financing
arrangements and any subsequent foreclosure, if any, thereunder;
. gifts, donations and contributions; and
. any other legally available means.
To the extent required, the number of shares of common stock or warrants to
be sold or transferred, the purchase price, the name of any agent, broker,
dealer or underwriter and any applicable discounts or commissions and any other
required information with respect to a particular offer will be shown in an
accompanying prospectus supplement. The aggregate proceeds to the selling
holders from the sale of the common stock or warrants will be the purchase price
of that common stock or warrants less any commissions. This prospectus also
may be used, with our prior written consent, by donees and pledgees of the
selling holders.
If necessary to comply with state securities laws, the common stock and
warrants will be sold only through registered or licensed brokers or dealers.
In addition, the common stock and warrants may not be sold unless they have been
registered or qualified for sale in the applicable state or an exemption from
the registration or qualification requirement is available and is complied with.
See "RISK FACTORS - State Blue Sky Laws may prevent sales of securities" and "-
Federal laws may prevent conversion of debentures and exercise of warrants."
The selling holders and any brokers, dealers, agents or underwriters that
participate in the distribution of the common stock and warrants may be deemed
to be "underwriters" within the meaning of the Securities Act, in which event
any discounts, concessions and commissions received by those brokers, dealers,
agents or underwriters and any profit on the resale of the common stock and
warrants purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.
No underwriter, broker, dealer or agent has been engaged by us in
connection with the distribution of the common stock or warrants.
Any common stock and warrants covered by this prospectus which qualify for
sale based on Rule 144 under the Securities Act may be sold under Rule 144
rather than based on this prospectus. There is no assurance that Equinox
Investors LLC or EBI Securities Corporation will sell any or all of the
26
<PAGE>
common stock or warrants. Equinox Investors LLC or EBI Securities Corporation
may transfer, devise or gift common stock and warrants by other means not
described herein.
We will pay all of the expenses incident to the registration of the common
stock and warrants, other than underwriting discounts and selling commissions,
if any.
We have agreed to indemnify the selling security holders against some of
the liabilities under the Securities Act arising from this prospectus or the
registration statement of which it is a part.
EXPERTS
Our financial statements incorporated herein by reference have been so
incorporated in reliance upon the report of Gelfond Hochstadt Pangburn & Co.,
independent certified public accountants, which expresses an unqualified opinion
and includes an explanatory paragraph relating to our ability to continue as a
going concern, given upon their authority as experts in auditing and accounting.
AVAILABLE INFORMATION
We are subject to the informational requirements of the Exchange Act and,
therefore, we file reports and other information with the SEC. Those reports
and other information can be obtained at or from:
. the SEC's Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549, information about which can be obtained by
calling the SEC at 1-800-SEC-0330;
. the SEC's New York regional office at Seven World Trade Center,
13th Floor, New York, New York 10048;
. the SEC's Chicago regional office at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661; and
. the Internet site maintained by the SEC at http://www.sec.gov,
which contains reports, proxy and information statements and other
information regarding us and other registrants that file
electronically with the SEC.
Some locations may charge prescribed or modest fees for copies.
ADDITIONAL INFORMATION
This prospectus is part of a registration statement on Form S-3 that we
have filed with the SEC. This prospectus is only a part of that registration
statement, and does contain all of the information that is included in the
registration statement, several sections of which are not included at all in
this prospectus. The statements contained in this prospectus, including
statements as to the contents of any contract or other document, are not
necessarily complete. You should refer to the registration statement and to an
actual copy of the contract or document filed as an exhibit to the registration
statement for more complete information. The registration statement may be
obtained from the SEC through one of the methods described above in "AVAILABLE
INFORMATION."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The
27
<PAGE>
information that is incorporated by reference is an important part of this
prospectus, and information that we file later with the SEC will automatically
update and supersede this information. We incorporate by reference the documents
listed below and any future filings made with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until we sell all of
the securities offered by this prospectus, or after the date of this initial
registration statement and before the effectiveness of the registration
statement.
. Annual Report on Form 10-KSB for the fiscal year ended June 30, 1999
that was filed with the SEC on September 28, 1999;
. Quarterly Report on Form 10-QSB for the quarter ended September 30, 1999
that was filed with the SEC on November 12, 1999;
. Quarterly Report on Form 10-QSB for the quarter ended December 31, 1999
that was filed with the SEC on February 11, 2000.
On request we will provide at no cost to each person, including any beneficial
owner, who receives a copy of this prospectus, a copy of any or all of the
documents incorporated in this prospectus by reference. We will not provide
exhibits to any of such documents, however, unless such exhibits are
specifically incorporated by reference into those documents.
28
<PAGE>
- --------------------------------------------------------------------------------
The only sources of information given to you by us about your investment
decision are this prospectus and any documents referred to in this prospectus.
We did not authorize anyone to give you any other information about your
investment decision.
This prospectus is not an offer to sell securities and is not meant to
induce the sale of securities if it would violate state law. If the persons who
are trying to offer the securities for sale, or the persons who receive those
offers for sale are prohibited from doing so under state law, this prospectus is
not meant to induce sale of the securities described in this prospectus.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
FORWARD-LOOKING STATEMENTS............................................. 1
PROSPECTUS SUMMARY..................................................... 2
RISK FACTORS........................................................... 5
USE OF PROCEEDS........................................................ 12
THE COMPANY............................................................ 13
DESCRIPTION OF SECURITIES.............................................. 22
SELLING SECURITY HOLDERS............................................... 25
PLAN OF DISTRIBUTION................................................... 25
EXPERTS................................................................ 27
AVAILABLE INFORMATION.................................................. 27
ADDITIONAL INFORMATION................................................. 27
INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE................................................. 27
</TABLE>
3,374,426 shares of common stock
630,000 common stock purchase
warrants
NANOPIERCE
TECHNOLOGIES, INC.
