UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C.  20549

                                   FORM 10-KSB
 (Mark  one)
[X]  ANNUAL  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT  OF  1934

                    FOR THE FISCAL YEAR ENDED: JUNE 30, 2004
                    ----------------------------------------

                                       OR

[ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR  15(d)  OF THE SECURITIES
     EXCHANGE  ACT  OF  1934

Commission  file  number:  33-19598-D

                          NANOPIERCE TECHNOLOGIES, INC.
                          -----------------------------
                    Exact name of registrant as specified in
                                   its charter

                 Nevada                                84-0992908
    -------------------------------         -------------------------------
    (State of other jurisdiction of         (I.R.S. employer identification
     incorporation or organization)                     number)

                       370 Seventeenth Street, Suite 3640
                             Denver, Colorado 80202
              ----------------------------------------------------
              (Address and zip code of principal executive office)


                 ----------------------------------------------
                 (Former address of principal executive office)

Registrant's telephone number, including area code: (303) 592-1010
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None

                     (Title of Class)      Name of Each
                                          Exchange On Which
                                             Registered
                    ----------------------------------------
                      Common Stock,           NASDAQ:BB
                    $0.0001 Par Value     Frankfurt Exchange
                                           Hamburg Exchange


     Indicate  by  check  mark  whether  the  registrant:  (1) filed all reports
required  to  be  filed by Section 13 or 15(d) of the Securities Exchange Act of
1934,  during  the  preceding  12  months  (or  for such shorter period that the
Registrant  was required to file such reports), and (2) has been subject to such
filing  requirements  for  the  past  90  days.

Yes  X      No
    ---


<PAGE>
     Indicate  by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-B is not contained herein, and will not be contained, to the
best  of  registrant's  knowledge,  in definitive proxy or information statement
incorporated  by  reference  in  Part  III  or this Form 10-KSB or any amendment
hereto.  [X]

     As  of  the  close  of trading on September 27, 2004, there were 90,059,033
shares  outstanding,  87,996,765  of  which  were  held  by non-affiliates.  The
aggregate market value of the common shares held by non-affiliates, based on the
average  closing  bid  and asked prices on September 27, 2004, was approximately
$10,559,612.

     The  registrant's  revenue  for  the  fiscal  year  ended June 30, 2004 was
$34,258.

Transitional  Small  Business  Disclosure     Yes       No  X
                                                  ---      ---


<PAGE>
                                     PART I

ITEM  1.          DESCRIPTION  OF  BUSINESS

COMPANY OVERVIEW

     NanoPierce  Technologies, Inc. (the "Company") is a Nevada corporation that
was incorporated on June 22, 1996, as Sunlight Systems, Ltd.  From June 22, 1996
through  November 1996 the Company engaged in limited activities as a dealer and
distributor  of  sun  tunnels.  This  business,  however,  was  discontinued and
substantially  all  assets  were sold in November of 1996.  From that time until
February  1998,  the  Company was generally inactive and reported no significant
operating  revenues.

     On February 26, 1998, the Company acquired the intellectual property rights
related  to  the  Company's  patented  Particle Interconnect Technology (the "PI
Technology")  from  Particle  Interconnect  Corporation  ("PI Corp"), a Colorado
corporation,  and  a wholly owned subsidiary of Intercell Corporation (now known
as  Intercell  International  Corporation,  hereinafter  "Intercell"),  a Nevada
corporation.  In  exchange  for  the  assets  of  PI  Corp,  the  Company issued
7,250,000  shares  of  its common stock and 100 shares of the Company's Series A
preferred  stock  (convertible  into  7,250,000  common  shares)  to  Intercell.
Intercell, subsequently converted the 100 shares of the Series A preferred stock
in  June  1999 for 7,250,000 common shares.  As of June 30, 2004, Intercell held
464,870 common shares of the Company.  The Company acquired the PI Technology in
order  to pursue a more focused, strategic application and development of the PI
Technology,  subsequently  referred  to  as  the  NanoPierce  Connection  System
("NCS(TM)").  NCS  is  an alternative method of providing temporary or permanent
electrical  connections  between  different  flexible,  rigid,  metallic  and
non-metallic  surfaces.  Through the use of the particle technology, the Company
can  also  attach semi-conductors directly to various surfaces.  The Company has
trademarked  this  process  as  WaferPierce(TM).

     The  Company,  since  the  acquisition of NCS, has focused on attempting to
provide  the  electronics industry with technologically advanced, cost-effective
electronic  connection technology that utilizes less expensive materials, allows
for  electronic  connections  to  be  made  with  and  on  flexible  materials,
miniaturizes  the  components  needed  to  make  electronic  connections, allows
lead-free  connections  and  allows  electronic  connections  to  be  made in an
environment  where  increased  temperatures  would  not  previously  allow  such
connections.

     The Company does not currently plan to manufacture or develop products that
utilize  the  Company's  particle  technology  and  the  Company  has  no  prior
experience  in  taking technology to the manufacturing or production stage.  The
Company  expected to  generate  revenue  by  licensing  companies  to  apply the
Company's  particle  technology to products that are brought to the market place
by  those  licensees  or  by  entering  into  joint ventures with companies that
manufacture  products  using  the particle technology.  To date, the Company has
not  successfully licensed companies to manufacture, develop and market products
using the Company's particle technology, and the Company does not currently have
licensing  relationships  in  place.

     During  the  fiscal  year  ended  June  30, 2004, the Company minimized its
operations  to  conserve funds.  After the completion of the financing described
below  under  "ITEM  5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCK
HOLDER MATTERS-Recent Sales of Unregistered Securities," the Company revised its
business  strategy  and intends to use the funds received or to be received from
such  sale  to  support  minimal  operations  while  it  investigates  potential
acquisition  targets.  In  addition,  the  Company  dissolved  a  wholly-owned
subsidiary (NanoPierce Card), terminated operations of a wholly-owned subsidiary
(NanoPierce  Connection),


                                        1
<PAGE>
sold  a  majority  interest  in  a subsidiary (ExypnoTech), entered into a joint
venture  (Scimaxx  Solutions)  and  formed  a  new  wholly-owned  subsidiary
(ExypnoTech,  LLC),  each  as  described  below.

     NANOPIERCE  CARD  TECHNOLOGIES,  GMBH  ("NANOPIERCE CARD").  Established in
January  2000,  NanoPierce  Card was located in Hohenbrunn, Germany.  NanoPierce
Card was responsible for the marketing of the Company's technology, services and
products on an international basis.  On April 1, 2003, NanoPierce Card filed for
insolvency  with the Courts of Munich, Germany.  The insolvency was necessary in
order  to  comply with specific German legal requirements.  In conjunction, with
the  insolvency  filing,  management  decided  in  April  2003  to  discontinue
operations  at  NanoPierce  Card  and  to  liquidate  NanoPierce Card, through a
self-liquidation.  The  Company  completed  the plan of self-liquidation and the
German court legally dissolved NanoPierce Card on June 8, 2004.

     NANOPIERCE  CONNECTION  SYSTEMS, INC. ("NANOPIERCE CONNECTION"). NanoPierce
Connection,  a  Nevada  corporation,  was located in Colorado Springs, Colorado,
USA.  Beginning  business  in January 2002, NanoPierce Connection was the center
for  research and development activities. In September 2003, the Company entered
into  a joint venture with Scimaxx, LLC in order to further the marketing of the
services  previously  offered  by  NanoPierce  Connection.  In  return for a 50%
ownership  interest  in  the  newly  created  joint  venture  (Scimaxx Solutions
described  below),  the  Company contributed a license to utilize its technology
and  the  facilities and equipment of NanoPierce Connections. The Company has no
ongoing  responsibilities  to  make any cash contributions to the joint venture.

     EXYPNOTECH,  GMBH  ("EXYPNOTECH").  ExypnoTech  was  organized  in February
2002.  ExypnoTech  produces inlay components used in the manufacturing of, among
other  things, smart labels (often referred to as radio frequency identification
tags  or  "RFID").  ExypnoTech,  in  addition  to the inlay components, plans to
manufacture  and  sell  other  types  of  RFID  components.  In  December  2003
ExypnoTech  sold  a  controlling  51% interest in ExypnoTech to TagStar Systems,
GmbH for $98,000 in cash.  As a result of this sale, the Company does not have a
controlling  interest  in  ExypnoTech and the Company is only entitled to 49% of
the net income generated by ExypnoTech.  ExypnoTech, if able, will pay dividends
on  an  annual  basis.  The Company is entitled to 49% of the dividends, if any,
paid  as  a  result  of  any  future  profits  of  ExypnoTech.  The  sale of the
controlling  interest  in  ExypnoTech  decreased  the  Company's  revenues  from
ExypnoTech.

     SCIMAXX  SOLUTIONS,  LLC ("SCIMAXX SOLUTIONS").  On September 15, 2003, the
Company  entered into a joint venture with Scimaxx, LLC (Dr. Neuhaus, a director
of  the  Company is a part owner of Scimaxx, LLC - See Item 12).  The purpose of
the  joint  venture  is  to  provide  the  electronics  industry  with technical
solutions  to  manufacturing  problems  based  on  the  need  for  electrical
connectivity.  The  Company  received  a  50%  interest  in the joint venture in
exchange for a contribution of the equipment owned by NanoPierce Connection. The
Company  also  granted  Scimaxx Solutions a ten-year, non-exclusive, non-royalty
bearing  worldwide license to use the Company's intellectual property.  Scimaxx,
LLC is to invest $50,000 cash, of which $22,900 has been received as of June 30,
2004.  The terms of the joint venture provide for the Company to share in 50% of
joint  venture  net  profits,  if  any.  The Company is to share in 50% of joint
venture  net  losses  beyond  the  first  $50,000.  The Company has a 49% voting
interest  in  the  joint  venture.

     EXYPNOTECH,  LLC  ("EXYPNOTECH,  LLC").  On  June  18,  2004,  the  Company
organized  ExypnoTech,  LLC as a wholly-owned subsidiary to market, primarily in
the  United  States  of America, the RFID components manufactured by ExypnoTech,
GmbH.


                                        2
<PAGE>
THE TECHNOLOGY

     NCS(TM)  is  a  method  where  metallized,  hard, microscopic particles are
deposited onto one of two contact surfaces, through electrolytic or electro-less
plating  methods  or other methods.  When the two surfaces are pressed together,
the  conductive  particles  penetrate  the  second contact surface and create an
electrical  connection.  Bonding  of  the contact surfaces can be achieved using
nonconductive  adhesives  or  ultrasonic  welding.

     NCS  can  be used with many different substrates (flexible, rigid, metallic
and  non-metallic),  allowing NCS to replace more conventional methods of making
electrical  contacts, such as soldering, spring-loading, pin-in-hole connections
and  conventional  "flip  chip" attachment. In addition, NCS can be used to form
either  temporary  or  permanent  connections.

     NCS  provides  several advantages to potential users among which are; lower
costs  through  the  usage  of  less  expensive  materials;  the  elimination of
manufacturing  steps; improved thermal and electrical properties; elimination of
special  environments  for  application;  decreased  production  time;  easy
integration  into  existing  production lines; increased design miniaturization;
adaptability  for  specific  applications  and RF (radio frequency) performance.

     The  Company  has  extended  NCS  to  permit  the  direct  attachment  of
semiconductor  chips  to  a  substrate,  a  process  called  WaferPierce(TM).
WaferPierce is comprised of two parts: (1) the electroless application of NCS to
the  contact pads of chips while still in wafer form; and (2) a proprietary chip
attachment  process in which chips are bonded to a substrate face down using the
core  NCS  method.

     WaferPierce  offers  both  cost  and  performance benefits over the current
methods  of  chip  attachment.  These  benefits  include  the simplification and
acceleration  of  chip assembly, reduction of substrate costs and economic wafer
preparation.  In  addition,  WaferPierce has several functional advantages, such
as,  good  electrical and thermal conductivities, reliability, thinness and good
high  frequency  characteristics  and  the  absence  of  lead.

     The  Company  currently holds 12 Patents with the U.S. Patent and Trademark
Office.  Further,  the Company has filed several patent applications both in the
United  States  and  internationally  in  order  to  continue  to  protect  its
intellectual  property.  To  reduce  expenses, during the fiscal year ended June
30, 2004, the Company  abandoned several of its patent applications. The Company
also  holds  several  trademarks  with  the U.S. Patent and Trademark Office, in
connection  with  the  Company's  name,  logo  and  services.

     During the fiscal year ended June 30, 2004, the Company incurred an expense
of  $608,061  in  connection  with  the  impairment of the original intellectual
property,  patent  applications  and  trademarks  owned  by  the  Company.  The
impairment  decreased  the  book  value  of  the  intellectual  property, patent
applications  and  trademarks to $0. The decision to record an impairment of the
intellectual  property was based on the overall age of the patents combined with
the  Company's  current  inactive  operational  status  relating  to  its  core
technology  and the Company's decision to consider potential acquisition targets
outside  of the technology industry. (See - "Notes to the Consolidated Financial
Statements  -  Note  1")


                                        3
<PAGE>
BUSINESS STRATEGY

     The  Company,  through  its  various  investments  and  joint  ventures, is
targeting  the  following applications of its technology:

     1.   RFID  COMPONENTS.  RFID  components  are  used to identify objects, by
          short-range  radio  over  a few millimeters to distances as great as a
          meter.  RFID  inlays consist of a small transponder chip bonded onto a
          metal foil antenna on an exceptionally thin and small plastic or paper
          sheet.  NCS  can  be  used  to  provide  the  connection  between  the
          transponder  chip  and  the  antenna.  In addition, NCS can be used to
          connect the chip to the chip module in contact smart cards or the chip
          module  to  the  antenna in the case of contactless smart cards. There
          are  many  different  applications  for  RFID  components,  but  the
          application  being  focused  on  by  the  Company  is  smart  labels.
          ExypnoTech  currently  offers  RFID  Components  using  the  Company's
          intellectual  property.  ExypnoTech,  LLC is attempting to market RFID
          components  produced  by ExypnoTech primarily in the United States. To
          date these marketing efforts have met with limited commercial success.

     2.   WAFERPIERCE  SERVICE.  Wafers  are  2,  4, 6, 8 or 12 -inch silicon or
          other  substrate  material  used  in  the process of making chips with
          integrated  circuits in the semiconductor industry. NCS can be used as
          a  method  of  a  chip  attachment  to the actual substrate, replacing
          conventional  flip chip processes used to remove chips and attach them
          to  substrates.  Scimaxx  Solutions  offers  this service to potential
          customers.  To  date,  these services have met with limited commercial
          success.

     3.   OTHER APPLICATIONS.  The applications described above are not the only
          possible  applications  for  NCS;  other  viable  applications include
          connectors  and  sockets  in both printed and flexible circuit boards.
          Further  applications  include  temporary  applications,  such as test
          connectors,  sockets  and  switches.

     The  Company's  business strategy also includes making an acquisition of an
operational,  revenue  generating  company,  not  necessarily  in the technology
industry. At this time, the Company has reviewed several potential acquisitions,
but has not come to terms with an acquisition candidate.

RESEARCH AND DEVELOPMENT

     The  Company's  research and development activities were formerly conducted
through  NanoPierce  Connection,  with  additional  activities  occurring  at
ExypnoTech.  Beginning  in  September  2003,  the Company's limited research and
development  activities  were conducted indirectly through Scimaxx Solutions and
ExypnoTech.  For  the  fiscal  years  ended  June  30,  2004  and June 30, 2003,
NanoPierce  Connections  and  ExypnoTech  incurred  $41,849  and  $316,403,
respectively,  in  research and development expenses from continuing operations.
NanoPierce  Card  incurred $0 and $251,354 in 2004 and 2003, respectively, which
is  classified  as  a  component  of  loss  from  discontinued operations in the
Company's  consolidated  statements  of  operations.

