NBS Technologies Completes Acquisition of Cybernetix Microelectronique SAS

The total acquisition costs including cash consideration, liabilities assumed and transaction costs is approximately Cdn$14.8 million. NBS will maintain an operational capacity in Marseille, France, with a focus on the design and manufacture of automated equipment systems for the production, testing and personalization of microprocessor cards (smart cards), smart objects, electronic labels and micromodules, as well as RFID products for applications in telecommunications, ID, security, banking and transportation. In addition, NBS has acquired a product line directly serving the semiconductor industry including specialized equipment for handling, sorting, packing, unpacking, inspection, wet processing, personalization and testing of semiconductor wafers as well as a range of parametric and radio-frequency testers for chips and electronic components. This acquisition also includes a presence in Shanghai, China where NBS will continue the sales and service activities for the distribution of products and services in China. NBS will provide a broad combined portfolio of technology, solutions and expertise directly to our major account customers and our established global dealer and distributor network to secondary customers focusing on three main markets: Mobile Telephony, Financial EMV (Europay MasterCard/Visa) and the Secure ID markets: Mobile Telephony With the addition of milling and embedding capabilities, NBS will, for the first time, be able to address the needs of the mobile telephony segment, the largest in the microprocessor card market with approximately 70% of the worldwide sales volumes and revenues. Microprocessor cards, in the form of SIM cards (Subscriber Identification Module), are included in all mobile telephony using a GSM network and in a growing proportion of handsets for other networks (TDMA, PDA and CDMA). Their main function is identifying the user on the operators network, so that the latter can authorize the customer to use their phone and bill them accordingly. Financial EMV (Europay MasterCard/Visa) NBS has a leadership position in both hardware and software personalization solutions for the global financial EMV market. This segments main growth driver is the migration from traditional magnetic stripe cards to smart cards, stimulated by the timing of the EMV migration, which will make the party that has not adopted EMV microprocessor cards responsible for fraud. In 1993, the first full year after the smart card was launched in France, losses relating to fraud halved. In 1996, according to the Groupement des Cartes Bancaires, card related fraud practically disappeared in France. Secure ID Identity and security covers the other major area segment in which microprocessor cards are used: identity, healthcare, government, physical and logical access control, travel cards and pay-TV. Smart cards offer over 100 times the calculation and storage capacity of other types of cards, allowing them to perform more complicated security applications and security demands (cryptographic algorithms), particularly in the area of biometrics (which require a significant amount of memory). NBS has had recent success by winning the centralized printer contract for the Department of Defenses Common Access Card (CAC) and believes this segment offers solid long-term growth potential, particularly in the areas of identity and access control as measures to counter terrorism continue to increase in demand. In order to finance the acquisition, NBS has amended and restated its borrowing facilities with NBSs significant shareholder, Brascan Financial Corporation. The companys debt profile is now comprised of a Cdn$12 million, one-year term, variable rate operating facility, with currently Cdn$9.6 million borrowed on the facility, and a US$11 million, 7.5%, five-year term loan.