COMMON STOCK
AND
COMMON STOCK PURCHASE WARRANTS
_____________________
PROSPECTUS
_____________________
March __, 2000
===============================================================================
<PAGE>
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other The following are the estimated expenses in connection
Expenses of with the registration and distribution of the shares
Issuance and and warrants:
Distribution.
Securities and Exchange Commission
Registration Fee $1,541
Printing and Engraving Expenses 10,000*
Accounting Fees and Expenses 15,000*
Legal Fees and Expenses 35,000*
Miscellaneous 0*
Total $61,541*
_______________
*Estimated.
Item 15. Article VII of the registrant's Articles of
Indemnification of Incorporation, as amended, provides that the registrant
Directors and shall indemnify its directors, officers, employees and
Officers. agents to the maximum extent and in accordance with the
provisions of the Nevada General Corporation Law, as in
effect from time to time. Sections 78.7502 and 78.751 of
the Nevada General Corporation Law provide generally and in
pertinent part that a Nevada corporation may indemnify its
directors and officers against expenses, judgements, fines
and settlements actually and reasonably incurred by them in
connection with any civil suit or action or any
administrative or investigative proceeding, except actions
by or in the right of the corporation, if, in connection
with the matters in issue, they acted in good faith and in
a manner they reasonably believed to be in, or not opposed
to, the best interests of the corporation, and in
connection with any criminal suit or proceeding, if in
connection with the matters in issue, they had no
reasonable cause to believe their conduct was unlawful.
Section 78.7502 further provides that in connection with
the defense or settlement of any action by or in the right
of the corporation, a Nevada corporation may indemnify its
directors and officers against expenses actually and
reasonably incurred by them in connection therewith,
provided that they acted in good faith and in a manner they
reasonably believed to be in, or not opposed to, the best
interests of the corporation. Section 78.751 permits a
Nevada corporation to grant its directors and officers
additional rights of indemnification through bylaw
provisions and otherwise and Section 78.752 permits a
Nevada corporation to purchase indemnity insurance or make
other financial arrangements on behalf of its directors and
officers.
Article VIII of the registrant's Articles of
Incorporation provides that directors shall not be liable
to the registrant or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for
liability arising from (a) any breach of the director's
loyalty to the registrant or its stockholders, (b) acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (c) any
transaction from which the director receives an improper
personal benefit, or (d) any other act expressly proscribed
or for which directors are otherwise liable under the
Nevada General Corporation Law. See Item 17 "Undertakings"
herein.
II-1
<PAGE>
Item 16. (a) Exhibits. The following is a complete list of
Exhibits and Exhibits filed as part of this registration statement.
Financial Exhibit numbers correspond to the numbers in the exhibit
Statement table of Item 601 of Regulation S-K.
Schedules.
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
2.00 Agreement dated February 26, 1998, by and among the registrant, Particle Interconnect
Corporation and Intercell Corporation (incorporated by reference to Exhibit 2.01 to the
registrant's Current Report on Form 8-K, dated February 26, 1998, filed on March 12, 1998)
3.01 The Articles of Incorporation of registrant (incorporated by reference to Exhibit 4.01 to
the registrant's Annual Report on Form 10-KSB for the fiscal year ended June 30, 1998, filed
on October 8, 1998)
3.02 Amendment to the Articles of Incorporation of registrant (incorporated by reference to
Exhibit 4.02 to the registrant's Annual Report on Form 10-KSB for the fiscal year ended June
30, 1998, filed on October 8, 1998)
*3.03 Amendment to the Articles of Incorporation of registrant
*4.01 Debentures issued to Equinox Investors LLC (Form of Debenture included as Exhibit A to
Exhibit 10.01)
*4.02 Warrant issued to Equinox Investors LLC (Form of Warrant included as Exhibit B to Exhibit
10.01)
*4.03 Conditional Warrant issued to Equinox Investors LLC (Form of Conditional Warrant included as
Exhibit C to Exhibit 10.01)
*4.04 Warrant issued to EBI Securities Corporation
#4.05 Warrant issued to EBI Securities Corporation to purchase 150,000 shares of registrant's
Common Stock
#4.06 Warrant issued to EBI Securities Corporation to purchase 50,000 shares of registrant's
Common Stock
*5.00 Opinion from Kutak Rock LLP
*10.01 Securities Purchase Agreement between the registrant and Equinox Investors LLC, dated as of
January 11, 2000
*10.02 Registration Rights Agreement between the registrant and Equinox Investors LLC, dated as of
January 11, 2000 (Form of Agreement included as Exhibit E to Exhibit 10.01)
*10.03 Letter Agreement dated February 14 by and between the registrant and Ladenburg Thalmann
& Co., Inc.
#23.01 Consent of Gelfond Hochstadt Pangburn & Co.
*23.02 Consent of Kutak Rock LLP (included in Exhibit 5.00)
#24.00 Power of Attorney (included on page II-5 of the registration statement)
</TABLE>
________________
*Previously filed.
#Filed herewith.
Item 17. Undertakings.
(a) The undersigned registrant will:
(i) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(1) include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(2) reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement; and Notwithstanding the
forgoing, any increase or decrease in volume of securities offered (if
II-2
<PAGE>
the total dollar value of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospects filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in the volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement;
(3) include any additional or changed material information on the
plan of distribution.
(ii) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.
(iii) File a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act of 1934, as amended (the "Exchange Act") (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Denver, State of Colorado, on March 14, 2000.
NANOPIERCE TECHNOLOGIES, INC.