COMPETITION

     Competition  in  the  electronic connector market is fierce.  The principal
competitive  factors  are  product quality, performance, price and service.  The
Company  and  its  licensees  face  competition from well-established firms with
other  interconnect  technologies.


     The  Company  will  face  competition  from the development of existing and
future  competing  technologies.  There  currently  exists  approximately  28
different  technologies  that  can  be  used  to  create interconnect solutions,
including  dendrite  crystals,  gold  dot  technology,  anisotropic  technology
(technologies  using  materials  whose  behavior  differs  in  the  up/down  and
left/right  directions),  elastomerics  (rubber-like  synthetic  materials)  and
Z-axis  conductive  adhesives.  These  technologies  currently  are  produced by
materials  and  chemical  suppliers,  flexible  and  rigid printed circuit board
manufacturers,  as  well  as  electronics  manufacturers  who  produce their own
materials  and  interconnect  systems.  Many  of  these


                                        4
<PAGE>
competitors  have  substantially  greater financial and other resources than the
Company.  Consequently,  there are no assurances that the Company or the NCS can
successfully  compete  with  current  or  future  technologies.

GOVERNMENT REGULATION

     The  Company  believes  that it is in compliance with all federal and state
laws  and  regulations  governing  its  limited operations. Further, the Company
believes that it is in compliance with all German laws and regulations governing
its  limited  operations  in  Germany.  Compliance  with  federal  and  state
environmental  laws  and  regulations  did  not  have  a  material effect on the
Company's  capital  expenditures,  earnings  or  competitive position during the
fiscal  year  ended  June  30,  2004.

EMPLOYEES

     On  June 30, 2004, the Company and its subsidiaries had two employees.  Mr.
Metzinger  and  Ms.  Kampmann,  key  officers  of  the  Company and the only two
employees  of  the  Company, have signed employment agreements with the Company.
(See-  ITEM  9-  "Directors and Officers of the Company")  None of the Company's
employees  are  represented  by  a  labor  union  or are subject to a collective
bargaining  agreement.  The  Company  believes  that  its  relations  with  its
employees  are  excellent.

FACTORS AFFECTING FUTURE OPERATING RESULTS

     Our  future  results  may  be  affected  by various risks and uncertainties
including  the  following:

     WE HAVE A HISTORY OF LOSSES

     Developing  our  particle  technology  and its applications has been and we
expect  will  continue to be expensive. Our operating expenses have consistently
exceeded  our  revenues.  We  reported a net loss of $1,558,083, $4,017,785, and
$4,729,072  for  the  fiscal  years  ended  June  30,  2004,  2003  and  2002,
respectively.

     WE MAY NOT BE ABLE TO CONTINUE AS A GOING CONCERN

     Our independent auditors' report of our financial statements as of June 30,
2004  includes  an  explanatory paragraph expressing substantial doubt about our
ability  to continue as a going concern.  If we are unable to secure significant
additional  financing,  we  may  be  obligated  to  seek  protection  under  the
bankruptcy laws and our shareholders may loose their investment.

     OUR  REVENUES  DEPEND  ON  OUR  ABILITY  TO  LICENSE COMPANIES TO APPLY OUR
PARTICLE TECHNOLOGY TO PRODUCTS THAT THEY BRING TO THE MARKETPLACE WHICH WE HAVE
BEEN  UNABLE  TO  ACCOMPLISH  TO  DATE

     We  do  not anticipate generating significant revenues until we are able to
license  companies to apply our particle technology to products that are brought
to  the  marketplace.  To  date,  we have not successfully licensed companies to
apply  our  particle technology to products that are brought to the marketplace.
Even  if  we  are  successful and products utilizing our particle technology are
brought  to  the marketplace, we may still not generate enough revenue to offset
our  operating  costs.

     We  do  not  have licensing relationships with manufacturers to develop and
market  products using our particle technology in place, and if we are unable to
secure  these  agreements,  we  believe that we may not become profitable in the
future.


                                        5
<PAGE>
     We  believe that our long-term profitability and growth depends on entering
into  licensing  or  joint  venture  relationships with various manufacturers to
develop  and  market  products  using the particle technology or to successfully
enter into a business combination with a profitable company. We have not entered
into  any  formal agreements to date, and even if we do enter into agreements in
the  future,  we  cannot  assure  that  the  agreements  will  be  profitable.

     CONSUMERS  MAY  USE  ALTERNATIVE  TECHNOLOGIES UNLESS WE ESTABLISH A MARKET
PRESENCE  WITH  OUR  PARTICLE  TECHNOLOGY

     The  interconnect  market  is  subject  to  rapid  technology changes.  New
products  are  introduced, old products are enhanced and others become obsolete.
The  entire  interconnect  market may be replaced by a newer form of technology.
To be competitive, we believe that we must develop, market and sell our products
on  a  timely  and  cost-effective  basis  and  respond  to  the  ever  changing
requirements  and demands of our customers, which in turn depends in part on our
capability  to  upgrade our products and quality control procedures and to adapt
to  technological  changes  and  advances  in  the  electronics  industry.

     We  cannot  assure that we will be successful in selecting, developing, and
marketing  new  technologies  or  that  compatibility  issues  with  an evolving
generation  of  electronic  components and manufacturing equipment and errors or
flaws  in the new technologies will not prevent or delay market acceptance.  Any
further delay in bringing our particle technology to the marketplace could cause
prospective  customers  to  use alternative technologies and could result in our
inability  to  generate  sufficient  revenues  to  cover  our  operating  costs.

     WE MAY BE UNABLE TO SUCCESSFULLY COMPETE IN THE MARKETPLACE

     The  interconnect market is highly competitive.  Our success will depend in
part  on  how  quickly competitors can design and develop competing products and
technologies.  We will compete with suppliers of other interconnect technologies
including  Alien  Technologies,  Inc.,  Interconnect  Technologies  and  major
electronic technology manufacturing leaders including Philips, Siemens, Infineon
and  IBM.  We  are  disadvantaged competing against these competitors in several
different  areas,  including:

     -    financial  resources;

     -    technological  resources;

     -    manufacturing  capabilities;

     -    diversity  of  revenue  sources  and  business  opportunities;

     -    personnel  and  human  resources;  and

     -    research  and  development  capabilities.

     Our  larger  competitors  have long term advantages over us in research and
new  product  development  and  have  a  greater  ability  to withstand periodic
downturns  in  the  interconnect  market because they have diverse product lines
that  can  provide  revenue  even  when  there is a downturn in the interconnect
market.

     WE CANNOT GUARANTEE THE QUALITY, PERFORMANCE OR RELIABILITY OF OUR PRODUCTS

     We  have  no  prior experience in taking technology to the manufacturing or
production  stage.  We  plan to have licensees or co-joint venturers manufacture
products  using  the particle technology.  We expect that the customers of these
products will demand quality, performance and reliability.  We cannot assure you


                                        6
<PAGE>
that our future licensees or co-joint venturers will be able to meet the quality
control  standards  that may be established by equipment manufacturers and other
customers  of  products  utilizing  the  particle  technology.

     THERE MAY BE INSUFFICIENT DEMAND FOR OUR PARTICLE TECHNOLOGY

     We  must  convince  our potential customers that the particle technology is
technologically  sound  and can be manufactured efficiently and cost-effectively
before  connector  manufacturers  and electronic equipment manufacturers will be
willing  to  use  our  technology.  To  create  this consumer demand, we have to
successfully  market  and  sell  our  technology.  Even after these efforts, our
particle  technology  may  not  be  viewed  by  consumers as an improvement over
existing technologies and may not achieve commercial acceptance.

     WE MAY BE UNABLE TO MEET OUR ONGOING NEEDS FOR ADDITIONAL CAPITAL

     We cannot accurately predict how much funding we will need to implement our
strategic  business  plan  or  to  continue  operations.  Our  future  capital
requirements,  the  likelihood  that  we  can  obtain money and the terms of any
financing  will  be  influenced  by  many  different  factors,  including:

     -    our  revenues,

     -    the  status  of  competing  products  in  the  marketplace,

     -    our  performance  in  the  marketplace,

     -    our  overall  financial  condition,

     -    our  business  prospects,

     -    the  perception  of  our  growth  potential  by  the public, including
potential  lenders,

     -    our  ability to enter into joint venture or licensing relationships to
achieve  a  market  presence  and

     -    our  progress  in  developing,  marketing  and  selling  the  particle
technology.

     If we cannot obtain adequate financing or if the terms on which we are able
to acquire financing are unfavorable, our business and financial condition could
be  negatively  affected.  We may have to delay, scale back or eliminate some or
all  of  our development and marketing programs, if any.  We may also have to go
to  third  parties  to  seek  financing, and in exchange, we may have to give up
rights  to  some  of  our  technologies, patents, patent applications, potential
products  or  other  assets.




     WE MAY BE UNABLE TO HIRE AND RETAIN KEY PERSONNEL

     Our  future  success  depends on our ability to attract qualified technical
personnel  capable  of working with our technology.  We may be unable to attract
these  necessary  personnel.  If we fail to attract or retain skilled employees,
or  if a key employee fails to perform in his or her current position, we may be
unable


                                        7
<PAGE>
to  bring  our particle technology to the marketplace and to generate sufficient
revenues  to  offset  our  operating  costs.

     WE  MAY  BE  UNABLE  TO OBTAIN AND RETAIN APPROPRIATE PATENT, COPYRIGHT AND
TRADEMARK  PROTECTION  OF  OUR  PRODUCTS

     We  protect  our  intellectual property rights through patents, trademarks,
trade  names,  trade  secrets  and  a variety of other measures.  However, these
measures  may  be  inadequate  to  protect  our  intellectual  property or other
proprietary  information.

     -    TRADE SECRETS MAY BECOME KNOWN BY THIRD PARTIES.  Our trade secrets or
proprietary  technology  may  become  known  or  be  independently  developed by
competitors.

     -    RIGHTS  TO PATENTS AND TRADE SECRETS MAY BE INVALIDATED.  Disputes may
arise with third parties over the ownership of our intellectual property rights.
Our  patents  may  be  invalidated,  circumvented  or challenged, and the rights
granted  under those patents that provide us with a competitive advantage may be
nullified.

     -    PROBLEMS  WITH  FUTURE  PATENT  APPLICATIONS.  Our  pending  or future
patent  applications may not be approved, or the scope of the granted patent may
be  less  than  the  coverage  sought.

     -    INFRINGEMENT CLAIMS BY THIRD PARTIES.  Infringement, invalidity, right
to use or ownership claims by third parties or claims for indemnification may be
asserted  by third parties in the future.  If any claims or actions are asserted
against  us,  we  can  attempt  to  obtain  a  license  for  that  third party's
intellectual  property  rights.  However,  the  third  party  may  not provide a
license  under  reasonable  terms,  or may not provide us with a license at all.

     -    THIRD  PARTIES  MAY DEVELOP SIMILAR PRODUCTS.  Competitors may develop
similar  products,  duplicate our products or may design around the patents that
are  owned  by  us.

     -    LAWS  IN  OTHER  COUNTRIES  MAY  INSUFFICIENTLY  PROTECT  INTELLECTUAL
PROPERTY  RIGHTS  ABROAD.  Foreign intellectual property laws may not adequately
protect  our  intellectual property rights abroad.  Our failure to protect these
rights  could  adversely  affect  our  business  and  financial  condition.

     -    LITIGATION  MAY  BE  REQUIRED TO PROTECT INTELLECTUAL PROPERTY RIGHTS.
Litigation  may  be  necessary  to  protect our intellectual property rights and
trade  secrets,  to  determine  the validity of and scope of the rights of third
parties  or  to  defend  against  claims  of infringement or invalidity by third
parties.  This  litigation  could  be  expensive,  would  divert  resources  and
management's  time  from  our  sales  and  marketing  efforts,  and could have a
materially  adverse  effect  on our business, financial condition and results of
operations  and on our ability to enter into joint ventures or partnerships with
others.


     LICENSE RIGHTS TO PARTICLE TECHNOLOGY MAY LIMIT OUR ABILITY TO COMPETE

     Before  we  acquired the patents, patent applications and licenses from the
original  owners  of  the  particle  technology,  the  inventor  of the particle
technology  granted  five  companies exclusive and non-exclusive licenses to use
the  patents  and  patent  applications relating to the particle technology.  At
this  time, only two of the original five licensees are using our technology and
none of these licenses relate to either smart card or smart label technology.  A
non-exclusive,  two  year


                                        8
<PAGE>
license  was  also granted to the inventor of the particle technology in October
2002  in connection with the settlement of certain litigation with the inventor.
Scimaxx  Solutions  was  granted  a ten year, non-exclusive, non-royalty bearing
world wide license to use the Company's intellectual property.  In addition, the
Company  assigned  the  U.S.  Provisional  Application for Ultrasonic Bonding of
Electronic  Devices  and the trademark Application for Smart Paper to ExypnoTech
on  December  11, 2003, as part of the agreement wherein the Company sold 51% of
ExypnoTech to TagStar Systems, GmbH. These licenses restrict us as follows:

     -    EXCLUSIVE  LICENSES  PREVENT  US  FROM COMPETING AGAINST THE EXCLUSIVE
LICENSES.  We cannot compete in the fields in which exclusive licenses have been
granted.  An  exclusive  license  was granted in the field of sockets for use in
the  automated  handling  and  testing  of  integrated  circuits,  a  type  of
semiconductor  in  which a number of transistors and other elements are combined
to  form  a  more  complicated  circuit.

     -    NON-EXCLUSIVE  LICENSES  ALLOW  LICENSEES  TO  COMPETE  AGAINST  US IN
CERTAIN  AREAS.  The  licensees with non-exclusive licenses can compete directly
with us or our other future licensees.  Non-exclusive licenses have been granted
to  use  the  particle  technology  for  electrically  conductive  components,
laminate-based and metal-based products and semiconductor products.  Although we
are  not currently aware of any proposed competition by any of our licensees, if
the  present  licensees  decide to compete with us or our future licensees, this
competition  could  adversely  affect  our  business.

     WE DO NOT EXPECT TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE

     We have never paid cash dividends on our common stock.  We do not expect to
pay  cash  dividends  on our common stock at any time in the foreseeable future.
The  future  payment  of  dividends  directly  depends upon our future earnings,
capital requirements, financial requirements and other factors that our board of
directors  will  consider.  Since  we do not anticipate paying cash dividends on
our  common  stock,  return on your investment, if any, will depend solely on an
increase,  if  any,  in  the  market  value  of  our  common  stock.

ITEM  2.     DESCRIPTION  OF  PROPERTIES

     The  Company's corporate headquarters are located at 370 17th Street, Suite
3640,  Denver,  Colorado 80202.  The Company moved into its current office space
on  June  27, 2001 and has a 5-year lease on the property, expiring in September
2006.  The  base  rent  is $4,850 per month for the remaining term of the lease,
plus  certain  occupancy costs.  Intercell maintains an administrative office on
the  premises.

