Press Release Source: True Product ID, Inc.
True Product ID States Details Previously Reported in Its Form 10-KSB Relating To Projected $1.3 Billion Revenue Gas Tank Contract Signed With The Chinese Government Counterpart To U.S. Consumer Product Safety Commission
Friday November 9, 4:29 pm ET
BEIJING & PHILADELPHIA--(BUSINESS WIRE)--True Product ID, Inc. (OTCBB:TPDI) today stated the following details previously reported in its Form 10-KSB filed October 2, 2007 relating to the agreement which its Chinese joint venture company affiliate, True Product ID Technology (Beijing) Limited ("TPID Beijing"), signed on August 27, 2007 with the State General Administration for Quality Supervision, Inspection and Quarantine of the People's Republic of China ("AQSIQ") to develop a national safety/security system for China's liquefied natural gas and other pressurized canisters and other special equipment (Contract No. 0076180):
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As reported in its press release on August 27, 2007, the Company, through its Chinese joint venture affiliate, entered into a contract with the National Quality Inspection Department of the State General Administration for Quality Supervision, Inspection and Quarantine of the People's Republic of China ("AQSIQ"), to develop a national safety/security system for China's liquefied natural gas and other pressurized canisters and other special equipment.
According to its website (www.aqsiq.gov.cn), AQSIQ is a ministerial administrative organ directly under the State Council of the People's Republic of China in charge of national quality, metrology, entry-exit commodity inspection, entry-exit health quarantine, entry-exit animal and plant quarantine, import-export food safety, certification and accreditation, standardization, as well as administrative law-enforcement. AQSIQ is considered the Chinese counterpart to the United States Consumer Product Safety Commission. See The U.S. Consumer Product Safety Commission-AQSIQ Joint Statement on Enhancing Consumer Product Safety dated September 11, 2007, available at http://www.cpsc.gov/cpscpub/prerel/prhtml07/07305.pdf.
The AQSIQ Contract follows an AQSIQ Circular to every quality and technical supervision bureau in all provinces, autonomous regions and municipalities under the control of the Chinese Central Government. The AQSIQ Circular sets out a 5-year AQSIQ National Security/Safety Plan to protect against the illegal production, circulation, and use of certain "special equipment" (the "Plan"). AQSIQ's mission in the Circular is, among other things, to protect public safety from safety accidents and other risks caused by counterfeit and substandard "special equipment." Among the "special equipment" referenced in the AQSIQ Circular are liquefied gas tanks, oxygen tanks, and other pressurized containers and pipes, elevators, lift machinery; and equipment at large recreational facilities and automobile plants.
In its Circular, AQSIQ has explicitly designated our technology and our Chinese joint venture company affiliate as the exclusive technology and technology provider to help AQSIQ develop, implement and administer its National Security/Safety Plan. Under the AQSIQ Circular, TPID Beijing is to help AQSIQ develop national special equipment security identification standards (the "standards"), a special equipment identification information security management system (the "management system"), and a special equipment security/safety logo (the "logo").
As a result of the Circular, AQSIQ has entered into a Project Cooperation Agreement with the Company's Chinese joint venture company affiliate (Contract No. 0076180). ASQIQ subsequently entered into supplementary provisions to the Project Cooperation Agreement in connection with the initial phase of AQSIQ's National Security/Safety Plans relating to liquefied natural gas containers (the "LNG Contract").
Under the LNG Contract, TPID Beijing is to provide and apply a security logo to all LNG containers in China. According to Chinese government statistics, the total number of LNG containers in China is currently over 130 million and is expected to increase in quantity by 10% every year. Under the LNG Contract, TPID Beijing is to receive a fixed taggant price per LNG container. The specific taggant price per LNG container is not being disclosed due to its proprietary nature.
Under the LNG Contract, TPID Beijing is to provide 50,000 units of one of its highly proprietary scanners and 15,000 units of another of its highly proprietary scanners to approximately 20,000 LNG gas stations, 30,000 special equipment manufacturers, and 40,000 "platforms" in China. Under the LNG Contract, TPID Beijing is to receive a fixed price per scanner, with a different fixed price for each type of scanner. The specific price per scanner is not being disclosed due to its proprietary nature.
Finally, under the LNG Contract, TPID Beijing is to establish a security management information system for 50,000 enterprises. Under the LNG Contract, TPID Beijing is to receive a fixed price per enterprise. The specific price per enterprise is not being disclosed due to its proprietary nature. According to AQSIQ, among such enterprises and platforms include 5,016 enterprises in charge of manufacturing LNG containers and other pressurized containers, 14,995 enterprises in charge of charging LNG containers, 8,747 enterprises in charge of manufacturing, installing, reequipping and repairing boilers, and approximately 1,823 institutes in the Chinese state quality inspection system which check LNG containers.