By /s/ Paul H. Metzinger
---------------------------------------
Paul H. Metzinger, President, Chief
Executive Officer and Director
II-4
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Paul H. Metzinger and Herbert J. Neuhaus, and
each of them, his true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) to the Registration Statement on Form S-3 and file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto such attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, to all intents and
purposes and as full as they might or could do in person, hereby ratifying and
confirming all that such attorney-in-fact and agent, or his substitute, lawfully
may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement on Form S-3 is signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Paul H. Metzinger President, Chief Executive March 14, 2000
- -------------------------------------------- Officer and Director
Paul H. Metzinger (Principal Executive
Officer)
* * * * Director March 14, 2000
- --------------------------------------------
Herbert J. Neuhaus
* * * * Chief Financial Officer March 14, 2000
- -------------------------------------------- (Principal Accounting
Kristi J. Kampmann Officer)
* * * * By: /s/ Paul H. Metzinger
---------------------------------
Paul H. Metzinger, as
attorney-in-fact
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
2.00 Agreement dated February 26, 1998, by and among the registrant,
Particle Interconnect Corporation and Intercell Corporation
(incorporated by reference to Exhibit 2.01 to the registrant's
Current Report on Form 8-K, dated February 26, 1998, filed on
March 12, 1998)
3.01 The Articles of Incorporation of registrant (incorporated by
reference to Exhibit 4.01 to the registrant's Annual Report on
Form 10-KSB for the fiscal year ended June 30, 1998, filed on
October 8, 1998)
3.02 Amendment to the Articles of Incorporation of registrant
(incorporated by reference to Exhibit 4.02 to the registrant's
Annual Report on Form 10-KSB for the fiscal year ended June 30,
1998, filed on October 8, 1998)
*3.03 Amendment to Articles of Incorporation of registrant
*4.01 Debenture issued to Equinox Investors LLC (form of Debenture
included as Exhibit A to Exhibit 10.01)
*4.02 Warrant issued to Equinox Investors LLC (form of Warrant
included as Exhibit B to Exhibit 10.01)
*4.03 Conditional Warrant issued to Equinox Investors LLC (form of
Conditional Warrant included as Exhibit C to Exhibit 10.01)
*4.04 Warrant issued to EBI Securities Corporation
#4.05 Warrant issued to EBI Securities Corporation to purchase 150,000
shares of the registrant's Common Stock
#4.06 Warrant issued to EBI Securities Corporation to purchase 50,000
shares of the registrant's Common Stock
*5.00 Opinion from Kutak Rock LLP
*10.01 Securities Purchase Agreement between the registrant and Equinox
Investors LLC, dated as of January 11, 2000
*10.02 Registration Rights Agreement between the registrant and Equinox
Investors LLC, dated as of January 11, 2000 (form of Agreement
included as Exhibit E to Exhibit 10.01)
*10.03 Letter Agreement dated February 14, 2000 by and between the
registrant and Ladenburg Thalmann & Co., Inc.
#23.01 Consent of Gelfond Hochstadt Pangburn & Co.
*23.02 Consent of Kutak Rock LLP (included in Exhibit 5.00)
#24.00 Power of Attorney (included on page II-5 of the registration
statement)
</TABLE>
___________________
*Previously filed.
#Filed herewith.
<PAGE>
EXHIBIT 4.05
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
Warrant to Purchase
150,000 shares
- ---------
Warrant to Purchase Common Stock
of
NANOPIERCE TECHNOLOGIES, INC.
THIS CERTIFIES that EBI Securities Corporation or any subsequent ("Holder")
hereof, has the right to purchase from NANOPIERCE TECHNOLOGIES, INC., a Nevada
corporation (the "Company"), up to 150,000 fully paid and nonassessable shares
of the Company's Common Stock, no par value ("Common Stock"), subject to
adjustment as provided herein, at a price equal to the Exercise Price as defined
in Section 3 below, at any time beginning on the Date of Issuance and ending at
5:00 p.m., New York, New York time, on January 10, 2003.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance.
-----------------
This Warrant shall be deemed to be issued on January 11, 2000 ("Date of
Issuance").
2. Exercise.
--------
(a) Manner of Exercise. On or after the Date of Issuance, this Warrant
may be exercised as to all or any lesser number of full shares of Common Stock
covered hereby upon surrender of this Warrant, with the Exercise Form attached
hereto duly executed, together with the full Exercise Price (as defined in
Section 3) for each share of Common Stock as to which this Warrant is exercised,
at the office of the Company, 370 17/th/ Street, Suite 3580, Denver, Colorado
80202; Attention: President, Telephone No. (303)592-1010, Telecopy No.
(303)592-1054, or at such other office or agency as the Company may designate in
writing, by overnight mail, with an advance copy of the Exercise Form
1
<PAGE>
attached as Exhibit A ("Exercise Form") by facsimile (such surrender and payment
of the Exercise Price hereinafter called the "Exercise of this Warrant").
(b) Date of Exercise. The "Date of Exercise" of the Warrant shall be
defined as the date that the advance copy of the Exercise Form is sent by
facsimile to the Company, provided that the original Warrant and Exercise Form
are received by the Company as soon as practicable thereafter. Alternatively,
the Date of Exercise shall be defined as the date the original Exercise Form is
received by the Company, if Holder has not sent advance notice by facsimile.
(c) Cancellation of Warrant. This Warrant shall be canceled upon its
Exercise, and, as soon as practical after the Date of Exercise, the Holder
hereof shall be entitled to receive Common Stock for the number of shares
purchased upon such Exercise, and if this Warrant is not exercised in full, the
Holder shall be entitled to receive a new Warrant or Warrants (containing terms
identical to this Warrant) representing any unexercised portion of this Warrant
in addition to such Common Stock.
(d) Holder of Record. Each person in whose name any Warrant for shares of
Common Stock is issued shall, for all purposes, be deemed to have become the
Holder of record of such shares on the Date of Exercise of this Warrant,
irrespective of the date of delivery of such shares of Common Stock. Nothing in
this Warrant shall be construed as conferring upon the Holder hereof any rights
as a shareholder of the Company.
3. Payment of Warrant Exercise Price.
---------------------------------
The Exercise Price shall be Two Dollars and Ninety-One and Half Cents
($2.915) per share ("Exercise Price").