     NanoPierce  Connection  was  located  at  4180  Center Park Drive, Colorado
Springs,  Colorado  80916. NanoPierce Connection currently has a 3-year lease on
the  property, expiring in March 2006. The base rent is $2,600 per month through
March 30th, with a $100 per month increase in base rent each year thereafter for
the  remaining  term  of the lease, plus utilities and maintenance expenses. The
facility  is  approximately  4,800  square feet consisting of office space and a
small  laboratory. The facility also has a clean room for use in the WaferPierce
process.  In  October  2003,  as  part  of the joint venture signed with Scimaxx
Solutions,  the  joint  venture  operates in the former facilities of NanoPierce
Connections  and  has  taken  over  responsibility  for payment under the lease.
Scimaxx Solutions conducts research and development activities at this facility.

     NanoPierce Card, during the fiscal year ended June 30, 2003, leased offices
located  at  Lise-Meitner-Strasse  1,  D-85662  Hohenbrunn, Germany.  From these
offices  marketing, software development and additional research and development
activities


                                        9
<PAGE>
took  place through March 31, 2003.  During the fiscal year ended June 30, 2004,
NanoPierce  Card  moved  from  the  facility  and  implemented  a  plan  of self
liquidation.  As  part  of  the  self  liquidation,  the  lessor was given first
priority  on  any  funds  received  from  the  liquidation.

     ExypnoTech  leases  production  space  located  at
Professor-Hermann-Klare-Strasse 6, D-07407 Rudolstadt, Germany. ExypnoTech had a
5-year  lease  on the facilities, expiring in March 2007. The base rent was $821
per  month  for  the  remaining  term  of  the  lease,  plus utilities, repairs,
maintenance  and  tax  expenses.  During  the  fiscal  year ended June 30, 2004,
ExypnoTech terminated the lease and moved from the facility to the same facility
as  its  majority  shareholder,  TagStar  Systems,  GmbH.

ITEM  3.     LEGAL  PROCEEDINGS

HARVEST  COURT  LITIGATION

     In  connection with a financing obtained in October 2000, the Company filed
various actions in the United States District Court for the District of Colorado
against,  among others, Harvest Court, LLC, Southridge Capital Investments, LLC,
Daniel  Pickett,  Patricia  Singer and Thomson Kernaghan, Ltd. for violations of
federal  and  state  securities laws, conspiracy, aiding and abetting and common
law  fraud  among  other  claims.  As a result of various procedural rulings, in
January  2002,  the  United  States  District Court for the District of Colorado
transferred  the  case  to  the  United  States  District Court for the Southern
District  of  New  York,  New  York City, New York.  In this litigation, Harvest
Court, LLC filed counterclaims against the Company, Mr. Metzinger, Ms. Kampmann,
Dr.  Neuhaus,  Dr.  Shaw  and  a  number  of  unrelated  third  parties.  The
counterclaims  allege  violations  of  federal  securities  laws and other laws.
Harvest Court, LLC is seeking various forms of relief including compensatory and
punitive  damages.  Responsive  pleadings  have been filed and the litigation is
currently  in  the  discovery  stage.

     In  May  2001,  Harvest  Court,  LLC  filed suit against the Company in the
Supreme  Court  of  the State of New York, County of New York.  The suit alleges
that  the  Company breached an October 20, 2000 Stock Purchase Agreement, by not
issuing  7,418,895  free  trading  shares  of  the  Company's  common  stock  in
connection with the reset provisions of the Purchase Agreement due on the second
reset  date  and approximately 4,545,303 shares due in connection with the third
reset  date.  Harvest  Court,  LLC  is  seeking  the  delivery of such shares or
damages  in  the alternative.  In August 2001, the Supreme Court of the State of
New  York,  County  of  New  York  issued  a preliminary injunction ordering the
Company  to  reserve and not transfer the shares allegedly due to Harvest Court,
LLC.  The  Company  has  filed  counterclaims  seeking  various  forms of relief
against  Harvest  Court,  LLC.

     The  Company  intends  to  vigorously prosecute all litigation and does not
believe the outcome of the litigation will have a material adverse effect on the
financial  condition,  results  of  operations  or  liquidity  of  the  Company.
However, it is too early at this time to determine the ultimate outcome of these
matters.




DEPOSITORY  TRUST  COMPANY

     On  May  4,  2004,  the Company filed suit against the Depository Trust and
Clearing  Corporation  (DTCC),  the  Depository  Trust  Company  (DTC),  and the
National  Securities Clearing Corporation (NSCC) in the Second Judicial District
Court  of  the  County  of  Washoe,  State of Nevada.  The suit alleges multiple
claims  under Nevada Revised Statutes 90.570, 90.580, 90.660 and 598A.060 and on
other  legal  bases.  The


                                       10
<PAGE>
complaint  alleges,  among  other  things,  that the DTCC, DTC and NSCC acted in
concert  to  operate  the  "Stock Borrow Program," originally created to address
short  term  delivery  failures  by  sellers  of securities in the stock market.
According  to  the  complaint,  the  DTCC,  NSCC  and  DTC conspired to maintain
significant  open  fail deliver positions of millions of shares of the Company's
common  stock  for extended periods of time by using the Stock Borrow Program to
cover  these  open and unsettled positions.  By permitting shares of the Company
to  be  borrowed  through  the  program,  DTCC,  NSCC  and DTC allegedly jointly
conspired  to  drive  down the price of the Company's stock.  The complaint also
alleges  that the operation of the Stock Borrow Program allowed the manipulation
of  the  Company's  stock by various sellers who failed to deliver shares to the
Company.  By  covering  open  fail  to  deliver  positions  with shares borrowed
through  the  Stock Borrow Program and delivering borrowed shares to the buyers,
the  complaint  contends  that  DTCC,  NSCC  and  DTC  artificially  created
unregistered,  free  trading  shares of the Company's common stock and increased
the  supply of the Company's shares in the market place.  The Company is seeking
damages  in  the amount of $25,000,000 and treble damages.  Responsive pleadings
have  been  filed  by  the  defendants.

OTHER LITIGATION

     Other than the above mentioned lawsuits, to the knowledge of the management
of  the  Company,  there are no material legal proceedings pending or threatened
(other  than routine litigation incidental to business) to which the Company (or
any  officer,  director,  affiliate  of  beneficial owner of more than 5% of the
Company's  voting  securities)  is party, or to which property of the Company is
subject.

ITEM  4.     SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS

     There  were  no  meetings  of security holders during the period covered by
this  report.

                                     PART II

ITEM  5.     MARKET  FOR  REGISTRANT'S  COMMON  EQUITY  AND  RELATED STOCKHOLDER
MATTERS

PRICE RANGE OF COMMON STOCK

     The  Company's  common  stock  is  presently quoted on the over-the-counter
bulletin  board  maintained  by  the National Association of Securities Dealers,
Inc.  (the  "NASD") under the symbol "NPCT."  The common stock of the Company is
also  traded  on the Frankfurt Exchange and the Hamburg Stock Exchange under the
symbol  "NPI."

     The following table sets forth the range of high and low quotations for the
common  stock of each full quarterly period during the fiscal year or equivalent
period  for  the  fiscal  periods indicated below.  The quotations were obtained
from  information  published by the NASD and reflect interdealer prices, without
retail  mark-up, markdown or commission and may not necessarily represent actual
transactions.

<TABLE>
<CAPTION>
          2003 FISCAL YEAR               HIGH              LOW
          ----------------              -----            -----
<S>                                     <C>              <C>
          September 30, 2002            $0.60            $0.56
          December 31, 2002              0.63             0.61
          March 31, 2003                 0.30             0.28
          June 30, 2003                  0.32             0.28

          2004 FISCAL YEAR
          ----------------
          September 30, 2003             0.27             0.21
          December 31, 2003              0.29             0.25
          March 31, 2004                 0.34             0.31
          June 30, 2004                  0.17             0.15
</TABLE>


                                       11
<PAGE>
     As  of June 30, 2004, there were approximately 326 holders of record of the
Company's  common  stock.

DIVIDEND POLICY

     The Company has not paid any cash dividends on its common stock in the past
and  does  not  anticipate  paying  any  dividends  in  the  foreseeable future.
Earnings,  if  any, are expected to be retained to fund future operations of the
Company.  There  can  be no assurance that the Company will pay dividends at any
time  in  the  future.

RECENT SALES OF UNREGISTERED SECURITIES

     On  January  12, 2004, the Company entered into a placement agent agreement
with Charleston Capital Corp. (now known as Clayton Dunning & Company, Inc.)  in
connection  with  a  proposed  sale of our securities to a number of "accredited
investors"  (as defined in the Securities Act of 1933, as amended), in a private
placement  transaction  exempt from registration pursuant to Section 4(2) of the
Securities  Act  of  1933  and  Rule  506  of Regulation D promulgated under the
Securities Act of 1933.  In connection with this agreement, on January 20, 2004,
the  Company sold 20,000,000 units for a total of $2,000,000 to a limited number
of  accredited  investors  in  a  private  placement  transaction  exempt  from
registration  under  Section 4(2) of the Securities Act of 1933 and Regulation D
promulgated  under  the Securities Act of 1933 pursuant to a Securities Purchase
Agreement.  Each  unit  consists of (i) one share of the Company's common stock,
(ii)  a  warrant  to  purchase  one  share  of  the Company's common stock at an
exercise  price  of $0.10 per share ("$.10 warrants") and (iii) and a warrant to
purchase  two shares of the Company's common stock at an exercise price of $0.25
per  share.  All  these  warrants  expire  on  January 20, 2009 unless exercised
earlier.  As  a  result of the sale, the Company issued 20,000,000 shares of its
common  stock, 20,000,000 warrants with an exercise price of $0.10 per share and
40,000,000  warrants  with  an  exercise  price  of  $0.25  per  share.

     Through  June 30, 2004, 3,850,000 of the $0.10 warrants have been exercised
by  the  holders  thereof  and,  as  a  result,  the Company received a total of
$347,950  in  proceeds.

     In  connection  with the private placement, and in reliance on Section 4(2)
of  the  Securities  Act  of  1933,  as  amended and other applicable exemptions
thereunder,  the  Company  compensated  Charleston  Capital  Corp. (now known as
Clayton  Dunning  &  Company,  Inc.) as follows:  a fee equal to 3% of the gross
proceeds  received  by  the  Company  as  a  result of the issuance of the units
described  above ($60,000); warrants to purchase 600,000 shares of the Company's
common  stock at an exercise price of $0.10 per share that expire on January 20,
2009,  unless  exercised  earlier; and a right of first refusal on any financing
that  the  Company  enters  into  for  a period of one year from the date of the
effectiveness  of  the  selling  shareholder registration statement filed by the
Company as required by the terms of the Securities Purchase Agreement referenced
in the prior paragraph.  The Company was advised that Clayton Dunning & Company,
Inc.  (f/k/a  Charleston  Capital  Corp.)  transferred  390,000  of the warrants
described  above  as  compensation  to  Chris Messalas, one of Clayton Dunning &
Company's  registered  representatives.

     Jason  Lyons, unrelated to the Company, received a $200,000 finders fee for
introducing  the  Company  to  Charleston  Capital  Corp.  (now known as Clayton
Dunning  &  Company,  Inc.)  and  the purchasers and for consulting work done on
behalf  of  the  Company.  In  reliance on Section 4(2) of the Securities Act of
1933,  as  amended  and other applicable exemptions thereunder, the Company also
issued  to  Jason  Lyons  warrants to purchase 2,000,000 shares of the Company's
common stock.  The warrants have an exercise price of $0.10 per share and expire
on  January  20,  2009  unless


                                       12
<PAGE>
exercised  earlier.  The  Company  has been advised that Jason Lyons transferred
1,000,000  of these warrants as compensation to GRQ Consultants, Inc., unrelated
to  the  Company, for introducing the Company to Clayton Dunning & Company, Inc.
and  for  consulting  work  done  on  behalf  of  the  Company.

     On  February  25,  2004, the Company filed a registration statement on Form
S-2  (Registration No. 333-113071)(the "Registration Statement") to register all
of  the  securities  sold  in the private placement transaction described above.

     The  Company  made  no  unregistered sales of its securities from March 31,
2004  through  June  30,  2004.


ITEM  6.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS

     Certain  statements  contained in this Form 10-KSB contain "forward-looking
statements"  within  the meaning of the Private Securities Litigation Reform Act
of  1995  and involve risks and uncertainties that could cause actual results to
differ  materially  from  the  results,  financial  or  otherwise,  or  other
expectations  described in such forward-looking statements.  Any forward-looking
statement  or statements speak only as of the date on which such statements were
made,  and  the  Company  undertakes no obligation to update any forward-looking
statement  to  reflect  events  or  circumstances  after  the date on which such
statements  are  made  or  reflect  the  occurrence  of  unanticipated  events.
Therefore, forward-looking statements should not be relied upon as prediction of
actual  future  results.

     The  independent  auditors' report on the Company's financial statements as
of  June  30, 2004, and for each of the years in the two-year period then ended,
includes  a  "going  concern"  explanatory paragraph, that describes substantial
doubt  about the Company's ability to continue as a going concern.  Management's
plans in regard to the factors prompting the explanatory paragraph are discussed
below  and  also  in  Note  2 to Notes to the Consolidated Financial Statements.

RESULTS OF OPERATIONS

     On  April  1,  2003,  NanoPierce  Card  filed insolvency with the Courts of
Munich, Germany. On June 8, 2004, NanoPierce Card was dissolved by the Courts of
Munich,  Germany. NanoPierce Card is presented as discontinued operations in the
Company's  consolidated  financial  statements.  During  the year ended June 30,
2004,  NanoPierce  Card  had no income compared to a loss of $882,718 during the
year  ended  June  30, 2003. The decrease of $882,718 is due to the cessation of
operations  in  connection  with  the self-liquidation. The Company recognized a
gain  of  $454,882 on the disposal of NanoPierce Card during the year ended June
30, 2004.

     The  Company  recognized  $34,258  of  revenues  from continuing operations
during  the  fiscal  year  ended June 30, 2004 compared to $37,017 in the fiscal
year  ended  June 30, 2003. The revenue generated from continuing operations was
from the sale of inlays by ExypnoTech, $28,449 through December 2003, and $5,809
from services provided by the Company.

     The  Company  recognized  $2,550  in interest income during the fiscal year
ended  June  30,  2004  compared to $7,251 during the fiscal year ended June 30,
2003.  The  decrease  of  $4,701  is  due  primarily to the need to utilize cash
equivalents to support operations throughout the year.

     Total  operating expenses from continuing operations during the fiscal year
ended  June 30, 2004 were $1,999,462, compared to $3,179,297 for the fiscal year


                                       13
<PAGE>
ended  June  30, 2003.  The decrease of $1,179,835 is attributable to a decrease
in operational activities and spending over the year, as described below.

     General  and  administrative expenses during the fiscal year ended June 30,
2004  were  $1,312,519 compared to $2,414,077 for the fiscal year ended June 30,
2003.  The  decrease  of $1,101,558 is mainly attributable to decreases in legal
expenses,  payroll  and  press  releases, website development and other investor
relations  matters.  Selling and marketing expenses during the fiscal year ended
June  30,  2004  were  $37,033 compared to $238,817 during the fiscal year ended
June  30,  2003.  The  decrease  of  $201,784 was due to a decrease in marketing
activities,  including  appearances  at  various  trade  shows.  Research  and
development  expenses  during  the  fiscal year ended June 30, 2004 were $41,849
compared  to  $316,403 for the fiscal year ended June 30, 2003.  The decrease of
$274,554 was primarily attributable to the reduction in research and development
activities  over  the  previous  fiscal  year.

