Applied Nanotech Holdings, Inc, Nanofilm, Ltd. Sign Merger Agreement

Applied Nanotech Holdings, Inc. and NanoHolding Inc., the parent company of Nanofilm, Ltd. (Nanofilm), a private company with a leading market position for specialty optical coatings, cleaners and nano-composite products, announced that their respective Boards of Directors have approved an agreement and plan of merger and exchange. Under terms of the agreement, a new company named PEN Inc. will be created.

Upon completion of the merger, current Applied Nanotech stockholders and holders of certain debt convertible into Applied Nanotech’s common stock are expected to own approximately 38% of PEN’s outstanding common stock, and owners of Nanofilm are expected to receive approximately 62% of PEN’s outstanding common stock. Dr. Scott Rickert, the CEO of Nanofilm, will become the chairman and CEO of PEN.

Based on 2013 pro forma historical financial statements of Applied Nanotech and Nanofilm, assuming the merger had occurred at the beginning of 2013, PEN would have had 2013 revenues exceeding $13 million. Projected 2014 revenues of PEN are anticipated to be greater than 2013 pro forma revenues, generating positive operating income, not including transaction expenses.

This transaction will combine the technology portfolios of Applied Nanotech and Nanofilm, to be catalyzed by Nanofilm’s experience in consumer and industrial product commercialization for worldwide markets, thus enhancing PEN’s ability to gain greater value from its intellectual property. PEN was created to build a platform for a higher rate of expected revenue growth based on increased capabilities in intellectual property, key personnel, development facilities, operating facilities and customer relations to aggressively pursue product commercialization. PEN anticipates future acquisitions of companies that have strong intellectual property but are in need of commercialization expertise, as well as companies whose products can be advanced by PEN’s technologies.

“PEN offers an exciting opportunity for Applied Nanotech and Nanofilm shareholders to share in the growth of the combined company,” said Dr. Rickert. “Customers and consumers will be served by new products that incorporate nanotechnology, the science of small, to accomplish big breakthroughs. The name PEN is derived from ‘products enabled by nanotechnology.’ I am ready to show how a disciplined business approach can transform scientific innovation and bring next-generation products to the worldwide marketplace.”

Rickert, an early nanotechnology entrepreneur, founded Nanofilm in 1984. Nanofilm distributes a variety of products in dozens of countries across the globe.

To harness the capabilities of the combined research and development, operations and marketing departments, PEN plans to create a companywide Innovation Committee. This committee will be chaired by Dr. Rickert. Dr. Zvi Yaniv will also serve on the committee. Each technology subsidiary will be represented on the committee, charged with devising new product ideas to capitalize on technical innovation.

“For our shareholders, this merger is a compelling strategic and financial transaction to realize the market potential of Applied Nanotech’s technology,” said Dr. Robert Ronstadt, Applied Nanotech’s chairman. “Combining the outstanding research and development capabilities of the two organizations and Nanofilm’s experience and strength in manufacturing, marketing and sales expands PEN’s capabilities for growth.”

The merger agreement is subject to various conditions, including conversion of certain debts of APNT into equity, and customary conditions, including shareholder approval at both companies. The merger is expected to close by the end of the second quarter of 2014.