Since AQSIQ's Circular, Project Cooperation Agreement and LNG Contract, TPID Beijing and AQSIQ have met and continue to meet on a routine basis to develop, coordinate, and implement AQSIQ's National Safety/Security Plan and in particular as the Plan initially pertains to LNG containers. The initial revenue projections set forth by AQSIQ in the LNG Contract (as corrected to fix a mathematical miscalculation in the original Chinese version of the LNG Contract) to mark the 130 million LNG containers (at a fixed price per container), to provide the 50,000 and 15,000 proprietary scanners (at fixed prices per scanner), and to develop a security management information system for 50,000 enterprises (at a fixed price per enterprise) total 2,720,000,000 Chinese Yuan, which equates to over US$362,000,000.
Subsequent (yet ongoing) consultations between AQSIQ and TPID Beijing have produced the following latest gross revenue projections:
Year Gross Revenue in Chinese Yuan
Gross Revenue in US Dollars
(based on www.xe.com
exchange rate on
09-27-07 of US$1=0.133094
RMB)*
§
Year 1 801,800,000 106,714,769.20
Year 2 1,612,250,000 214,580,801.50
Year 3 2,815,770,000 374,762,092.38
Year 4 2,686,930,000 357,614,261.42
Year 5 2,054,400,000 273,428,313.60
TOTAL 9,971,150,000 1,327,100,238.10
These revenue projections included not only LNG containers, but also oxygen tanks, fixed pressure containers, boilers and other items. They were based on specific unit prices and number of items provided by AQSIQ per year for each of the five years to mark LNG tanks, fixed pressured containers, tank car and oxygen space, and boilers. They were based on specific unit prices and number of items provided by AQSIQ per year for each of the five years for three specific types of scanners and for automatic marking equipment and intellectual charging equipment. They were based on specific unit prices and number of items provided by AQSIQ per year for each of the five years for software sales associated with system building and client-side software. The number of items were based on certain Chinese official publications including Special Equipment Statistics Data Publication of 2005 published on April 7, 2007, the Special Equipment Statistics Data Publication of 2006 published on June 18, 2007, and Safety Status White Book of State Special Equipment published in July 2007. These are all AQSIQ publications. The revenue projections were based on the information in the following chart:
Time Category Name Number of Units
The
first
year The fee for
marking the
special
equipment LNG Container 20 million
Fixed pressure container 0
Tank car and Oxygen space 0
Boiler 0
Mark for checking gas bottles 0
Intellectual
Scanner TPID Scanner 3000
TPID Scanner 200
TPID Scanner 25000
Automatic marking equipment 400
Intellectual charging equipment 10000
§
Software
sales
§ System building 3
§Client-side software 6040
TOTAL GROSS REVENUE
§ 801,800,000 Chinese Yuan/
US$106,714,769.20
TIME CATEGORY NAME NUMBER OF UNITS
THE
SECOND
YEAR THE FEE FOR
MARKING THE
SPECIAL
EQUIPMENT LNG CONTAINER 30 MILLION
FIXED PRESSURE CONTAINER 0
TANK CAR AND OXYGEN SPACE 0
BOILER 0
MARK FOR CHECKING LNG CONTAINER 0
INTELLECTUAL
SCANNER
§ TPID SCANNER 5000
TPID SCANNER 250
TPID SCANNER 62500
AUTOMATIC MARKING EQUIPMENT 500
INTELLECTUAL CHARGING EQUIPMENT 25000
§
SOFTWARE
SALES
§ SYSTEM BUILDING 5
§CLIENT-SIDE SOFTWARE 15050
TOTAL GROSS REVENUE
1,612,250,000 CHINESE YUAN/
US$214,580,801.50
TIME CATEGORY NAME NUMBER OF UNITS
THE
THIRD
YEAR THE FEE FOR
MARKING THE
SPECIAL
EQUIPMENT LNG CONTAINER 40 MILLION
FIXED PRESSURE CONTAINER 1.923 MILLION
TANK CAR AND OXYGEN SPACE 31 THOUSAND
BOILER 186 THOUSAND
MARK FOR CHECKING LNG CONTAINER 0
INTELLECTUAL
SCANNER TPID SCANNER
7000
TPID SCANNER 150
TPID SCANNER 125000
AUTOMATIC MARKING EQUIPMENT 300
INTELLECTUAL CHARGING EQUIPMENT 50000
§
SOFTWARE
SALES
§ SYSTEM BUILDING 10
§CLIENT-SIDE SOFTWARE 30030
TOTAL GROSS REVENUE
2,815,770,000 CHINESE YUAN/
US$374,614,261.42
TIME CATEGORY NAME NUMBER OF UNITS
THE
FOURTH
YEAR THE FEE FOR
MARKING THE
SPECIAL
EQUIPMENT LNG CONTAINER 50 MILLION
FIXED PRESSURE CONTAINER 69 THOUSAND
TANK CAR AND OXYGEN SPACE 2 THOUSAND
BOILER 186 THOUSAND
MARK FOR CHECKING LNG CONTAINER
20 MILLION
INTELLECTUAL
SCANNER TPID SCANNER 0
TPID SCANNER 1300
TPID SCANNER 100000
AUTOMATIC MARKING EQUIPMENT 1300
INTELLECTUAL CHARGING EQUIPMENT 40000
§
SOFTWARE
SALES
§ SYSTEM BUILDING 8
§CLIENT-SIDE SOFTWARE 25300
TOTAL GROSS REVENUE 2,686,930,000 CHINESE YUAN/
US$357,614,261.42
TIME CATEGORY NAME NUMBER OF UNITS
THE
FIFTH
YEAR THE FEE FOR
MARKING THE
SPECIAL
EQUIPMENT GAS BOTTLE 80 MILLION
FIXED PRESSURE CONTAINER 72 THOUSAND
TANK CAR AND OXYGEN SPACE 2 THOUSAND
BOILER 186 THOUSAND
MARK FOR CHECKING GAS BOTTLES 30 MILLION
INTELLECTUAL
SCANNER TPID SCANNER 0
TPID SCANNER 823
TPID SCANNER 62375
AUTOMATIC MARKING EQUIPMENT 823
INTELLECTUAL CHARGING EQUIPMENT 24950
§
SOFTWARE
SALES
§ SYSTEM BUILDING 7
§CLIENT-SIDE SOFTWARE 15793
TOTAL GROSS REVENUE
2,054,400,000 CHINESE YUAN/
US$273,428,313.60
Continued consultation and coordination between AQSIQ and TPID Beijing are ongoing and the revenue projections are subject to change and revisions as such coordination and consultation continue.