     During  the fiscal years ended June 30, 2004 and 2003, the Company incurred
an  expense  of  $608,061  and  $210,000,  respectively  in  connection with the
impairment  of  the  intellectual  property,  patent applications and trademarks
owned  by the Company.  The decision to record an impairment of the intellectual
property  was  based  primarily  on  the  overall  age of the patents and patent
applications  underlying  the  intellectual property combined with the Company's
current  inactive  operational status.  After the impairment to the intellectual
property,  patent  applications  and  trademarks,  the  book  value  of  the
aforementioned  items  is  $0.

     During  the  fiscal  year ended June 30, 2004, the Company recognized a net
loss  of  $1,558,083 compared to a net loss of $4,017,785 during the fiscal year
ended  June  30,  2003.  The  decrease  of  $2,459,702  mostly resulted from the
decrease  of  $1,179,835  in  operating expenses and the decrease of $882,718 in
losses  of  NanoPierce Card and the gain from the disposal of NanoPierce Card of
$454,882 during the year ended June 30, 2004.

LIQUIDITY AND FINANCIAL CONDITION

     Net  cash  used  in operating activities from continuing operations in 2004
was  $1,199,214,  compared  to  net  cash  used  in  operating  activities  from
continuing  operations  in  2003  of  $1,754,247.  In  2004,  the  net cash used
represented  a net loss of $1,558,083, adjusted for the income from discontinued
operations  of  $454,882,  amortization  and  depreciation  expense of $291,790,
impairment  charges of $608,061, equity in losses of affiliates of $99,922, gain
on  extinguishment  of  liabilities  of  $  52,500, and provision for a doubtful
receivable  of  $58,074.

     In  2003,  the net cash used represented a net loss of $4,017,785, adjusted
for  the  loss  from  discontinued  operations  of  $882,718,  amortization  and
depreciation  expense  of  $416,250, impairment charges of $210,000, stock based
compensation  expense of $14,935.

     During  the  fiscal  year  ended  June 30, 2003, the Company entered into a
12-month financial advisory and exclusive placement agent agreement with a third
party  (the  "Placement Agent"). Under the terms of the agreement, the Placement
Agent  was  engaged  to  act  as the financial advisor to the Company and as its
exclusive  placement  agent  for a private placement of equity securities during
the  twelve-month  term  of  the  agreement.  Compensation  was  to consist of a
retainer  fee  (deferred  consulting  costs  of  approximately  $230,400), which
consists  of  a warrant to purchase up to 450,000 shares of the Company's common
stock.  Compensation also was to include a $10,000 monthly advisory fee, payable
in  cash,  beginning  in June 30, 2003. The Company has accrued but not paid the
$10,000 monthly advisory fee, and the agreement expired by its terms on June 30,
2004.

     During  the  fiscal  year end June 30,2004, the Company advanced $50,000 to
Scimaxx,  which  was  fully  reserved  for.

     During the fiscal year ended June 30,2003, the Company received $170,770 of
payments  on  notes receivable.

     During the fiscal year ended June 30, 2004, the Company made investments in
machinery  and  equipment  of approximately $1,575. During the fiscal year ended
June  30,  2003,  the  Company  made  investments  in machinery and equipment of
$351,431.  During  the  fiscal year ended June 30, 2004, the Company contributed
fixed assets with a book value of $132,000 to the Scimaxx Solutions, LLC as part
of  the  terms  of  the  joint  venture.

     During  the  fiscal  year  ended  June 30, 2004 the Company sold 20,769,231
shares  of  common  stock and granted warrants to purchase 600,000 shares of its
common  stock


                                       14
<PAGE>
at  exercise  prices  ranging from $0.10 to $0.25 for net proceeds of $1,828,000
(after  deducting  offering  costs  of  $272,000).  See  "ITEM  5-MARKET  FOR
REGISTRANT'S  COMMON  EQUITY  AND  RELATED STOCKHOLDER MATTERS - Recent Sales of
Unregistered  Securities." The warrants are exercisable through 2008 and contain
a  cashless  exercise provision. The funds were raised to support operations. In
addition,  the Company issued 3,850,000 shares of common stock upon the exercise
of 3,850,000 warrants for $347,950 (net of offering costs of $37,050).

     In  June  2003, Mr. Metzinger, the President, Chief Executive Officer and a
director  of  the  Company,  loaned  $10,000  to  the Company in exchange for an
unsecured  7%  note  payable  due  in  December 2003, the proceeds of which were
utilized  for  operational  purposes.  In  January  2004,  the  Company paid Mr.
Metzinger  the  outstanding  principal  balance  of this note, together with all
accrued  interest, from the proceeds of the offering described in "ITEM 5-MARKET
FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS - Recent Sales of
Unregistered  Securities.".

     During  the  fiscal  year  ended  June 30, 2003, the Company sold 7,340,348
shares  of  common  stock  and  granted warrants to purchase 6,024,525 shares of
common  stock at exercise prices ranging from $0.15 to $0.60 for $1,826,766 (net
of  offering  costs  of $75,500).  The warrants are exercisable through 2008 and
contain  a  cashless  exercise  provisions.  The  funds  were  raised to support
operations.

     In  September  2003,  Mr. Metzinger loaned the Company $30,000, in exchange
for  an  unsecured  7%  note payable due in September 2004. In January, 2004 the
Company  paid  Mr.  Metzinger  the  outstanding  principal balance of this note,
together  with all accrued interest, from the proceeds of the offering described
in  "ITEM  5--  MARKET  FOR  REGISTRANT'S  COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS  -  Recent  Sales  of  Unregistered  Securities."

     In  September  2003,  Intercell,  an  affiliate of the Company at the time,
loaned  the Company $35,000 in exchange for an unsecured, 7% promissory note due
in  September  2004.  In November 2003, Intercell loaned the Company $100,000 in
exchange for a 7% promissory note due in November 2004. This promissory note was
collateralized  by  an assignment of a 51% interest in the proceeds, if any, the
Company may have received in connection with the Financing Agreement litigation.
In  January  2004,  the  Company paid the $135,000 note plus accrued interest of
$2,493.

     In  2004,  the  Company  converted  an  account  payable of $92,100 into an
unsecured  non-interest bearing note payable due in March 2005. Through June 30,
2004,  the  Company  has  repaid  $30,700  on  this  note.

PLAN OF OPERATIONS

     In  September  2003,  the Company formed a joint venture with Scimaxx, LLC.
The  joint  venture,  Scimaxx Solutions, LLC was entered into for the purpose of
marketing  the  Company's  technology.  Scimaxx  LLC, is owned by an officer and
director  of the Company and two former employees of the Company.  In return for
50%  ownership  of the Scimaxx Solutions, LLC, the Company contributed a license
to  utilize  its  technology  and  the  facilities  and  equipment of NanoPierce
Connections.  The  Company is not required to make any cash contributions to the
joint venture. Operating capital will be provided by Scimaxx, LLC.

     On  December  11, 2003, TagStar Systems, GmbH, a German entity unrelated to
the  Company,  purchased  a  controlling  51%  equity  interest in ExypnoTech in
exchange  for  a  capital  contribution  of  $98,000,  of which $62,787 has been
received  as  of June 30, 2004. No gain or loss was incurred by the Company as a
result  of  this  transaction. As a result of this transaction, the Company does
not  have  a controlling interest in ExypnoTech and the Company is only entitled
to  49%  of  the  revenues generated by ExypnoTech (and 49% of the dividends, if
any, paid by ExypnoTech). The sale of the controlling interest in ExypnoTech may
decrease  the  Company's  revenues from ExypnoTech. As a result of the Company's
reduced  ownership  interest  and  loss  of  control  of ExypnoTech, the Company
deconsolidated  ExypnoTech as of December 11, 2003, and began accounting for its
investment in ExypnoTech under the equity method of accounting. Under the equity
method  of  accounting,  the  carrying  amount  of  the  Company's investment in
ExypnoTech  ($203,654  at  June 30, 2004) is adjusted to recognize the Company's
proportionate share of ExypnoTech's income (loss) each period.


                                       15
<PAGE>
     The  Company  is  continuing  to  look  for  additional  financing  through
marketing  of  its  NCS  though  the  pursuit  of  licensing,  joint  ventures,
co-manufacturing  or  other  similar  arrangements  with industry partners.  The
failure  to  secure  such  a  relationship  will result in the Company requiring
substantial additional capital and resources to bring its NCS to market.  To the
extent the Company's operations are not sufficient to fund the Company's capital
requirements,  the  Company  may  enter  into  a  revolving  loan agreement with
financial  institutions  or  attempt  to  raise  capital  through  the  sale  of
additional  capital  stock or through the issuance of debt.  At the present time
the  Company  does  not  have  a  revolving  loan  agreement  with any financial
institution  nor  can  the Company provide any assurance that it will be able to
enter  into  any  such agreement in the future or be able to raise funds through
the further issuance of debt or equity in the Company.  The Company continues to
evaluate additional merger and acquisition opportunities.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     In  January  2003,  the  Financial Accounting Standards Board (FASB) issued
SFAS  Interpretation  No.  46, Consolidation of Variable Interest Entities ("FIN
46"), which changes the criteria by which one company includes another entity in
its  consolidated  financial  statements.  FIN  46  requires a variable interest
entity  ("VIE")  to be consolidated by a company if that company is subject to a
majority  of  the risk of loss from the variable interest entity's activities or
is  entitled  to receive a majority of the entity's residual returns or both. In
December 2003, the FASB approved a partial deferral of FIN 46 along with various
other  amendments.  The effective date of this interpretation was extended until
the  first  interim or fiscal period that ends after March 15,2004. The adoption
of  FIN  46  did  not  impact  the  Company's  financial  position or results of
operations.

     In  May  2003,  FASB  issued SFAS No. 150, Accounting for Certain Financial
Instruments  with  Characteristics of Both Liabilities and Equity.  SFAS No. 150
establishes  new  standards  on  how  an  issuer classifies and measures certain
financial  instruments  with  characteristics  of  both  liabilities and equity.
Under  previous guidance, issuers could account for many of those instruments as
equity.  SFAS  No.  150  requires  that  those  instruments  be  classified  as
liabilities  in statements of financial position.  SFAS No. 150 is effective for
all  financial  instruments  entered  into  or  modified after May 31, 2003, and
otherwise  is  effective  at the beginning of the first interim period beginning
after  June  15,  2003.  The  Company believes that the adoption of SFAS No. 150
will  not  have  a  material  impact  on  its results of operations or financial
condition.

CRITICAL ACCOUNTING POLICIES

     The  discussion  and  analysis  of  our  financial condition and results of
operations are based upon our consolidated financial statements, which have been
prepared  in  accordance  with  accounting  principles generally accepted in the
United  States  of  America.  The  preparation  of  these  financial  statements
requires  us to make estimates and judgments that affect the reported amounts of
assets  and  liabilities,  revenues  and  expenses  and  related  disclosures of
contingent  assets  and  liabilities.  On  an  on-going  basis,  we evaluate our
estimates,  including  those related to deferred revenues; depreciation or fixed
assets,  valuation  of  intangible


                                       16
<PAGE>
assets  such  as  our  intellectual  property,  financing  operations,  currency
valuations  and  contingencies  and  litigation.  We  base  our  estimates  on
historical  experience  and on various other assumptions that are believed to be
reasonable  under  the  circumstances,  the  results of which form the basis for
making  judgments  about  the carrying values of assets and liabilities that are
not  readily  apparent from other sources.  Actual results may differ from these
estimates under different assumptions or conditions.

     The  Company  believes  that the following are some of the more significant
accounting policies and methods used by the Company:

          -    stock  based  compensation;
          -    valuation  of  intellectual  property,  patent  and  trademark
               applications  and  other  long-lived  assets;
          -    international  operations;
          -    revenue  recognition  and  deferred  revenue;
          -    litigation;  and
          -    contractual  obligations.

Stock-based  compensation

     SFAS  No.  123,  Accounting  for  Stock  Based  Compensation,  defines  a
fair-value-based  method  of  accounting  for  stock-based employee compensation
plans  and  transactions  in  which  an  entity issues its equity instruments to
acquire  goods  or  services  from  non-employees,  and  encourages but does not
require  companies  to  record  compensation  cost  for  stock-based  employee
compensation  plans  at  fair  value.

     The  Company  has  chosen  to account for employee stock-based compensation
using  the  intrinsic  value  method  prescribed  in Accounting Principles Board
Opinion  No.  25  (APB  No.  25),  Accounting for Stock Issued to Employees, and
related  interpretations.  Accordingly,  employee  compensation  cost  for stock
options  is  measured  as the excess, if any, of the estimated fair value of the
Company's stock at the date of the grant over the amount an employee must pay to
acquire  the  stock.

     In  December  2002,  FASB  issued  SFAS No. 148, Accounting for Stock-Based
Compensation-Transition  and  Disclosure.  This  statement  amends SFAS No. 123,
Accounting for Stock Based Compensation, and establishes two alternative methods
of  transition  for  the  intrinsic  value  method  to  the fair value method of
accounting  for  stock-based  employee  compensation.  In addition, SFAS No. 148
requires  prominent  disclosure  about the effects on reported net income (loss)
and requires disclosure for these effects in interim financial information.  The
Company adopted the disclosure only provisions of SFAS No. 148 in 2003 and plans
to  continue  accounting  for  stock-based  compensation  under  APB  25.

Valuation  of intellectual property, patent and trademark applications and other
long-lived  assets

     The  Company  assesses  the  impairment of long-lived assets and intangible
assets  such  as  intellectual  property  and  patent and trademark applications
whenever events or changes in circumstances indicate that the carrying value may
not be recoverable.  Factors the Company considers important which could trigger
an  impairment  review  include  negative projected operating performance by the
Company and significant negative industry or economic trends.  At June 30, 2004,
management  assessed  the  carrying  value  of intellectual and other long-lived
assets  for  impairment,  and based on this assessment the Company believed that
impairment  was necessary in the case of the original intellectual property, the
patent  applications and the trademarks.  During 2004, the Company recognized an
impairment  of  $608,061  on  the intellectual property, patent applications and
trademarks.  The


                                       17
<PAGE>
Company  does not believe that there has been any other impairment to long-lived
assets  as  of  June  30,  2004.

International  operations

     The  Company's  foreign  subsidiary  (NanoPierce  Card)  and foreign equity
investment  (ExypnoTech)  operations are located in Germany. NanoPierce Card and
ExypnoTech  transactions are conducted in currencies other than the U.S. dollar,
(the  currency into which the subsidiaries' historical financial statements have
been  translated)  primarily  the  Euro.  As a result, the Company is exposed to
adverse  movements  in  foreign  currency  exchange  rates. In addition, foreign
political  and economic environment, trade barriers, managing foreign operations
and  potentially  adverse  tax  consequences.  Any of these factors could have a
material  adverse  effect  on  the  Company's  financial condition or results of
operations  in  the  future.

Revenue recognition and deferred revenue

     The  Company's  revenue  recognition  policy  is significant because future
revenue  could be a key component of its results or operations.  Revenue results
are  difficult  to predict, and any shortfall in revenue or delay in recognizing
revenue  could  cause  operating  results  to  vary  significantly.

Litigation

     The  Company is involved in certain legal proceedings, as described in Note
8 to the consolidated financial statements included in this report.