Payment of the Exercise Price may be made by either of the following, or a
combination thereof, at the election of Holder:
(i) Cash Exercise: cash, certified check or cashiers check or wire
transfer; or
(ii) Cashless Exercise: subject to the last sentence of this Section 3,
surrender of this Warrant at the principal office of the Company together with
notice of cashless election, in which event the Company shall issue Holder a
number of shares of Common Stock computed using the following formula:
X = Y (A-B)/A
where: X = the number of shares of Common Stock to be issued to Holder.
Y = the number of shares of Common Stock for which this Warrant is being
exercised.
2
<PAGE>
A = the Market Price of one (1) share of Common Stock (for purposes of
this Section 3(ii), the "Market Price" shall be defined as the average
closing price of the Common Stock for the five (5) trading days prior
to the Date of Exercise of this Warrant (the "Average Closing Price"),
as reported by the OTC Bulletin Board, or if the Common Stock is not
traded on the OTC Bulletin Board, the Average Closing Price in the
over-the-counter market; provided, however, that if the Common Stock
is listed on a stock exchange, the Market Price shall be the Average
Closing Price on such exchange. If the Common Stock is/was not traded
during the five (5) trading days prior to the Date of Exercise, then
the closing price for the last publicly traded day shall be deemed to
be the closing price for any and all (if applicable) days during such
five (5) trading day period.
B = the Exercise Price.
For purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is intended,
understood and acknowledged that the Common Stock issuable upon exercise of this
Warrant in a cashless exercise transaction shall be deemed to have been acquired
at the time this Warrant was issued. Moreover, it is intended, understood and
acknowledged that the holding period for the Common Stock issuable upon exercise
of this Warrant in a cashless exercise transaction shall be deemed to have
commenced on the date this Warrant was issued.
4. Transfer.
--------
(a) Transfer Rights. Subject to the provisions of Section 8 of this
Warrant, this Warrant may be transferred on the books of the Company, in whole
or in part, in person or by attorney, upon surrender of this Warrant properly
endorsed. This Warrant shall be canceled upon such surrender and, as soon as
practicable thereafter, the person to whom such transfer is made shall be
entitled to receive a new Warrant or Warrants as to the portion of this Warrant
transferred, and the Holder of this Warrant shall be entitled to receive a new
Warrant or Warrants as to the portion hereof retained.
5. Anti-Dilution Adjustments.
-------------------------
(a) Stock Dividend. If the Company shall at any time declare a dividend
payable in shares of Common Stock, then the Holder hereof, upon Exercise of this
Warrant after the record date for the determination of Holders of Common Stock
entitled to receive such dividend, shall be entitled to receive upon Exercise of
this Warrant, in addition to the number of shares of Common Stock as to which
this Warrant is Exercised, such additional shares of Common Stock as such Holder
would have received had this Warrant been Exercised immediately prior to such
record date and the Exercise Price will be proportionately adjusted.
3
<PAGE>
(b) Recapitalization or Reclassification. If the Company shall at any
time effect a recapitalization, reclassification or other similar transaction of
such character that the shares of Common Stock shall be changed into or become
exchangeable for a larger or smaller number of shares, then upon the effective
date thereof, the number of shares of Common Stock which the Holder hereof shall
be entitled to purchase upon Exercise of this Warrant shall be increased or
decreased, as the case may be, in direct proportion to the increase or decrease
in the number of shares of Common Stock by reason of such recapitalization,
reclassification or similar transaction, and the Exercise Price shall be, in the
case of an increase in the number of shares, proportionally decreased and, in
the case of decrease in the number of shares, proportionally increased. The
Company shall give the Warrant Holder the same notice it provides to holders of
Common Stock of any transaction described in this Section 5(b).
(c) Distributions. If the Company shall at any time distribute to Holders
of Common Stock cash, evidences of indebtedness or other securities or assets
(other than cash dividends or distributions payable out of earned surplus or net
profits for the current or preceding year) then, in any such case, the Holder of
this Warrant shall be entitled to receive, upon exercise of this Warrant, with
respect to each share of Common Stock issuable upon such Exercise, the amount of
cash or evidences of indebtedness or other securities or assets which such
Holder would have been entitled to receive with respect to each such share of
Common Stock as a result of the happening of such event had this Warrant been
Exercised immediately prior to the record date or other date fixing shareholders
to be affected by such event (the "Determination Date") or, in lieu thereof, if
the Board of Directors of the Company should so determine at the time of such
distribution, a reduced Exercise Price determined by multiplying the Exercise
Price on the Determination Date by a fraction, the numerator of which is the
result of such Exercise Price reduced by the value of such distribution
applicable to one share of Common Stock (such value to be determined by the
Board in its discretion) and the denominator of which is such Exercise Price.
(d) Notice of Consolidation or Merger. In the event of a merger,
consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which shares of Common Stock of the Company shall
be changed into the same or a different number of shares of the same or another
class or classes of stock or securities or other assets of the Company or
another entity or there is a sale of all or substantially all the Company's
assets (a "Corporate Change"), then this Warrant shall be exerciseable into such
class and type of securities or other assets as the Holder would have received
had the Holder exercised this Warrant immediately prior to such Corporate
Change; provided, however, that Company may not affect any Corporate Change
unless it first shall have given thirty (30) business days notice to the Holder
hereof of any Corporate Change.
(e) Exercise Price Adjusted. As used in this Warrant, the term "Exercise
Price" shall mean the purchase price per share specified in Section 3 of this
Warrant, until the occurrence of an event stated in subsection (a), (b) or (c)
of this Section 5, and
4
<PAGE>
thereafter shall mean said price as adjusted from time to time in accordance
with the provisions of said subsection. No such adjustment under this Section 5
shall be made unless such adjustment would change the Exercise Price at the time
by $.01 or more; provided, however, that all adjustments not so made shall be
deferred and made when the aggregate thereof would change the Exercise Price at
the time by $.01 or more. No adjustment made pursuant to any provision of this
Section 5 shall have the effect of increasing the Exercise Price. The number of
shares of Common Stock subject hereto shall increase proportionately with each
decrease in the Exercise Price.