Under AQSIQ's supplementary provisions and project cooperation agreement, TPID Beijing is to: (a) begin marking LNG containers in the first year and finish marking them in three years; (b) begin marking other fixed pressure containers in the third year and finish marking them in one year; and (c) begin marking boilers in the third year and finish marking them in three years.
Under AQSIQ's Circular and Project Cooperation Agreement, the initial phase of Plan starts LNG containers in the designated pilot areas of Beijing (referenced by AQSIQ as the site of the 2008 Olympics) and Guangdong Province. Beijing, China's capital, has a population of over 14 million. Guangdong Province has a population of over 110 million. To implement the Beijing/Guangdong Pilot Phase, TPID Beijing will use SDNA taggant developed by the Company as well as three types of highly developed scanners developed by the Company. The Company and TPID BJ may supplement its technology with technology from several prominent technology companies in the United States and Europe.
Preliminarily, based on consultations with AQSIQ to date, to begin to implement the Beijing/Guangdong Pilot Phase, TPID Beijing has determined the estimated amount of producing lines, scanners and related software needed; projects that it will initiate manufacture and coordinate the technology team by early November; and projects that the trial work will take approximately six months, at which time it believes that it will have completed the development of the national security logo standard and can begin implementation of the security logo standard throughout China beyond Beijing and Guangdong. Based on consultations with AQSIQ to date, TPID Beijing projects that the expenses associated with the Beijing/Guangdong Pilot Phase will run approximately 15 million Chinese Yuan or approximately US$2 million. As stated above, the latest gross revenue projections for year one of the AQSIQ contract is 801,800,000 Chinese Yuan or US$106,714,769.20, which includes, but is not limited to, the Beijing/Guangdong Pilot Phase.
Regarding technological implementation for the Beijing/Guangdong Pilot Phase, TPID Beijing will utilize scanners developed by the Company. At the same time, TPID Beijing may supplement the Company's technology with technology from several prominent technology companies in the United States and Europe. TPID Beijing will also utilize its SDNA taggant, which may have to be produced outside China.
Regarding funding to implement the Beijing/Guangdong Pilot Phase and beyond, TPID has met with and received significant interest from several prominent and well-funded entities in China with significant government relationships. These entities are not only interested in funding implementation of the entire AQSIQ Contract but are also interested in using TPID's technologies to help anti-counterfeit their own products and the products of other companies or organizations. TPID has also met with potential funders in and from the U.S., Hong Kong, and other parts of Asia.
*Note that there was an inadvertent error regarding the stated conversion rate in the heading in the gross revenue chart. The conversion rate should read 1 Chinese Yuan = 0.133094 US$1.
About True Product ID
True Product ID produces integrators for anti-counterfeiting and security surveillance applications and is a provider of integrated tracking devices. The Company delivers turnkey solutions for governments, armed forces, and industry, through its own proprietary technology and through aggregating the technology, products, and services of third parties via licensing agreements and or joint ventures. For more information about True Product ID, Inc., go to http://www.tpid.net. For more information about True Product ID Technology (Beijing) Limited, go to http://www.trueproductid.com/.
SAFE HARBOR STATEMENT: This news release contains "forward-looking statements" that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" describe future expectations, plans, results, or strategies and are generally preceded by words such as "future," "plan" or "planned," "will" or "should," "expected," "anticipates," "draft," "eventually" or "projected." You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that our products may not achieve customer acceptance or perform as intended, that we may be unable to obtain necessary financing to continue operations and development, and other risks. You should consider these factors in evaluating the forward-looking statements included herein, and not place undue reliance on such statements.
Contact:
True Product ID, Inc.
Michael Antonoplos, 610-608-9300
mantonoplos@tpid.net
Source: True Product ID, Inc.
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