     The  Company  intends  to  vigorously prosecute these legal proceedings and
does  not  believe the outcome of these proceedings will have a material adverse
effect  on  the  financial  condition, results of operations or liquidity of the
Company.  However,  it  is  too  early  at  this  time to determine the ultimate
outcome  of  these  matters.

Contractual  obligations

     For  more information on the Company's contractual obligations on operating
leases,  refer  to Note 9 of the consolidated financial statements.  At June 30,
2004, the Company's commitments under these obligations were as follows:

                                          OPERATING LEASES
                                          ----------------
          Year ending June 30,
                  2005                         58,200
                  2006                         58,200
                  2007                         14,550
                                          ----------------
                                              $130,950
                                          ================

ITEM  7.     FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA

     The  consolidated  financial  statements  and related financial information
required to be filed are indexed on page F-1 and are incorporated herein.

ITEM  8.     CHANGES  IN  AND  DISAGREEMENTS  WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL  DISCLOSURE

     None.

ITEM  8A.     CONTROLS  AND  PROCEDURES


                                       18
<PAGE>
     Within  90  days prior to the date of this Form 10-KSB, the Company carried
out  an  evaluation,  under  the  supervision  and with the participation of the
Company's  President  and  Chief  Financial Officer, of the effectiveness of the
design  and  operation  of  the Company's disclosure controls and procedures (as
such  term  is  defined  in  Rules  13a-14(c) and 15d-14(c) under the Securities
Exchange  Act  of  1934,  as  amended  (the  "Exchange  Act").  Based  upon such
evaluation,  such officers have concluded that the Company's disclosure controls
and  procedures  are  effective in alerting them, on a timely basis, to material
information  relating  the  Company required to be included in this Form 10-KSB.

     There  have  been no significant changes to the Company's internal controls
over financial reporting that have materially affected, or are reasonably likely
to  materially effect, the Company's internal controls over financial reporting.

ITEM  8B.     OTHER  INFORMATION

None.




                                    PART III

ITEM  9.     DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

FINANCIAL EXPERT

     The  Company's  Board  of  Directors  does  not have a designated Financial
Expert,  as  defined  by  the  SEC,  due  to  factors  including  the  Company's
operational  status,  and  the  limited  number  of  transactions,  accounts and
balances  that  the  Company maintains.  In addition, the estimates of cost that
the  Company  would  be  required  to  incur  in  identifying  and designating a
Financial Expert are deemed not to be in the best interest of the Company.

EXECUTIVE OFFICERS AND DIRECTORS

     The  executive officers, directors and significant employees of the Company
are  as  follows:


                                       19
<PAGE>
<TABLE>
<CAPTION>
       NAME AND AGE                    POSITION                    PERIOD
---------------------------  --------------------------  -------------------------
<S>                          <C>                         <C>
Paul H. Metzinger (65)       Director, President, and    December 1998 to present
                             Chief Executive Officer,
                             General Manager of          January 2000 to June 2003
                             NanoPierce Card
Dr. Herbert J. Neuhaus (45)  Director, Former Executive  January 1999 to present
                             Vice President of
                             Technology & Marketing,
                             President & Chief           January 2002 to September
                             Executive Officer of        2003
                             NanoPierce Connection

Kristi J. Kampmann (31)      Chief Financial Officer,    October 1999 to present
                             Secretary                   February 1998 to present
Dr. Robert Shaw (64)         Director                    October 2000 to present

John Hoback (64)             Director                    April 2002 to present
Dr. Michael E. Wernle (42)   Former Director, Former     November 1999 to
                             Executive Vice President    September 2003
                             of Strategic Business
                             Development,
                             Former President & Chief    January 2000 to May 2003
                             Executive Officer of
                             NanoPierce Card,
                             Former President & Chief    February 2002 to August
                             Executive Officer of        2003
                             ExypnoTech
Dr. Noel Eberhardt (66)      Former Director             November 2001 to December
                                                         9, 2003
</TABLE>

     The directors hold office until the next annual meeting of shareholders and
until  their  successors  have  been  duly  elected and qualified.  The Board of
Directors  elects  the  officers at its annual meeting immediately following the
shareholders  annual  meeting  and  hold office until they resign or are removed
from office.  There are no family relationships that exist between any director,
executive  officer,  significant  employee  or person nominated or chosen by the
Company  to become a director of executive officer.  The Company has established
audit,  incentive  compensation  and  nominating  committees,  consisting of the
independent  directors.

    BIOGRAPHICAL INFORMATION ON OFFICERS, DIRECTORS AND SIGNIFICANT EMPLOYEES

     PAUL H. METZINGER.  Mr. Metzinger was President and Chief Executive Officer
of the Company from February 26, 1998 to May 6, 1998 and has served in that same
capacity  from  December  1,  1998  to  present.  He  has been a director of the
Company since February 26, 1998.  He served as the General Manager of NanoPierce
Card  from  January 2000 to June 2003.  In addition, he served as the President,
Chief  Executive  Officer  and a Director of Intercell International Corporation
from June 1996 to October 2003.  Prior to becoming a director and officer of the
Company  and  Intercell  International  Corporation,  Mr.  Metzinger  served  as
Intercell's General Counsel and practiced securities law in Denver, Colorado for
over  32  years.  Mr.  Metzinger received his J.D. degree in 1967 from Creighton
University  Law  School  and  his  L.L.M.  from  Georgetown  University in 1969.

     HERBERT  J.  NEUHAUS,  PH.D.  Dr.  Neuhaus  has  been  the  Executive  Vice
President  of  Marketing  and  Technology  and  a  Director of the Company since
January  1,  1999.  He  has  been  the  President and Chief Executive Officer of
NanoPierce  Connection  since January 2002. Dr. Neuhaus previously served as the
Managing  Director  of Particle Interconnect Corporation from August 18, 1997 to
November  1,  1997.  From August 1989 to August 1997, he was associated with the
Electronic  Material  Venture  Group


                                       20
<PAGE>
in  the  New  Business  Development  Department  of  Amoco  Chemical  Company,
Naperville, Illinois. While associated with Amoco Chemical Company he held among
other positions: Business Development Manger/Team Leader; Project Manager --High
Density  Interconnect; Product Manager MCM Products and as a research scientist.

     Dr.  Neuhaus  received  his  Ph.D. degree in Physics form the Massachusetts
Institute  of Technology, Cambridge, Massachusetts in 1989 and his BS in Physics
from  Clemson  University,  Clemson,  South  Carolina  in  1980.

     KRISTI J. KAMPMANN.  Ms. Kampmann was appointed the Chief Financial Officer
of  the  Company  on  October  15, 1999.  Ms. Kampmann has been Secretary of the
Company since February 1998. Ms. Kampmann has served as a manager of ExypnoTech,
LLC  since June 2004. She has served as the Chief Financial Officer of Intercell
International  Corporation  since  October 1, 2003 and as Secretary of Intercell
International  Corporation  since  July 28, 1999.  Since June 1997, she has been
the  administrative assistant to the Chief Executive Officer and Chief Financial
Officer;  in addition, during the same period she served in the same capacity to
the  Chief  Executive  Officer  of Intercell.  From April 1996 to June 1997, she
served  as  a paralegal and administrative assistant for Paul H. Metzinger, P.C.
Ms. Kampmann received an MBA from the University of Colorado, Denver in December
2001.  Ms.  Kampmann  graduated  from the Denver Paralegal Institute in 1996 and
received  a B.A. from the University of Minnesota in Morris in 1995, majoring in
Political  Science  with  a  minor  in  Business  Management.

     DR. ROBERT SHAW.  Dr. Shaw has been a director of the Company since October
31,  2000.  Dr.  Shaw currently is an Assistant Professor of Physics at Farleigh
Dickinson  University  where  he has served on the faculty since September 1988.
Dr. Shaw also performs professional research in his academic areas of specialty,
and  has  held,  among others, the positions of Research Chemist at the American
Cyanamid  Research  Laboratories,  Stamford;  Senior Research Physicist at Exxon
Research  and  Engineering Company; Manager of New Business Development at Exxon
Enterprises,  Exxon  Corporation,  New  York,  NY;  and President of Robert Shaw
Associates,  Inc.,  Chatham,  NJ.

     Dr.  Shaw  received  his  Ph.D.  in  Solid  State  Physics  form  Cambridge
University,  Cambridge,  England.  He  was  among  the first to conduct academic
research  on  electronic  conduction mechanisms in amorphous semiconductors.  He
received  a  B.S.  in  Inorganic  Chemistry with a minor in Nuclear Physics from
North  Carolina  State  University,  Raleigh,  NC.

     JOHN  HOBACK.  Mr.  Hoback  has  been a director of the Company since April
2002.  Mr.  Hoback  currently  serves  as  the  President  of  Z&H  Enterprises
Solutions,  Ltd., which position he has held since 2000.  Among other positions,
Mr.  Hoback was the Director of Marketing and Sales of CTS from 1999 to 2000 and
was  the  Venture  Manager of Electronics with Amoco Chemical from 1998 to 1999.

     DR.  MICHAEL  E. WERNLE.  Dr. Wernle served as the Executive Vice President
for  Strategic Business Development and a Director of the Company, from November
1999  to  September  2003.  He  was the President and Chief Executive Officer of
NanoPierce  Card  from  January 2000 to May 2003. He was the President and Chief
Executive  Officer  of ExypnoTech from February 2002 to August 2003.  Dr. Wernle
was the Chief Operations Officer for Meinen, Ziegel & Co., GmbH, Munich, Germany
from  1997  to  1999.  He  also  served  as  the  Director  of  Production  for
Mikron/Philips-Graz,  Graz,  Austria from 1994 to 1996. Where he was responsible
for  the  development and production of RFID and Contactless Smart Card Systems.

     Dr.  Wernle  received  his  Ph.D.  in  Applied  Physics  from the Technical
University of Vienna in 1990 and his Masters Degree in Industrial Electronics in
1988.


                                       21
<PAGE>
     NOEL  EBERHARDT.  Mr. Eberhardt was a director of the Company from November
28,  2001 until December 9, 2003.  Mr. Eberhardt's 35 year career has focused on
the  design,  development,  process  development and manufacturing of electronic
packages.  He has held positions with Motorola WSSD (Worldwide Smartcard Systems
Division),  Indala  Corporation  and Hytek Microsystems, among a few, throughout
his  career.




                                       22
<PAGE>
ITEM  10.     EXECUTIVE  COMPENSATION

     The  following table sets forth certain information concerning compensation
paid  by the Company to the Chief Executive Officer and the Company's three most
highly  compensated executive officers for the fiscal years ended June 30, 2004,
2003  and  2002  (the  "Named  Executive  Officers"):

<TABLE>
<CAPTION>
                             ANNUAL COMPENSATION                      LONG TERM COMPENSATION
                   ------------------------------------  ------------------------------------------------
                                                                   AWARDS                  PAYOUTS
                                                         -------------------------  ---------------------
                                               OTHER                   SECURITIES
                                               ANNUAL     RESTRICTED   UNDERLYING     LTIP     ALL OTHER
NAME & PRINCIPAL           SALARY    BONUS   COMPENSA-      STOCK       OPTIONS/     PAYOUTS   COMPENSA-
POSITION           YEAR     ($)       ($)       TION      AWARDS ($)    SARS (#)       ($)        TION
<S>                <C>   <C>        <C>      <C>         <C>           <C>          <C>        <C>
Paul H.
Metzinger,         2004  $ 114,583  $   -0-  $      -0-  $        -0-          -0-  $     -0-  $      -0-
Director,          2003  $ 132,500  $   -0-  $      -0-  $        -0-          -0-  $     -0-  $      -0-
President &        2002  $ 190,750  $   -0-  $      -0-  $        -0-          -0-  $     -0-  $      -0-
CEO(1)

Dr. Herbert J.
Neuhaus,
Director, Ex. VP   2004  $  16,668  $   -0-  $      -0-  $        -0-          -0-  $     -0-  $      -0-
of Technology &    2003  $ 148,333  $   -0-  $      -0-  $        -0-          -0-  $     -0-  $      -0-
Marketing, Pre &   2002  $ 190,750  $   -0-  $      -0-  $        -0-          -0-  $     -0-  $      -0-
CEO of
NanoPierce
Connection (2)

Dr. Michael E.
Wernle,
Director, Ex. VP   2004  $     -0-  $   -0-  $      -0-  $        -0-          -0-  $     -0-  $      -0-
of Strategic       2003  $ 128,000  $   -0-  $      -0-  $        -0-      365,000  $     -0-  $      -0-
Business Dvlpmt,   2002  $ 160,000  $   -0-  $      -0-  $        -0-          -0-  $     -0-  $      -0-
Pres & CEO of
ExypnoTech (3)

Kristi J.
Kampmann, Chief
Financial          2004  $  37,492  $   -0-  $      -0-  $        -0-          -0-  $     -0-  $      -0-
Officer &          2003  $  58,125  $   -0-  $      -0-  $        -0-          -0-  $     -0-  $      -0-
Secretary(4)       2002  $  67,500  $   -0-  $      -0-  $        -0-      100,000  $     -0-  $      -0-
</TABLE>
---------------
1  Paul  Metzinger  has  served  as  President & CEO since December 1998.  He is
compensated pursuant to a written Employment Agreement, dated January 1, 2003 at
an  annual salary of $200,000.  At July 15, 2002, Mr. Metzinger agreed to take a
30%  cut  in  the  gross  amount of his salary, resulting in an annual salary of
$140,000.  In  February 2003, Mr. Metzinger agreed to a further reduction in his
salary  to  $80,000.  In  March  2004,  Mr.  Metzinger  salary  was increased to
$150,000  per  year.
2  Dr.  Neuhaus  has  served  as  the Executive Vice President of Technology and
Marketing  since January 1999.  He served as the President and CEO of NanoPierce
Connection from January 2002 to September 2003. He was compensated pursuant to a
written  Employment  Agreement,  dated  January  2002  at  an  annual  salary of
$200,000.  On  August  1,  2002,  Dr. Neuhaus agreed to take a cut of 20% of his
annual  salary,  resulting  in an annual salary of $160,000.  In March 2003, Dr.
Neuhaus  agreed to a further reduction in his salary resulting in a gross amount
of  $80,000.  This employment agreement was terminated in September 2003 and Dr.
Neuhaus  is  no  longer  a paid employee of the Company and/or its subsidiaries.
3  Dr.  Wernle  served  as  the  Executive  Vice President of Strategic Business
Development  until  September  2003.  He  served  as  the  President  &  CEO  of
NanoPierce  Card from January 2000 until May 2003.  He served as the President &
CEO  of  ExypnoTech,  from  February  2002  to  August 2003.  He was compensated
pursuant  to a written Employment Agreement with NanoPierce Card, dated February
1, 2000, at an annual salary of $160,000 (181,000 Euros). On August 1, 2002, Dr.
Wernle  agreed to take a 20% cut in the gross amount of his salary, resulting in
an annual salary of $128,000.  As of August 2003, Dr. Wernle no longer is a paid
employee  of  the  Company  and/or  its  subsidiaries.
4  Kristi Kampmann has served as the Chief Financial Officer since October 1999.
She  is  compensated pursuant to a written Employment Agreement, dated March 31,
2004,  at an annual salary of $45,000.  On July 15, 2002, Ms. Kampmann agreed to
take  a  20%  cut  in  the  gross


                                       23
<PAGE>
amount  of  her  salary,  resulting in an annual salary of $60,000.  In February
2003, she agreed to a further reduction in the annual gross amount of her salary
to  $52,500.