(f) Adjustments: Additional Shares, Securities or Assets. In the event
that at any time, as a result of an adjustment made pursuant to this Section 5,
the Holder of this Warrant shall, upon Exercise of this Warrant, become entitled
to receive shares and/or other securities or assets (other than Common Stock)
then, wherever appropriate, all references herein to shares of Common Stock
shall be deemed to refer to and include such shares and/or other securities or
assets; and thereafter the number of such shares and/or other securities or
assets shall be subject to adjustment from time to time in a manner and upon
terms as nearly equivalent as practicable to the provisions of this Section 5.
6. Fractional Interests.
--------------------
No fractional shares or scrip representing fractional shares shall be
issuable upon the Exercise of this Warrant, but on Exercise of this Warrant, the
Holder hereof may purchase only a whole number of shares of Common Stock. If,
on Exercise of this Warrant, the Holder hereof would be entitled to a fractional
share of Common Stock or a right to acquire a fractional share of Common Stock,
such fractional share shall be disregarded and the number of shares of Common
Stock issuable upon conversion shall be the next higher number of shares.
7. Reservation of Shares.
---------------------
The Company shall at all times reserve for issuance such number of
authorized and unissued shares of Common Stock (or other securities substituted
therefor as herein above provided) as shall be sufficient for Exercise and
payment of the Exercise Price of this Warrant. The Company covenants and agrees
that upon Exercise of this Warrant, all shares of Common Stock issuable upon
such Exercise shall be duly and validly issued, fully paid, nonassessable and
not subject to preemptive rights, rights of first refusal or similar rights of
any person or entity.
8. Restrictions on Transfer.
------------------------
(a) Registration or Exemption Required. This Warrant has been issued
in a transaction exempt from the registration requirements of the Act by virtue
of Section 4(2). The Warrant and the Common Stock issuable upon exercise of the
Warrant may not be sold except pursuant to an effective registration statement
or an exemption to the registration requirements of the Act and applicable state
laws.
5
<PAGE>
(b) Registration Rights. The Company shall within One Hundred and
Twenty (120) days of the date of this Warrant prepare and file a Registration
Statement with the SEC, no more than once, under the Securities Act of 1933,
registering this Warrant and the shares underlying this Warrant. The Company
agrees to use its best efforts to cause the above filing to become effective, as
promptly as possible.
(c) Assignment. Assuming the conditions of (a) above regarding
registration or exemption have been satisfied, the Holder may sell, transfer,
assign, pledge or otherwise dispose of this Warrant, in whole or in part. Holder
shall deliver a written notice to Company, substantially in the form of the
Assignment attached hereto as Exhibit B, indicating the person or persons to
whom the Warrant shall be assigned and the respective number of warrants to be
assigned to each assignee. The Company shall effect the assignment within ten
(10) days, and shall deliver to the assignee(s) designated by Holder a Warrant
or Warrants of like tenor and terms for the appropriate number of shares.
9. Benefits of this Warrant.
------------------------
Nothing in this Warrant shall be construed to confer upon any person
other than the Company and the Holder of this Warrant any legal or equitable
right, remedy or claim under this Warrant and this Warrant shall be for the sole
and exclusive benefit of the Company and the Holder of this Warrant.
10. Applicable Law.
--------------
This Warrant is issued under and shall for all purposes be governed by
and construed in accordance with the laws of the state of Nevada, without giving
effect to conflict of law provisions thereof.
11. Loss of Warrant.
---------------
Upon receipt by the Company of evidence of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of indemnity or security reasonably satisfactory to the Company,
and upon surrender and cancellation of this Warrant, if mutilated, the Company
shall execute and deliver a new Warrant of like tenor and date.
12. Notice or Demands.
-----------------
Notices or demands pursuant to this Warrant to be given or made by the Holder of
this Warrant to or on the Company shall be sufficiently given or made if sent by
certified or registered mail, return receipt requested, postage prepaid, and
addressed, until another address is designated in writing by the Company, to
Attention:
6
<PAGE>
President, Nanopierce Technologies, Inc., 370 17/th/ Street, Suite 3580, Denver,
Colorado 80202, Attention: President, Telephone No. (303)592-1010, Telecopy No.
(303)592-1054. Notices or demands pursuant to this Warrant to be given or made
by the Company to or on the Holder of this Warrant shall be sufficiently given
or made if sent by certified or registered mail, return receipt requested,
postage prepaid, and addressed, to the address of the Holder set forth in the
Company's records, until another address is designated in writing by Holder.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the
11th day of January, 2000.
NANOPIERCE TECHNOLOGIES, INC.
By: /s/ Paul H. Metzinger
---------------------
Print Name: Paul H. Metzinger
Title: President & Chief Executive Officer
7
<PAGE>
EXHIBIT A
EXERCISE FORM
TO: NANOPIERCE TECHNOLOGIES, INC.
The undersigned hereby irrevocably exercises the right to purchase
____________ of the shares of Common Stock of NANOPIERCE TECHNOLOGIES, INC., a
Nevada corporation (the "Company"), evidenced by the attached Warrant, and
herewith makes payment of the Exercise Price with respect to such shares in
full, all in accordance with the conditions and provisions of said Warrant.
1. The undersigned agrees not to offer, sell, transfer or otherwise dispose of
any of Common Stock obtained on exercise of the Warrant, except in accordance
with the provisions of Section 8(a) of the Warrant.
