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CEO Interview: Applied Nanotech Holdings, Inc. (APNT) - Douglas P. Baker

On Monday July 25, 2011, 11:25 am

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Douglas P. Baker, CPA, joined Applied Nanotech Holdings, Inc., as Chief Financial Officer in June 1996 and became Chief Executive Officer in May 2010. Prior to joining Applied Nanotech, Mr. Baker spent nine years in public accounting at Plante & Moran, PLLC, a large regional CPA firm, four years as Chief Financial Officer of a small privately held company and five years as a Divisional Controller at MascoTech, Inc., a large publicly held automotive supplier. Mr. Baker has a BBA and an MBA from the University of Michigan.

TWST: What is Applied Nanotech?

Mr. Baker: We are a premier research and commercialization organization focused on solving problems at the molecular level. Our goal is to work with partners to solve technical impasses and create innovative solutions that will give their products a competitive advantage in the marketplace. Our revenues come from funded research products and from licensing the technology that we develop in these projects.

TWST: Would you give us an idea of what the particular focus areas are for your materials or processes?

Mr. Baker: We work in several different areas. They all have a common thread of nanotechnology, usually revolving around carbon nanotubes or nanoparticles. Right now, we are mainly focused on two areas: those being what we call nanomaterials or composites, and the other being nanoelectronics, which in our case is primarily related to inks and pastes. We have developed significant intellectual property over the years and are always searching for other areas and products where we can leverage the intellectual property we have developed or our expertise. But right now we are primarily focused on nanomaterials and nanoelectronics.

TWST: Would you elaborate on the advantages of your technology over the competition's?

Mr. Baker: That answer is going to be dependent on the particular project we are talking about - our focus is to help solve problems for our partners. If you look at some of the license agreements we have, the first and probably the simplest is with Yonex Corporation, a leading sporting goods company based in Japan. We have been working with them to develop composites using carbon nanotubes to use in the frames of racquets, whether it is tennis or badminton, and in golf club shafts. This year Yonex introduced the new composite material that we developed in their badminton racquets and golf club shafts - likely later in the year it will be used in their tennis racquets. Since carbon nanotubes are one of the strongest materials in the world, introducing them into a composite material allows you to reduce the weight but maintain the same performance characteristics such as strength and flex.

In the case of golf clubs, it makes the club lighter, so you can generate more swing speed and hit the ball farther - the same concept with racquets.Another license agreement we have is with Ishihara Chemical, where we developed copper inks in partnership with them. Basically, copper ink can be a replacement for anything that uses the copper solder. That would include the semiconductor industry, cell phone industry and other similar industries. Copper ink made of nanoparticles allows you to either inkjet or aerosol jet the ink directly on to a substrate as opposed to the way technologies using copper solder are made today, where you design a mask and you put down copper in it and you wash the excess away. Our method allows you to cut steps out of the process. Basically, a producer can manufacture its product cheaper. Those are two examples of our nanotechnology advantages.

TWST: What's the Applied Nanotech business model? Is it licensing, is it joint ventures? Are you trying to develop and introduce the technologies yourself?

Mr. Baker: Our basic business model is to license our technologies and collect royalties. On the other end of the spectrum, since we are a research organization, we really have no interest in establishing manufacturing operations. Having said that, we work very closely with our partners to develop solutions. And there may be instances where a joint venture would be appropriate to facilitate licensing our technology or as an additional way to increase our income beyond just the royalty from the sale of the product, but also by participating in the profit from the sale of the product through ownership in a joint venture.

TWST: What are some of the risks associated with being a holder of intellectual property?

Mr. Baker: The obvious risk is that others will infringe your patents. I can turn it around and say that for us, intellectual property is a benefit. We have a strong patent portfolio. We've developed over 300 patents over the past 10 to 15 years. We have a long history of developing quality patents. The strength of our patent portfolio has been recognized based on some of the licenses we've done. For example, last year Samsung came to us and wanted to license part of our patent portfolio - our electron-emission I.P. In our case, I wouldn't characterize intellectual property as a risk, but as a benefit.

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