     The  foregoing  compensation table does not include certain fringe benefits
made  available  on  a  nondiscriminatory basis to all Company employees such as
group  health  insurance,  dental  insurance,  long-term  disability  insurance,
vacation  and  sick  leave.  In  addition,  the  Company makes available certain
non-monetary  benefits  to  its  executive officers with a view to acquiring and
retaining  qualified  personnel  and  facilitating job performance.  The Company
considers  such  benefits  to  be  ordinary  and  incidental  business costs and
expenses.  The  aggregate  value  of such benefits in the case of each executive
officer  listed  in  the  above table, which cannot be precisely ascertained but
which  is  less  than  10%  of the cash compensation paid to each such executive
officer,  is  not  included  in  such  table.

                             OPTION/SAR GRANTS TABLE
     The  following  table  provides  information relating to the grant of stock
options  to  the  Company's executive officers during the fiscal year ended June
30,  2004.

<TABLE>
<CAPTION>
                                INDIVIDUAL GRANTS
                                -----------------

                      # OF         % OF TOTAL
                   SECURITIES     OPTIONS/SARS
                   UNDERLYING      GRANTED TO
                  OPTIONS/SARS    EMPLOYEES IN   EXERCISE OR BASE   EXPIRATION
NAME               GRANTED (#)   FISCAL YEAR(1)   PRICE ($/SHARE)      DATE
<S>               <C>            <C>             <C>                <C>
Paul H.Metzinger            -0-              0%                -0-         -0-

Dr. Herbert J.
Neuhaus                     -0-              0%                -0-         -0-

Dr. Michael E.
Wernle                      -0-              0%                -0-         -0-

Kristi J.
Kampmann                    -0-              0%                -0-         -0-
</TABLE>
_______________
1  Based  on  a total of 0 options granted to employees in the fiscal year ended
June  30,  2004.


                                       24
<PAGE>
             AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
                        FISCAL YEAR END OPTION/SAR VALUES

     The  following table provides information relating to the exercise of stock
options  during  the  fiscal year ended June 30, 2004 by the Company's executive
officers  and  the  2004  fiscal  year-end  value  of  unexercised  options.

<TABLE>
<CAPTION>
                SHARES       VALUE    NUMBER OF SECURITIES UNDERLYING     VALUE OF UNEXERCISED
             ACQUIRED ON   REALIZED      UNEXERCISED OPTIONS/SARS       IN-THE-MONEY OPTIONS/SAR
NAME         EXERCISE (#)     ($)                AT FY-END                    AT FY-END ($)

                                         EXERCISABLE/UNEXERCISABLE      EXERCISABLE/UNEXERCISABLE
                                      -------------------------------  ---------------------------
<S>          <C>           <C>        <C>                              <C>
Paul H.                 0          0           2,500,000/0             $        400,000/0
Metzinger

Dr. Herbert             0          0           1,350,000/0             $        216,000/0
J. Neuhaus

Dr. Michael             0          0           1,350,000/0             $        216,000/0
E. Wernle

Kristi                  0          0             325,000/0             $         52,000/0
J.Kampmann
</TABLE>
---------------
1 The average of the closing bid and asked price of the Common Stock on June 30,
2004  ($0.16)  was  used  to  calculate  the  option  value.

EMPLOYMENT AGREEMENTS

     On  March  15,  2004, the Company entered into an employment agreement with
Paul  H.  Metzinger  to  serve  as  President and Chief Executive Officer of the
Company.  The  employment  agreement  with Mr. Metzinger expires March 14, 2008.
Pursuant to his employment agreement, the Company agreed to pay Mr. Metzinger an
annual  salary  of  $150,000.

     On  January  1,  2002,  NanoPierce  Connection  entered  into an employment
agreement  with  Dr.  Herbert J. Neuhaus to serve as the Chief Executive Officer
and  President  of  NanoPierce  Connection.  The  employment  agreement  expires
December  31,  2005.  The agreement with Dr. Neuhaus was terminated in September
2003.

     On  March  15,  2004, the Company entered into an employment agreement with
Kristi  J. Kampmann to serve as the Chief Financial Officer of the Company.  The
employment  agreement  with Ms. Kampmann expires on March 14, 2008.  Pursuant to
her  employment  agreement,  the  Company  agreed  to pay Ms. Kampmann an annual
salary  of  $30,000.

     In connection with the Employment Agreements, generally, the Company or the
employee  may  terminate  the  Employment  Agreement at any time with or without
cause.  In the event the Company terminates an Employment Agreement for cause or
the employee terminates his or her Employee Agreement without cause, all of such
employee's rights to compensation would cease upon the date of such termination.
If  the  Company  terminates  an  Employment  Agreement  without cause, the such
employee  terminates  his or her Employment Agreement for cause, or in the event
of  a  change  in  control,  the Company is required to pay to such employee all
compensation  and  other benefits that would have accrued and/or been payable to
that employee during the full term of the Employment Agreement.

     A change of control is considered to have occurred when, as a result of any
type of corporate reorganization, execution of proxies, voting trusts or similar
arrangements,  a  person  or  group  of  persons (other than incumbent officers,
directors and principal shareholders of the Company) acquires sufficient control
to


                                       25
<PAGE>
elect  more than a majority of the Company's Board of Directors, acquires 50% or
more  of  the  voting  shares  of  the  Company, or the Company adopts a plan of
dissolution of liquidation.  The Employment Agreement also include a non-compete
and  nondisclosure  provisions in which each employee agrees not to compete with
or  disclose  confidential  information  regarding  the Company and its business
during  the  term  of  the  Employment  Agreement  and  for a period of one year
thereafter.

COMPENSATION PURSUANT TO PLANS

     STOCK  OPTION  PLANS.  The  Company has two Stock Option Plans.  As of June
30,  2004,  7,047,524  options are outstanding under the 1998 Compensatory Stock
Option  Plan  and  1,740,000 options are outstanding under the 2000 Compensatory
Stock  Option  Plan,  for  a total of 8,787,524 options outstanding.  A total of
8,322,524  options  are exercisable at June 30, 2004, under these plans.  During
the fiscal year ended June 30, 2004, the Company did not grant any options.  The
Company  has  reserved  7,500,000  shares of common stock for issuance under the
1998  Compensatory  Stock  Option Plan.  In January 2002, the Company's Board of
Directors  passed  a  resolution closing the 1998 Compensatory Stock Option Plan
for  issuance  of  new  options.  The  Company  has reserved 5,000,000 shares of
common stock for issuance under the 2000 Compensatory Stock Option Plan.

     During  the  fiscal  year ended June 30, 2004, there was no action taken to
reprice any options or warrants held by any officers, directors or employees.

COMPENSATION  OF  DIRECTORS

     The  Company  holds quarterly meetings of the board of directors.  Although
the  Company  does  not  have  any  standard  arrangements pursuant to which our
directors  are  compensated  for  any  services  provided  as  a director or for
attendance  at meetings of the board of directors, if the financial situation of
the  Company  is adequate, the Company compensates directors $1,000 per meeting,
plus  reasonable  travel  expenses.

     During the fiscal year ended June 30, 2004, the officers and directors were
not  compensated  for  attendance  at  board  meetings.

ITEM  11.     SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL OWNERS AND MANAGEMENT

BENEFICIAL OWNERSHIP

     The following table sets forth certain information regarding the beneficial
ownership  of  outstanding  shares  of the Company's common stock as of June 30,
2004  on  a  fully diluted basis, by (a) each person known by the Company to own
beneficially  5%  or  more  of  the  outstanding shares of common stock, (b) the
Company's  directors, Chief Executive Officer and executive officers whose total
compensation  exceeded  $100,000 for the last fiscal year, and (c) all directors
and  executive  officers  of  the  Company  as  a  group.


                                       26
<PAGE>
<TABLE>
<CAPTION>
     NAME, ADDRESS & NATURE OF
          BENEFICIAL OWNER          TITLE OF CLASS      AMOUNT     PERCENT OF CLASS9
----------------------------------  ---------------  ------------  ------------------
<S>                                 <C>              <C>           <C>
The Paul H. Metzinger Trust         Common Stock     4,543,188(1)               2.71%
Paul H. Metzinger, President &
CEO, Director  370 17th Street,
Suite 3640 Denver, CO 80202
----------------------------------  ---------------  ------------  ------------------

The Cheri L. Metzinger Trust        Common Stock     4,543,188(2)               2.71%
Cheri L. Metzinger, Wife of Paul
H. Metzinger
3236 Jellison Street Wheatridge,
CO 80033
----------------------------------  ---------------  ------------  ------------------

Dr. Herbert J. Neuhaus, Director,   Common Stock     1,350,000(3)               0.81%
770 Maroonglen Court
Colorado Springs, CO 80906
----------------------------------  ---------------  ------------  ------------------

Dr. Michael E. Wernle, Former Ex    Options to       1,350,000(4)               0.81%
VP of Strategic Business            purchase Common
Development, Former Director,       Stock
President & CEO of ExypnoTech
Lise-Meitner-Strasse  1D-85662
Hohenbrunn Germany
----------------------------------  ---------------  ------------  ------------------

Kristi J. Kampmann, Chief           Common Stock       344,080(5)               0.21%
Financial Officer & Secretary
370 17th Street, Suite 3640
Denver, CO 80202
----------------------------------  ---------------  ------------  ------------------

Dr. Robert E. Shaw, Director        Options to         400,000(6)               0.24%
8 Nicklaus Court                    purchase Common
Florham Park, NJ 07932              Stock
----------------------------------  ---------------  ------------  ------------------

Dr. Noel Eberhardt, Former          Options to         400,000(7)               0.24%
Director  21407 Krzich Place        purchase Common
Cupertino, CA 95014                 Stock
----------------------------------  ---------------  ------------  ------------------

John Hoback, Director  20 White     Options to         400,000(8)               0.24%
Heron Lake                          purchase Common
East Stroudsburg, PA 18301          Stock
----------------------------------  ---------------  ------------  ------------------

All Officers & Directors as a       Common Stock       8,787,268                5.25%
Group (7 persons)
----------------------------------  ---------------  ------------  ------------------
</TABLE>
---------------
1  Includes  1,072,937  common  shares  held  directly and beneficially; 970,251
common  shares  that Mr. Metzinger owns beneficially though his wife and options
held  by  Mr.  Metzinger  consisting  of  options  to  purchase  500,000  shares
exercisable  at $2.125 per share, options to purchase 500,000 shares exercisable
at  $0.52  per  share  and  options  to purchase 1,500,000 shares exercisable at
$0.3250  per  share.
2  Cheri  L. Metzinger is the wife of Mr. Paul H. Metzinger, the Chief Executive
Officer  and  President  of  the  Company.  This  includes  970,251  shares held
directly  and  beneficially  and  1,072,937  common  shares and 2,000,000 common
shares  subject  to  options  owned  beneficially  by  her  husband.
3  Based  on options to purchase 500,000 shares exercisable at $2.125 per share,
options  to  purchase  100,000 shares exercisable at $2.75 per share, options to
purchase  250,000  shares exercisable at $0.52 per share and options to purchase
500,000  shares  exercisable  at  $0.20  per  share.
4  Based  on options to purchase 500,000 shares exercisable at $2.125 per share,
options  to  purchase  160,000 shares exercisable at $2.75 per share, options to
purchase  25,000  shares  exercisable  at  $0.52  per share, options to purchase
300,000  shares  at  $0.45  per  share  and  options  to purchase 365,000 shares
exercisable  at  $0.60  per  share.
5  Based  on  19,080  common  shares  and  options  to  purchase  100,000 shares
exercisable at $0.84 per share, options to purchase 75,000 shares exercisable at
$2.125  per  share,  options  to


                                       27
<PAGE>
purchase  50,000  shares  exercisable  at  $2.75  per share, options to purchase
50,000  shares  exercisable  at  $0.52  per share and options to purchase 50,000
shares  exercisable  at  $0.3250  per  share.
6  Based  on  options to purchase 250,000 shares exercisable at $0.97 per share,
options to purchase 50,000 shares exercisable at $0.67 per share, and options to
purchase  100,000  shares  exercisable  at  $2.00  per  share.
7 Based on options to purchase 300,000 shares exercisable at $0.70 per share and
options  to  purchase  100,000  shares  exercisable  at  $0.70  per  share.
8  Based  on  options to purchase 400,000 shares exercisable at $1.35 per share.
9  Based on 90,059,033 shares of common stock issued and outstanding on June 30,
2004,  assuming  exercise  of  all  8,787,524  presently exercisable options and
exercise  of  68,594,353 outstanding warrants, there would be 167,440,910 shares
outstanding.  Mr.  Metzinger's  and  Mrs.  Metzinger's  stock  ownership are not
duplicated  in  this  computation.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

     The  following  table  provides  information  as of June 30, 2004 regarding
compensation  plans (including individual compensation arrangements) under which
shares  of  our  common  stock  are  authorized  for  issuance.  No class of our
securities  other than our common stock or options to purchaser our common stock
is authorized for issuance under any of our equity compensation plans.

<TABLE>
<CAPTION>
                                                                    Number of securities
                     Number of securities    Weighted-average     remaining available for
                       to be issued upon     exercise price of     future issuance under
                          exercise of           outstanding      equity compensation plans
Plan Category        outstanding options,    options, warrants     (excluding securities
                      warrants and rights       and rights        reflected in column (a)

                              (a)                   (b)                     (c)
-------------------  ---------------------  -------------------  --------------------------
<S>                  <C>                    <C>                  <C>
Equity
compensation plans
approved by
security holders                     0                      -                         0
-------------------  ---------------------  -------------------  --------------------------
Equity
compensation plans
not approved by
security holders(1)              8,787,524  $              1.00                   3,712,476
-------------------  ---------------------  -------------------  --------------------------
Total                            8,787,524  $              1.00                   3,712,476
-------------------  ---------------------  -------------------  --------------------------
</TABLE>

(1)  The material features of the plans not approved by the security holders are
described  herein under "ITEM 10-EXECUTIVE COMPENSATION-Compensation Pursuant to
Plans."


ITEM  12.     CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

     In  March  2004,  the  Company  entered  into  employment  agreements,  as
previously  discussed,  with  Mr.  Metzinger,  the President and Chief Executive
Officer  and  a  Director  of  the  Company,  and  with  Ms. Kampmann, the Chief
Financial  Officer  and  Secretary  of  the  Company.

     In  September 2003, the Company entered into a joint venture agreement with
Scimaxx, LLC to support the marketing of the Company's technology. The owners of
Scimaxx, LLC include Dr. Neuhaus, a director and a former officer of the Company
and  several  former  employees  of  the  Company.

     In  June 2003, Mr. Metzinger, the President and Chief Executive Officer and
a  director  of  the  Company  loaned  the  Company  $10,000, in exchange for an
unsecured  7%  note  payable due in December 2003.  In January 2004, the Company
paid  Mr.  Metzinger


                                       28
<PAGE>
the  outstanding principal balance of this note and all accrued interest thereon
in  full.

     In  September  2003,  Mr. Metzinger loaned the Company $30,000, in exchange
for  an  unsecured  7%  note payable due in September 2004. In January, 2004 the
Company  paid  Mr.  Metzinger  the  outstanding  principal balance of this note,
together  with  all  accrued  interest,  in  full.

                                     PART IV

ITEM  13.     EXHIBITS  AND  REPORTS  ON  FORM  8-K

     (a)  The following documents are filed as a part of this Report.

     (i)  Financial  Statements.  See Index to Financial Statements and Schedule
     on  page  F-2  of  this  Report.