2. The undersigned requests that stock certificates for such shares be issued
free of any restrictive legend, and a warrant representing any unexercised
portion hereof be issued, pursuant to the Warrant in the name of the Registered
Holder and delivered to the undersigned at the address set forth below:
Dated:
________________________________________________________________________________
Signature of Registered Holder
________________________________________________________________________________
Name of Registered Holder (Print)
________________________________________________________________________________
Non-U.S. Address
8
<PAGE>
EXHIBIT B
ASSIGNMENT
(To be executed by the registered Holder
desiring to transfer the Warrant)
FOR VALUE RECEIVED, the undersigned Holder of the attached Warrant hereby sells,
assigns and transfers unto the person or persons below named the right to
purchase _______ shares of the Common Stock of NANOPIERCE TECHNOLOGIES, INC.
evidenced by the attached Warrant and does hereby irrevocably constitute and
appoint _______________________ attorney to transfer the said Warrant on the
books of the Company, with full power of substitution in the premises.
Dated: ______________________________
Signature
Fill in for new Registration of Warrant:
_________________________________________
Name
_________________________________________
Address
_________________________________________
Please print name and address of assignee
(including zip code number)
________________________________________________________________________________
NOTICE
The signature to the foregoing Exercise Form or Assignment must correspond to
the name as written upon the face of the attached Warrant in every particular,
without alteration or enlargement or any change whatsoever.
________________________________________________________________________________
9
<PAGE>
EXHIBIT 4.06
THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
Warrant to Purchase
50,000 shares
- --------
Warrant to Purchase Common Stock
of
NANOPIERCE TECHNOLOGIES, INC.
THIS CERTIFIES that EBI Securities Corporation or any subsequent ("Holder")
hereof, has the right to purchase from NANOPIERCE TECHNOLOGIES, INC., a Nevada
corporation (the "Company"), up to 50,000 fully paid and nonassessable shares of
the Company's Common Stock, no par value ("Common Stock"), subject to adjustment
as provided herein, at a price equal to the Exercise Price as defined in Section
3 below, at any time beginning on the Date of Issuance and ending at 5:00 p.m.,
New York, New York time, on January 10, 2003.
The Holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. Date of Issuance.
-----------------
This Warrant shall be deemed to be issued on January 11, 2000 ("Date of
Issuance").
2. Exercise.
--------
(a) Manner of Exercise. On or after the Date of Issuance, this Warrant
may be exercised as to all or any lesser number of full shares of Common Stock
covered hereby upon surrender of this Warrant, with the Exercise Form attached
hereto duly executed, together with the full Exercise Price (as defined in
Section 3) for each share of Common Stock as to which this Warrant is exercised,
at the office of the Company, 370 17/th/ Street, Suite 3580, Denver, Colorado
80202; Attention: President, Telephone No. (303)592-1010, Telecopy No. (303)592-
1054, or at such other office or agency as the Company may designate in writing,
by overnight mail, with an advance copy of the Exercise Form
1
<PAGE>
attached as Exhibit A ("Exercise Form") by facsimile (such surrender and payment
of the Exercise Price hereinafter called the "Exercise of this Warrant").
(b) Date of Exercise. The "Date of Exercise" of the Warrant shall be
defined as the date that the advance copy of the Exercise Form is sent by
facsimile to the Company, provided that the original Warrant and Exercise Form
are received by the Company as soon as practicable thereafter. Alternatively,
the Date of Exercise shall be defined as the date the original Exercise Form is
received by the Company, if Holder has not sent advance notice by facsimile.
(c) Cancellation of Warrant. This Warrant shall be canceled upon its
Exercise, and, as soon as practical after the Date of Exercise, the Holder
hereof shall be entitled to receive Common Stock for the number of shares
purchased upon such Exercise, and if this Warrant is not exercised in full, the
Holder shall be entitled to receive a new Warrant or Warrants (containing terms
identical to this Warrant) representing any unexercised portion of this Warrant
in addition to such Common Stock.
(d) Holder of Record. Each person in whose name any Warrant for shares of
Common Stock is issued shall, for all purposes, be deemed to have become the
Holder of record of such shares on the Date of Exercise of this Warrant,
irrespective of the date of delivery of such shares of Common Stock. Nothing in
this Warrant shall be construed as conferring upon the Holder hereof any rights
as a shareholder of the Company.
3. Payment of Warrant Exercise Price.
---------------------------------
The Exercise Price shall be Two Dollars and Ninety-One and Half Cents
($2.915) per share ("Exercise Price").
Payment of the Exercise Price may be made by either of the following, or a
combination thereof, at the election of Holder:
(i) Cash Exercise: cash, certified check or cashiers check or wire
transfer; or
(ii) Cashless Exercise: subject to the last sentence of this Section 3,
surrender of this Warrant at the principal office of the Company together with
notice of cashless election, in which event the Company shall issue Holder a
number of shares of Common Stock computed using the following formula:
X = Y (A-B)/A
where: X = the number of shares of Common Stock to be issued to Holder.
Y = the number of shares of Common Stock for which this Warrant is being
exercised.
2
<PAGE>
A = the Market Price of one (1) share of Common Stock (for purposes of
this Section 3(ii), the "Market Price" shall be defined as the average
closing price of the Common Stock for the five (5) trading days prior
to the Date of Exercise of this Warrant (the "Average Closing Price"),
as reported by the OTC Bulletin Board, or if the Common Stock is not
traded on the OTC Bulletin Board, the Average Closing Price in the
over-the-counter market; provided, however, that if the Common Stock
is listed on a stock exchange, the Market Price shall be the Average
Closing Price on such exchange. If the Common Stock is/was not traded
during the five (5) trading days prior to the Date of Exercise, then
the closing price for the last publicly traded day shall be deemed to
be the closing price for any and all (if applicable) days during such
five (5) trading day period.
B = the Exercise Price.
For purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is intended,
understood and acknowledged that the Common Stock issuable upon exercise of this
Warrant in a cashless exercise transaction shall be deemed to have been acquired
at the time this Warrant was issued. Moreover, it is intended, understood and
acknowledged that the holding period for the Common Stock issuable upon exercise
of this Warrant in a cashless exercise transaction shall be deemed to have
commenced on the date this Warrant was issued.
