MIK 0.00% 1.5¢ mikoh corporation limited

Reply by Peter Atherton

  1. gdb
    345 Posts.
    The following are some questions I raised with Mikoh, and the response from Peter Atherton.

    Email to Mikoh:

    I have followed the progress of Mikoh Corporation for several years and have
    recently become a shareholder. To say Mikoh has struggled to get where it
    is, is a major understatement. Whether this has been a function of the
    executives running the company or the technology Mikoh is trying to sell,
    well I wish I was in a better position to make that judgement. The progress
    as it stands appears to be very good, in reference to the last shareholder
    update. I have followed Mikoh closely enough to know that this is not
    uncommon ground being crossed. Several times in the past the optimism
    esposued by management has fallen flat leaving shareholders wondering what
    questions to ask next.

    I could ask many questions of you, but I am sure they would have all been
    asked before and no doubt would have all been answered with unbridled
    optimism. Many years on though, it appears Mikoh is only just starting to
    make real inroads into commercializing what I think is an incredible
    technology that could have major ramifications in the niches being targeted.

    I have some questions though that are asked with honest concern and a
    constructive bent:

    1) If Mikoh achieves 100% success in attracting commercial orders for all
    the pilot programs underway and from all the parties Mikoh is currently in
    discussion with, does Mikoh have the capacity to produce this many labels
    with it's current production facility ? This may seem like a dumb question
    as one would surely have to assume this would be foremost in managements
    planning but given the track record of Mikoh I need to ask the question and
    more so, need a confirmatory reply. If the technology is as good as slated
    and Mikoh does achieve significant commercial orders this surely could be
    the only thing that could derail Mikoh's success.

    2) Assuming Mikoh does have the capacity to start immediate production for
    one or many orders what quality assurance has been done on the production
    facility, that is, do the labels produced in a mass production run, work
    identically to those produced in small runs ? This is a very subtle point
    and one I expect you to consider seriously. Assuming that the 100,000th
    label will work identically to the 100th label produced, is an assumption
    that could destroy Mikoh's credibility and viability, because the 100,000th
    label produced might not work. Has this been tested, checked or verified.
    Can you prove to me that this quality assurance has been undertaken ?

    3) Has Mikoh investigated the use of RFID labels for use with goods on
    supermarket shelves ? I am aware that Mikoh believes RFID labels will not
    supercede bar coding as bar coding is cheaper and is entrenched. An
    application I can see that may attract interest from supermarkets is being
    able to eliminate the manual check out process. Is it possible that RFID
    labels and the products they are attached to could be identified
    simultaneously when passed by a RFID reader. I can envisage a time when a
    trolley full of goods could be wheeled past an RFID reader and the contents
    itemised and a total charge instantly produced. Is it possible in the
    foreseeable future that the technology could do this ?


    Thanks for your e-mail, and my apologies for the delayed response (due to
    travel commitments).

    In response to your questions:

    (i) and (ii) We don't foresee any difficulties producing Smart&Secure in the
    required volumes. As you know, MIKOH contracts each stage of the production
    process to an established third party manufacturer. Each of the
    manufacturing processes (chip production, transponder production, and
    label/tag production) is designed for high volumes. Similarly in relation to
    the quality control issue. We have spent a great deal of time working with
    our suppliers to ensure product quality and reliability will be unaffected
    as we move from pilot projects to large-scale implementations. (For example,
    we have developed certification procedures for label converters who want to
    convert Smart&Secure labels.) Since the production processes are
    intrinsically geared for high volumes, quality and reliability are likely to
    improve, rather than deteriorate, as volumes increase.

    (ii) The use of RFID with supermarket goods has been technologically
    possible for some time, but the costs are prohibitive and will remain so for
    some time yet. If this application ever becomes feasible from a cost
    standpoint, I am sure Smart&Secure will have a role in preventing label
    transfer from item to item. In the meantime, we are focused on those
    applications that will justify the actual current costs of RFID.

    Thanks again for your e-mail. Please feel free to contact me by phone or
    e-mail with further questions.

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