     (ii)  Exhibits.  The following is a complete list of exhibits filed as part
     of  this  Form  10-KSB.  Exhibit  numbers  correspond to the numbers in the
     Exhibit  Table  of  Item  601  of  Regulation  S-B.

<TABLE>
<CAPTION>
EXHIBIT NO.  DESCRIPTION
<C>          <S>

   2         Agreement dated February 26, 1998, by and among the Company, Particle
             Interconnect Corporation and Intercell Corporation 4
   2.02      Application and Development Agreement, dated April 15, 1999, by and
             among the Company and Multitape & Co., Gmbh, KG. 2
   2.03      Technology Cooperation Agreement, dated May 17, 1999, by and among the
             Company and Meinen, Zeigel & Co. 2
   2.04      Technology Development Agreement, dated June 11, 1999, by and among the
             Company and ORGA Kartensysteme, GmbH. 2
   2.05      Agreement-In-Principle, dated May 18, 1999, by and among the Company and
             Cirrex Corporation. 2
   4.01      The Articles of Incorporation of the Company 3
   4.02      Amendment to the Articles of Incorporation of the Company filed with the
             Nevada Secretary of State on March 20, 2002 3
   4.03      Amendment to Articles of Incorporation filed with the Nevada Secretary
             of State on March 20, 2002
   4.04      Certificate of Designation of Rights and Preferences of the Series A
             Preferred Stock 4
   4.05      Certificate of Designation of Rights and Preferences of the Series B
             Preferred Stock 5
   4.06      Certificate of Designation of Rights and Preferences of the Series C
             Preferred Stock 5
   4.07      Form of Common Stock Certificate 3
   4.08      The Amended and Restated By-laws of the Company 6
   10.01     Employment Agreement, dated March 15, 2004, between Paul H. Metzinger
             and the Company 7
   10.02     Employment Agreement, dated March 15, 2004, between Kristi J. Kampmann
             and the Company 7
   11        Statement regarding Computation of Per Share Earnings 1
   21        Subsidiaries of the Company 1
   23        Consent of Independent Certified Public Accountants 1
   31        Certifications pursuant to Section 302 of the Sarbanes-Oxley Act 1
   32        Certifications pursuant to Section 906 of the Sarbanes-Oxley Act 1
</TABLE>

_________________
1    Filed  herewith.
2    Incorporated by reference to the Company's Annual Report on Form 10-KSB for
     the  fiscal  year  ended  June  30,  1999.


                                       29
<PAGE>
3    Incorporated by reference to the Company's Annual Report on Form 10-KSB for
     the  fiscal  year  ended  June  30,  1998.
4    Incorporated  by  reference  to  the  Company's Current Report on Form 8-K,
     dated  February  26,  1998.
5    Incorporated  by  reference  to  the  Company's Current Report on Form 8-K,
     dated  July  23,  1998.
6    Incorporated by reference to Amendment No. 1 to the Company's Annual Report
     on  Form  10-KSB  for  the  fiscal  year  ended  June  30,  2003.
7    Incorporated  by reference to the Company's Quarterly Report on Form 10-QSB
     for  the  fiscal  quarter  ended  March  31,  2004.
     (b)  REPORTS  ON  FORM  8-K.
     The  Company  filed no reports on Form 8-K during the fourth quarter of the
     year  ended  June  30,  2004.

ITEM  14.     PRINCIPAL  ACCOUNTANT  FEES  AND  SERVICES

     The  aggregate  fees  billed  by  Gelfond  Hochstadt  Pangburn,  P.C.,  the
Company's  independent  auditors,  for professional services in the fiscal years
ended  June  30,  2004  and  2003  are  as  follows:

          Services Rendered              2004               2003
          ------------------            -------            -------
          Audit Fees                    $57,060            $49,800
          Audit Related Fees                  0                  0
          All Other Fees                      0                  0


     The  Company's corporate tax returns are prepared by the firm of Thompson &
Lowe,  P.C.  Fees  for the fiscal year ended June 30, 2004 and 2003 were $10,000
and  $13,610,  respectively.

     The  engagement  of  the  auditors  was  approved by the Company's Board of
Directors  prior  to  the  start of the audit for the fiscal year ended June 30,
2004.


                                       30
<PAGE>
                                   SIGNATURES

     Pursuant  to  the  requirements  of  Section  13 or 15(d) of the Securities
Exchange  Act  of  1934,  the  registrant caused this report to be signed on its
behalf  by  the  undersigned,  thereunto  duly  authorized.

                                    NANOPIERCE TECHNOLOGIES, INC.
                                    (a Nevada corporation)


     Date:  September 30, 2004          By:  /s/  Paul  H.  Metzinger
                                           --------------------------
                                          Paul H. Metzinger, Director, Chief
                                          Executive  Officer  &  President


     Date:  September 30, 2004          By:  /s/  Kristi  J.  Kampmann
                                           ---------------------------
                                          Kristi J. Kampmann, Chief Financial
                                          Officer & Chief Accounting Officer


     In  accordance  with  the  Securities Exchange Act of 1934, this report has
been  signed  below  by the following persons on behalf of the registrant and in
the  capacities  and  on  the  dates  indicated.

     Date:  September 30, 2004          By:  /s/  Paul  H.  Metzinger
                                           --------------------------
                                          Paul H. Metzinger, Director, Chief
                                          Executive  Officer  &  President


     Date:  September 30, 2004          By:  /s/  Herbert  J.  Neuhaus
                                           ---------------------------
                                          Herbert  J.  Neuhaus,  Director  &
                                          Executive Vice-President of Technology
                                          & Marketing


     Date:  September 30, 2004          By:  /s/  Robert  Shaw
                                           -------------------
                                          Robert  Shaw,  Director


     Date:  September 30, 2004          By:  /s/  John  Hoback
                                           -------------------
                                          John  Hoback,  Director


                                       31
<PAGE>
SUPPLEMENTAL  INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d)  OF  THE  EXCHANGE  ACT  BY  NON-REPORTING  ISSUERS

     No  annual  report  covering the Company's fiscal year ended June 30, 2004,
nor any proxy material, has been sent to security holders of the Company.


                                        1
<PAGE>
<TABLE>
<CAPTION>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                            Page
                                                                            ----
<S>                                                                         <C>
Report of Independent Registered Public Accounting Firm                      F-2

Consolidated Financial Statements:

  Consolidated Balance Sheet - June 30, 2004                                 F-3

  Consolidated Statements of Operations -
    Years ended June 30, 2004 and 2003                                       F-4

  Consolidated Statements of Comprehensive Loss -
    Years ended June 30, 2004 and 2003                                       F-5

  Consolidated Statements of Shareholders' Equity -
    Years ended June 30, 2004 and 2003                                       F-6

  Consolidated Statements of Cash Flows -
    Years ended June 30, 2004 and 2003                                       F-8

  Notes to Consolidated Financial Statements                                F-10
</TABLE>


                                      F-1
<PAGE>
             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
             -------------------------------------------------------



Board of Directors
Nanopierce Technologies, Inc.
Denver, Colorado

We  have  audited  the  accompanying  consolidated  balance  sheet of Nanopierce
Technologies,  Inc.  and  subsidiaries  as  of  June  30,  2004, and the related
consolidated  statements  of  operations,  comprehensive  loss,  changes  in
shareholders' equity and cash flows for each of the years in the two-year period
ended  June  30,  2004. These financial statements are the responsibility of the
Company's  management.  Our  responsibility  is  to  express an opinion on these
financial  statements  based  on  our  audits.

We  conducted  our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements  are free of material misstatement. An audit includes examining, on a
test  basis,  evidence  supporting  the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made  by  management,  as well as evaluating the overall
financial  statement  presentation.  We  believe  that  our  audits  provide  a
reasonable  basis  for  our  opinion.

In  our opinion, the consolidated financial statements referred to above present
fairly,  in  all  material  respects,  the  financial  position  of  Nanopierce
Technologies,  Inc.  and  subsidiaries  as  of June 30, 2004, and the results of
their  operations  and  their  cash  flows for each of the years in the two-year
period  ended  June 30, 2004, in conformity with accounting principles generally
accepted  in  the  United  States  of  America.

The  accompanying  consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company reported a net loss of $1,558,083
for  the  year ended June 30, 2004, and an accumulated deficit of $22,631,703 as
of  June  30,  2004.  These  factors raise substantial doubt about the Company's
ability  to  continue  as a going concern. Management's plans in regard to these
matters  are  also described in Note 2. The consolidated financial statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.




GELFOND HOCHSTADT PANGBURN, P.C.

Denver, Colorado
September 24, 2004



                                      F-2
<PAGE>
<TABLE>
<CAPTION>
                  NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                            Consolidated Balance Sheet
                                   June 30, 2004

                                     Assets
                                     ------
<S>                                                                  <C>

Current assets:
  Cash and cash equivalents                                          $  1,018,408
  Accounts receivable, net                                                  5,809
  Prepaid expenses                                                         44,727
                                                                     -------------
    Total current assets                                                1,068,944
                                                                     -------------

Property and equipment:
  Office equipment and furniture                                           66,356
  Less accumulated depreciation                                           (43,257)
                                                                     -------------
                                                                           23,099
                                                                     -------------

Other assets:
  Deposits and other                                                       19,663
  Investments in affiliates (Note 6)                                      303,966
                                                                     -------------
                                                                          323,629
                                                                     -------------

       Total assets                                                  $  1,415,672
                                                                     =============


                      Liabilities and Shareholders' Equity
                      ------------------------------------

Current liabilities:
  Accounts payable, including $6,116 payable to affiliate (Note 6)   $    108,856
  Note payable (Note 7)                                                    61,400
                                                                     -------------

    Total liabilities  (all current)                                      170,256
                                                                     -------------

Commitments and contingencies (Notes 4, 9 and 12)

Shareholders' equity (Note 8):
  Preferred stock; $0.0001 par value; none issued and outstanding;
   5,000,000 shares authorized
  Common stock; $0.0001 par value; 200,000,000 shares authorized
     90,059,033 shares issued and outstanding                               9,006
  Additional paid-in capital                                           23,744,891
  Accumulated other comprehensive income                                  123,222
  Accumulated deficit                                                 (22,631,703)
                                                                     -------------
      Total shareholders' equity                                        1,245,416
                                                                     -------------

        Total liabilities and shareholders' equity                   $  1,415,672
                                                                     =============

See notes to consolidated financial statements.
</TABLE>


                                      F-3
<PAGE>
<TABLE>
<CAPTION>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                      Consolidated Statements of Operations
                       Years Ended June 30, 2004 and 2003


                                              2004         2003
                                          ------------  -----------
<S>                                       <C>           <C>
Revenues                                  $    34,258       37,017
                                          ------------  -----------

Operating expenses:
  General and administrative                1,312,519    2,414,077
  Research and development                     41,849      316,403
  Selling and marketing                        37,033      238,817
  Impairment of intellectual property
    and equipment (Note 1)                    608,061      210,000
                                          ------------  -----------
                                            1,999,462    3,179,297
                                          ------------  -----------

Loss from operations                       (1,965,204)  (3,142,280)
                                          ------------  -----------

Other income (expense):
  Interest income                               2,550        7,251
  Extinguishment of liabilities (Note 7)       52,500            -
  Equity losses of affiliates (Note 6)        (99,922)           -
  Interest expense                             (2,889)         (38)
                                          ------------  -----------
                                              (47,761)       7,213
                                          ------------  -----------

Loss from continuing operations            (2,012,965)  (3,135,067)
                                          ------------  -----------

Discontinued operations; income(loss)
  from operations of subsidiary (Note 3)      454,882     (882,718)
                                          ------------  -----------

Net loss                                  $(1,558,083)  (4,017,785)
                                          ============  ===========

Basic and diluted loss per share:
  Loss from continuing operations         $     (0.03)       (0.05)
 Income (loss) from discontinued
   operations                                    0.01        (0.02)
                                          ------------  -----------

Net loss per share, basic and diluted          $(0.02)       (0.07)
                                          ============  ===========

Weighted average number of common
  shares outstanding                       75,116,717   61,647,688
                                          ============  ===========


See notes to consolidated financial statements.
</TABLE>


                                      F-4
<PAGE>
<TABLE>
<CAPTION>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                  Consolidated Statements of Comprehensive Loss
                       Years Ended June 30, 2004 and 2003


                                  2004         2003
                              ------------  -----------
<S>                           <C>           <C>
Net loss                      $(1,558,083)  (4,017,785)

Change in unrealized gain on
  securities                         (141)        (237)

Change in foreign currency
  translation adjustments         (66,727)      48,915
                              ------------  -----------

Comprehensive loss            $(1,624,951)  (3,969,107)
                              ============  ===========
</TABLE>


See notes to consolidated financial statements.


                                      F-5
<PAGE>
<TABLE>
<CAPTION>
                                     NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                    Consolidated Statements of Shareholders' Equity
                                           Years Ended June 30, 2004 and 2003


                                   Common Stock            Additional    Accumulated other                     Total
                                   ------------             paid-in        comprehensive    Accumulated    shareholders'
                              Shares       Amount           Capital           income          deficit         equity
                           ------------  -----------  -------------------  -------------  ---------------  ------------
<S>                        <C>           <C>          <C>                  <C>            <C>              <C>
Balances, July 1, 2002       57,637,002  $     5,764  $       19,496,447   $    141,412   $  (17,055,835)  $ 2,587,788

Common stock issued
  for services                   14,000            1               9,344              -                -         9,345

Warrants issued for
  services                            -            -               3,190              -                -         3,190

Common stock and
  warrants issued for
  cash (net of offering
  costs of $75,500)           7,340,348          734           1,826,032              -                -     1,826,766

Common stock issued
  upon cashless exercise
  of warrants                    56,388            5                  (5)             -                -             -

Common stock issued upon
  cashless exercise of
  option                          7,000            1                  (1)             -                -             -

Warrant issued in
  exchange for deferred
  consulting costs                    -            -             230,400              -                -       230,400

Extension of term of
  warrant                             -            -               2,400              -                -         2,400

Net loss                              -            -                   -              -       (4,017,785)   (4,017,785)

Other comprehensive
  income:
    Change in unrealized
      gain on securities              -            -                   -           (237)               -          (237)
    Foreign currency
      translation
      adjustments                     -            -                   -         48,915                -        48,915
                           ------------  -----------  -------------------  -------------  ---------------  ------------
Balances,
  June 30, 2003              65,054,738  $     6,505          21,567,807        190,090      (21,073,620)      690,782
                           ============  ===========  ===================  =============  ===============  ============
</TABLE>

                                                          (Continued)


                                      F-6
<PAGE>
<TABLE>
<CAPTION>
                                   NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                             Consolidated Statement of Changes in Shareholders' Equity
                                         Years Ended June 30, 2004 and 2003
                                                    (Continued)



                                  Common stock            Additional    Accumulated other                  Total
                                  ------------             paid-in       comprehensive     Accumulated  shareholders'
                              Shares       Amount          capital           income         deficit        equity
                           ------------  -----------  ------------------  ------------  --------------  -----------
<S>                        <C>           <C>          <C>                 <C>           <C>             <C>
Balances, July 1, 2003       65,054,738  $     6,505         21,567,807       190,090     (21,073,620)     690,782

Common stock and
  warrants issued for
  cash (net of offering
  costs of $272,000)
                             20,769,231        2,077          1,825,923             -               -    1,828,000

Common stock issued
  in satisfaction of
  payable                       200,000           20              3,615             -               -        3,635

Common stock issued upon
  exercise of
  warrants (net of
  offering costs
  of $ 37,050)                3,850,000          385            347,565             -               -      347,950

Common stock issued upon
  cashless exercise of
  warrants                      185,064           19                (19)            -               -            -

Net loss                              -            -                  -             -      (1,558,083)  (1,558,083)

Other comprehensive
   Loss:
    Change in unrealized
      gain on securities              -            -                  -          (141)              -         (141)
    Foreign currency
      translation
      adjustments                     -            -                  -       (66,727)              -      (66,727)
                           ------------  -----------  ------------------  ------------  --------------  -----------
Balances,
  June 30, 2004              90,059,033  $     9,006         23,744,891       123,222     (22,631,703)   1,245,416
                           ============  ===========  ==================  ============  ==============  ===========
</TABLE>

See notes to consolidated financial statements.