4. Transfer.
--------
(a) Transfer Rights. Subject to the provisions of Section 8 of this
Warrant, this Warrant may be transferred on the books of the Company, in whole
or in part, in person or by attorney, upon surrender of this Warrant properly
endorsed. This Warrant shall be canceled upon such surrender and, as soon as
practicable thereafter, the person to whom such transfer is made shall be
entitled to receive a new Warrant or Warrants as to the portion of this Warrant
transferred, and the Holder of this Warrant shall be entitled to receive a new
Warrant or Warrants as to the portion hereof retained.
5. Anti-Dilution Adjustments.
-------------------------
(a) Stock Dividend. If the Company shall at any time declare a dividend
payable in shares of Common Stock, then the Holder hereof, upon Exercise of this
Warrant after the record date for the determination of Holders of Common Stock
entitled to receive such dividend, shall be entitled to receive upon Exercise of
this Warrant, in addition to the number of shares of Common Stock as to which
this Warrant is Exercised, such additional shares of Common Stock as such Holder
would have received had this Warrant been Exercised immediately prior to such
record date and the Exercise Price will be proportionately adjusted.
3
<PAGE>
(b) Recapitalization or Reclassification. If the Company shall at any
time effect a recapitalization, reclassification or other similar transaction of
such character that the shares of Common Stock shall be changed into or become
exchangeable for a larger or smaller number of shares, then upon the effective
date thereof, the number of shares of Common Stock which the Holder hereof shall
be entitled to purchase upon Exercise of this Warrant shall be increased or
decreased, as the case may be, in direct proportion to the increase or decrease
in the number of shares of Common Stock by reason of such recapitalization,
reclassification or similar transaction, and the Exercise Price shall be, in the
case of an increase in the number of shares, proportionally decreased and, in
the case of decrease in the number of shares, proportionally increased. The
Company shall give the Warrant Holder the same notice it provides to holders of
Common Stock of any transaction described in this Section 5(b).
(c) Distributions. If the Company shall at any time distribute to Holders
of Common Stock cash, evidences of indebtedness or other securities or assets
(other than cash dividends or distributions payable out of earned surplus or net
profits for the current or preceding year) then, in any such case, the Holder of
this Warrant shall be entitled to receive, upon exercise of this Warrant, with
respect to each share of Common Stock issuable upon such Exercise, the amount of
cash or evidences of indebtedness or other securities or assets which such
Holder would have been entitled to receive with respect to each such share of
Common Stock as a result of the happening of such event had this Warrant been
Exercised immediately prior to the record date or other date fixing shareholders
to be affected by such event (the "Determination Date") or, in lieu thereof, if
the Board of Directors of the Company should so determine at the time of such
distribution, a reduced Exercise Price determined by multiplying the Exercise
Price on the Determination Date by a fraction, the numerator of which is the
result of such Exercise Price reduced by the value of such distribution
applicable to one share of Common Stock (such value to be determined by the
Board in its discretion) and the denominator of which is such Exercise Price.
(d) Notice of Consolidation or Merger. In the event of a merger,
consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which shares of Common Stock of the Company shall
be changed into the same or a different number of shares of the same or another
class or classes of stock or securities or other assets of the Company or
another entity or there is a sale of all or substantially all the Company's
assets (a "Corporate Change"), then this Warrant shall be exerciseable into such
class and type of securities or other assets as the Holder would have received
had the Holder exercised this Warrant immediately prior to such Corporate
Change; provided, however, that Company may not affect any Corporate Change
unless it first shall have given thirty (30) business days notice to the Holder
hereof of any Corporate Change.
(e) Exercise Price Adjusted. As used in this Warrant, the term "Exercise
Price" shall mean the purchase price per share specified in Section 3 of this
Warrant, until the occurrence of an event stated in subsection (a), (b) or (c)
of this Section 5, and
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thereafter shall mean said price as adjusted from time to time in accordance
with the provisions of said subsection. No such adjustment under this Section 5
shall be made unless such adjustment would change the Exercise Price at the time
by $.01 or more; provided, however, that all adjustments not so made shall be
deferred and made when the aggregate thereof would change the Exercise Price at
the time by $.01 or more. No adjustment made pursuant to any provision of this
Section 5 shall have the effect of increasing the Exercise Price. The number of
shares of Common Stock subject hereto shall increase proportionately with each
decrease in the Exercise Price.
(f) Adjustments: Additional Shares, Securities or Assets. In the event
that at any time, as a result of an adjustment made pursuant to this Section 5,
the Holder of this Warrant shall, upon Exercise of this Warrant, become entitled
to receive shares and/or other securities or assets (other than Common Stock)
then, wherever appropriate, all references herein to shares of Common Stock
shall be deemed to refer to and include such shares and/or other securities or
assets; and thereafter the number of such shares and/or other securities or
assets shall be subject to adjustment from time to time in a manner and upon
terms as nearly equivalent as practicable to the provisions of this Section 5.
6. Fractional Interests.
--------------------
No fractional shares or scrip representing fractional shares shall be
issuable upon the Exercise of this Warrant, but on Exercise of this Warrant, the
Holder hereof may purchase only a whole number of shares of Common Stock. If,
on Exercise of this Warrant, the Holder hereof would be entitled to a fractional
share of Common Stock or a right to acquire a fractional share of Common Stock,
such fractional share shall be disregarded and the number of shares of Common
Stock issuable upon conversion shall be the next higher number of shares.
7. Reservation of Shares.
---------------------
The Company shall at all times reserve for issuance such number of
authorized and unissued shares of Common Stock (or other securities substituted
therefor as herein above provided) as shall be sufficient for Exercise and
payment of the Exercise Price of this Warrant. The Company covenants and agrees
that upon Exercise of this Warrant, all shares of Common Stock issuable upon
such Exercise shall be duly and validly issued, fully paid, nonassessable and
not subject to preemptive rights, rights of first refusal or similar rights of
any person or entity.
8. Restrictions on Transfer.
------------------------
(a) Registration or Exemption Required. This Warrant has been issued
in a transaction exempt from the registration requirements of the Act by virtue
of Section 4(2). The Warrant and the Common Stock issuable upon exercise of the
Warrant may not be sold except pursuant to an effective registration statement
or an exemption to the registration requirements of the Act and applicable state
laws.
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(b) Registration Rights. The Company shall within One Hundred and
Twenty (120) days of the date of this Warrant prepare and file a Registration
Statement with the SEC, no more than once, under the Securities Act of 1933,
registering this Warrant and the shares underlying this Warrant. The Company
agrees to use its best efforts to cause the above filing to become effective, as
promptly as possible.
(c) Assignment. Assuming the conditions of (a) above regarding
registration or exemption have been satisfied, the Holder may sell, transfer,
assign, pledge or otherwise dispose of this Warrant, in whole or in part. Holder
shall deliver a written notice to Company, substantially in the form of the
Assignment attached hereto as Exhibit B, indicating the person or persons to
whom the Warrant shall be assigned and the respective number of warrants to be
assigned to each assignee. The Company shall effect the assignment within ten
(10) days, and shall deliver to the assignee(s) designated by Holder a Warrant
or Warrants of like tenor and terms for the appropriate number of shares.
9. Benefits of this Warrant.
------------------------
Nothing in this Warrant shall be construed to confer upon any person
other than the Company and the Holder of this Warrant any legal or equitable
right, remedy or claim under this Warrant and this Warrant shall be for the sole
and exclusive benefit of the Company and the Holder of this Warrant.
10. Applicable Law.
--------------
This Warrant is issued under and shall for all purposes be governed by
and construed in accordance with the laws of the state of Nevada, without giving
effect to conflict of law provisions thereof.
11. Loss of Warrant.
---------------
Upon receipt by the Company of evidence of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of indemnity or security reasonably satisfactory to the Company,
and upon surrender and cancellation of this Warrant, if mutilated, the Company
shall execute and deliver a new Warrant of like tenor and date.
12. Notice or Demands.
-----------------
Notices or demands pursuant to this Warrant to be given or made by the Holder of
this Warrant to or on the Company shall be sufficiently given or made if sent by
certified or registered mail, return receipt requested, postage prepaid, and
addressed, until another address is designated in writing by the Company, to
Attention:
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President, Nanopierce Technologies, Inc., 370 17/th/ Street, Suite 3580, Denver,
Colorado 80202, Attention: President, Telephone No. (303)592-1010, Telecopy No.
(303)592-1054. Notices or demands pursuant to this Warrant to be given or made
by the Company to or on the Holder of this Warrant shall be sufficiently given
or made if sent by certified or registered mail, return receipt requested,
postage prepaid, and addressed, to the address of the Holder set forth in the
Company's records, until another address is designated in writing by Holder.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the
11th day of January, 2000.
NANOPIERCE TECHNOLOGIES, INC.
By: /s/ Paul H. Metzinger
---------------------
Print Name: Paul H. Metzinger
Title: President & Chief Executive Officer
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EXHIBIT A
EXERCISE FORM
TO: NANOPIERCE TECHNOLOGIES, INC.
The undersigned hereby irrevocably exercises the right to purchase
____________ of the shares of Common Stock of NANOPIERCE TECHNOLOGIES, INC., a
Nevada corporation (the "Company"), evidenced by the attached Warrant, and
herewith makes payment of the Exercise Price with respect to such shares in
full, all in accordance with the conditions and provisions of said Warrant.
1. The undersigned agrees not to offer, sell, transfer or otherwise dispose of
any of Common Stock obtained on exercise of the Warrant, except in accordance
with the provisions of Section 8(a) of the Warrant.
2. The undersigned requests that stock certificates for such shares be issued
free of any restrictive legend, and a warrant representing any unexercised
portion hereof be issued, pursuant to the Warrant in the name of the Registered
Holder and delivered to the undersigned at the address set forth below:
Dated:
________________________________________________________________________________
Signature of Registered Holder
________________________________________________________________________________
Name of Registered Holder (Print)
________________________________________________________________________________
Non-U.S. Address
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EXHIBIT B
ASSIGNMENT
(To be executed by the registered Holder
desiring to transfer the Warrant)
FOR VALUE RECEIVED, the undersigned Holder of the attached Warrant hereby sells,
assigns and transfers unto the person or persons below named the right to
purchase _______ shares of the Common Stock of NANOPIERCE TECHNOLOGIES, INC.
evidenced by the attached Warrant and does hereby irrevocably constitute and
appoint _______________________ attorney to transfer the said Warrant on the
books of the Company, with full power of substitution in the premises.
Dated: _________________________
Signature
Fill in for new Registration of Warrant:
________________________________________
Name
_________________________________________
Address
_________________________________________
Please print name and address of assignee
(including zip code number)
________________________________________________________________________________
NOTICE
The signature to the foregoing Exercise Form or Assignment must correspond to
the name as written upon the face of the attached Warrant in every particular,
without alteration or enlargement or any change whatsoever.
________________________________________________________________________________
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EXHIBIT 23.01
CONSENT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference into this Registration
Statement on Pre-effective Amendment No. 1 to Form S-3 of our report dated
September 15, 1999 (which expresses an unqualified opinion and includes an
explanatory paragraph relating to the Company's ability to continue as a going
concern), which appears on page F-2 of the Annual Report on Form 10-KSB of
Nanopierce Technologies, Inc. for the year ended June 30, 1999 and to the
reference to our Firm under the caption "Experts" in the Prospectus.
/S/ Gelfond Hochstadt Pangburn & Co.
- ------------------------------------
Gelfond Hochstadt Pangburn & Co.
Denver, Colorado
March 13, 2000