                                      F-7
<PAGE>
<TABLE>
<CAPTION>
                     NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                     Condensed Consolidated Statements of Cash Flows
                           Years Ended June 30, 2004 and 2003


                                                                  2004          2003
                                                              -------------  -----------
<S>                                                           <C>            <C>
Cash flows from operating activities:
 Net loss                                                     $ (1,558,083)  (4,017,785)
                                                              -------------  -----------
 Adjustments to reconcile net loss to net cash used
  in operating activities from continuing operations:
  (Income) loss from discontinued operations                    (  454,882)     882,718
  Amortization expense                                             158,674      150,916
  Depreciation expense                                              10,657      157,393
  Equity losses of affiliates                                       99,922            -
  Gain on extinguishment of liabilities                            (52,500)           -
  Amortization of deferred consulting costs                        122,459      107,941
  Impairment of intellectual property and equipment                608,061      210,000
  Provision for doubtful receivable                                 58,074            -
  Stock-based compensation expense                                       -       14,935
  Changes in operating assets and liabilities:
   (Increase) decrease in accounts receivable                   (   11,883)      29,139
   Decrease in prepaid expense                                       8,646        4,001
   Decrease in deposits and other assets                                 -      240,013
   (Decrease) increase in accounts payable and
     accrued liabilities                                        (  188,359)     466,482
                                                              -------------  -----------
 Total adjustments                                                 358,869    2,263,538
                                                              -------------  -----------

    Net cash used in operating activities
      from continuing operations                                (1,199,214)  (1,754,247)
                                                              -------------  -----------

Cash flows from investing activities:
  Advances to equity investee                                   (   50,000)           -
  Increase in patent and trademark applications                 (   68,189)  (  239,556)
  Purchases of property and equipment                           (    1,575)  (  351,431)
  Payments received on notes receivable                                  -      170,779
  Cash effect of ExypnoTech deconsolidation                     (  115,151)           -
                                                              -------------  -----------
    Net cash used in investing activities
      from continuing operations                                (  234,915)  (  420,208)
                                                              -------------  -----------

Cash flows from financing activities:
  Issuance of common stock and warrants for cash                 2,175,950    1,826,766
  Proceeds from notes payable                                      165,000       10,000
  Payments of notes payable                                    (   205,700)           -
                                                              -------------  -----------
    Net cash provided by financing activities
      from continuing operations                                 2,135,250    1,836,766
                                                              -------------  -----------

Effect of exchange rate changes on cash
  and cash equivalents                                             127,038       44,098
                                                              -------------  -----------

Net cash used in discontinued operations                           (10,492)   ( 184,877)
                                                              -------------  -----------

Net increase (decrease) in cash and cash equivalents               817,667   (  478,468)

Cash and cash equivalents, beginning                               200,741      679,209
                                                              -------------  -----------

Cash and cash equivalents, ending                             $  1,018,408      200,741
                                                              =============  ===========
</TABLE>

                                  (Continued)


                                      F-8
<PAGE>
<TABLE>
<CAPTION>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                       Years Ended June 30, 2004 and 2003
                                  (Continued)


                                                                2004       2003
                                                             -----------  -------
<S>                                                          <C>          <C>
Supplemental disclosure of cash flow information:
  Cash paid for interest                                     $    2,851     5,923
                                                             ===========  =======
Supplemental disclosure of non-cash investing and financing
  activities:
   Issuance of common stock in satisfaction of payable       $     3,635        -
                                                             ===========  =======
   Investment in joint venture in exchange for equipment     $   132,000
                                                             ===========  =======
   Issuance of note payable in exchange for accounts payable $    92,100        -
                                                             ===========  =======
   Patent costs incurred on behalf of equity investee in
     exchange for receivable                                 $     8,074        -
                                                             ===========  =======
   Warrant issued in exchange for deferred consulting costs            -  230,400
                                                             ===========  =======
</TABLE>

See notes to consolidated financial statements.


                                       F-9
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2004 and 2003

1.   BASIS  OF  PRESENTATION,  BUSINESS,  AND  SUMMARY OF SIGNIFICANT ACCOUNTING
     POLICIES:

BASIS OF PRESENTATION:

The  accompanying  consolidated  financial  statements  include  the accounts of
NanoPierce  Technologies,  Inc.,  a Nevada corporation (the Company), its wholly
owned  subsidiaries,  NanoPierce  Connection Systems, Inc., a Nevada corporation
(NCOS)  which  was  incorporated  in November 2001, and its wholly-owned foreign
subsidiaries,  NanoPierce  Card Technologies GmbH, Hohenbrunn (NCT), and through
December  11,  2003,  ExypnoTech,  GmbH (EPT, formed in February 2002) (Note 6).
During  the  year  ended  June 30, 2003, NCT discontinued its operations, and in
June  2004,  NCT  was  dissolved  (Note  3).  In  June  2004, the Company formed
ExypnoTech,  LLC  (ET LLC), as a wholly-owned subsidiary to market, primarily in
the United States, RFID (Radio Frequency Identification) components manufactured
by  EPT.  All  significant  intercompany  accounts  and  transactions  have been
eliminated  in  consolidation.

BUSINESS:

The  Company  has  been  engaged  in  the  design,  development and licensing of
products  using  its  intellectual  property,  the  PI  Technology  through  its
subsidiaries  and  joint  venture  arrangements.  The  PI Technology consists of
patents,  pending patent applications, patent applications in preparation, trade
secrets,  trade  names,  and  trademarks. The PI Technology improves electrical,
thermal  and  mechanical characteristics of electronic products. The Company has
designated  its PI Technology as the NanoPierce Connection System (NCS ) and has
marketed  the  PI Technology to companies in various industries for a wide range
of  applications. As discussed below, the Company made a decision to abandon its
PI  technology  in  the  fourth  quarter  ended  June  30,  2004.

Through  June  30,  2004,  NCOS  activities  primarily consisted of research and
development,  marketing and administrative functions. Through June 30, 2004, EPT
activities  primarily consisted of manufacturing inlay components used in, among
other  things  Smart  Labels,  which  is a paper sheet holding a chip-containing
module  that  is capable of memory storage and/or processing. Scimaxx Solutions,
LLC,  which  is an equity investment (Note 6), is primarily involved in research
and  development and marketing functions.

ET  LLC  business  activities  are  to  include  the marketing and sales of RFID
products  in  North  America.  ET LLC had no revenues or operations through June
30,  2004.

USE OF ESTIMATES IN THE FINANCIAL STATEMENTS:

The preparation of financial statements in conformity with accounting principles
generally  accepted  in the United States of America requires management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and  disclosure of contingent assets and liabilities at the date of
the  financial  statements  and  the  reported  amounts of revenues and expenses
during the reporting periods.  Actual results could differ from those estimates.


                                      F-10
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2004 and 2003

FAIR VALUE OF FINANCIAL INSTRUMENTS:

The fair values of the Company's cash and cash equivalents, accounts receivable,
accounts  payable and note payable approximate their carrying amounts due to the
short  maturities  of  these  instruments.

CASH AND CASH EQUIVALENTS:

The Company considers all highly liquid investments with an original maturity of
three  months  or  less  and  money  market  instruments to be cash equivalents.

DEFERRED CONSULTING AND LEGAL COSTS:

In  January 2003, the Company entered into a twelve-month financial advisory and
exclusive  placement  agent  agreement  with  a third party, in which this party
acted  as financial advisor to the Company and served as its exclusive placement
agent  for a private placement of equity securities during the twelve-month term
of  the  agreement.  Compensation  included a non-refundable retainer fee, which
consisted  of a warrant to purchase up to 450,000 shares of the Company's common
stock  (Note  8).  The  warrant  was  valued at approximately $230,400 using the
Black-Scholes  pricing model. The deferred cost was amortized on a straight-line
basis  over  a  twelve-month period from the date of issuance, which represented
the estimated period the expenses were incurred. During the years ended June 30,
2004  and  2003,  $122,459  and  $107,941  were  expensed in connection with the
warrant.

AVAILABLE FOR SALE SECURITIES

Available  for  sale  securities  consist of 1,180 shares of the common stock of
Intercell International Corporation (Intercell). These securities are carried at
fair  value  ($391  at  June  30, 2004) based upon quoted market prices, and are
included  in  other long-term assets in the Company's June 30, 2004 consolidated
balance  sheet.  Unrealized  gains  and  losses  are  computed  on  the basis of
specific  identification  and  are  reported  as  a  separate  component  of
comprehensive  income  (loss),  included  as  a  separate  item in shareholders'
equity.  The Company reported a decrease in the unrealized loss on available for
sale  securities  of  $141  in  2004  and  $237  in 2003.  At June 30, 2004, the
unrealized  loss  on  available  for  sale  securities was $24.  Realized gains,
realized  losses,  and declines in value, judged to be other-than temporary, are
included  in  other  income (expense).  During the years ended June 30, 2004 and
2003,  the  Company  did  not  sell  any  available  for  sale  securities.

IMPAIRMENT  OF  INTELLECTUAL  PROPERTY  RIGHTS  AND  PATENT  AND  TRADEMARK
APPLICATIONS:

Through  the  third  quarter  of  the  year ended June 30, 2004, the Company had
recorded  intellectual  property  rights  and patent and trademark applications.
Through  June  30,  2003  the  intellectual  property  was  amortized  using the
straight-line  method  over  10  years, which was based on an average protection
period  of  underlying  patents.  As  discussed  below,  in conjunction with the
Company's  2003  assessment of long-lived assets, the Company made a decision to
utilize  a  remaining useful life of 2.5 years beginning July 1, 2003, which was
consistent  with the remaining average patent protection period of the remaining
intellectual  property.


                                      F-11
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2004 and 2003

Costs  incurred  to  establish  patents  and  trademarks  were  capitalized  and
amortized  beginning  at  the  time  of  the application over the shorter of the
estimated  useful  life  of  the technology or patent term. Patent and trademark
applications  were  amortized over a period of 10 years. Unsuccessful patent and
trademark application costs were expensed when determined to be unsuccessful.

Management assesses the carrying values of long-lived assets for impairment when
circumstances  warrant such a review.  In performing this assessment, management
considers current market analysis and appraisal of the PI Technology, along with
estimates of future cash flows and projected operating information.  The Company
recognizes  impairment  losses  when  undiscounted  cash  flows  estimated to be
generated  from  the  long-lived  assets are less than the amount of unamortized
assets.

During  the  fourth  quarter ended June 30, 2004, the Company made a decision to
abandon  its  intellectual property rights, patents and patent applications, and
trademarks.  This  decision  was  based  on  factors  including  the  Company's
evaluation  of  past and current operating results, and potential changes in the
Company's  business  plan,  which  involve  investigating  potential acquisition
candidates  outside  of  the  technology  industry (Note 2). As a result of this
decision,  the  Company  recorded an impairment charge of $608,061 in the fourth
quarter  ended  June  30,  2004.

During  the  fourth  quarter ended June 30, 2003, the Company determined that an
impairment  charge of $210,000 to intellectual property, patents, trademarks and
certain  fixed  assets was necessary. The decision to record this impairment was
based primarily on the remaining life of the patents underlying the intellectual
property  and  the  Company's  assessment  of existing operational and marketing
activities.

PROPERTY AND EQUIPMENT:

Property  and equipment are stated at cost.  Depreciation expense is provided by
use  of accelerated and straight-line methods over the estimated useful lives of
the  assets,  which  range  from  five  to  seven  years.

REVENUE RECOGNITION:

Revenues  from  the  sales  of  product  are recognized at time of shipment. NCT
periodically  performed various software development and implementation services
for third parties. These services are substantially unrelated to the development
and  marketing  of the PI Technology. Revenues from these services are generally
recorded as the services are provided and when no significant obligations remain
related  to  implementation.  Revenues  are  deferred  if  significant  future
obligations  are  to  be fulfilled or if collection is not probable. At June 30,
2004,  there were no deferred revenues related to contract services in progress.

The  Company  grants  credit,  without collateral, to its customers.  Management
reviews  trade  receivables  on an ongoing basis to determine if any receivables
will  potentially  be  uncollectible.  The  Company  includes  trade  receivable
balances  that  are  determined  to be uncollectible in an overall allowance for
doubtful  accounts.  After all attempts to collect a receivable have failed, the
receivable is written off against the allowance.  At June 30, 2004, no allowance
for  trade receivables was considered necessary; however an allowance of $58,074
was  established  for  receivables  from  affiliates  (Note  6).


                                      F-12
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2004 and 2003

RESEARCH AND DEVELOPMENT:

The  Company  includes  in  research  and development expense: payroll, facility
rent, lab supplies and other expense items directly attributable to research and
development.  The  Company  does not contract its research and development work,
nor  does  it,  at  this time, perform research and development work for others.

STOCK-BASED COMPENSATION:

Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock
Based  Compensation,  allows companies to choose whether to account for employee
stock-based  compensation  on a fair value method, or to continue accounting for
such  compensation  under  the  intrinsic  value method prescribed in Accounting
Principles  Board  Opinion No. 25, Accounting for Stock Issued to Employees (APB
25).  The  Company  has  chosen  to continue to account for employee stock-based
compensation  using  APB  25.

Had  compensation  cost  for  the Company's stock plans been determined based on
fair  value  at  the  grant dates for awards under the plans consistent with the
method  prescribed  under  SFAS No. 123, the Company's net loss and net loss per
share would have changed to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                             2004         2003
                                         ------------  -----------
<S>                                      <C>           <C>

Net loss, as reported                    $(1,558,083)  (4,017,785)
Total stock-based employee compensation
expense determined under fair value
based method for all awards                        -   (  233,000)
                                         ------------  -----------
Net loss, pro forma                      $(1,558,083)  (4,250,785)
                                         ============  ===========
Net loss per share as reported           $(     0.02)  (     0.07)
Net loss per share pro forma             $(     0.02)  (     0.07)
</TABLE>


The fair value of options granted during 2003 was estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted-average
assumptions:

<TABLE>
<CAPTION>
<S>                              <C>
Expected dividend yield                  0%
Expected stock price volatility        105%
Risk-free interest rate                2.9%
Expected life of options          6.5 years
</TABLE>

No options were granted during the year ended June 30, 2004.


                                      F-13
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2004 and 2003

FOREIGN CURRENCY TRANSLATION:

The  financial  statements  of  the  Company's foreign subsidiaries are measured
using  the  local  currency  (the  Euro) as the functional currency.  Assets and
liabilities  of  the  subsidiaries  are  translated  at exchange rates as of the
balance  sheet  date.  Revenues  and expenses are translated at average rates of
exchange  in  effect  during  the  period.  The resulting cumulative translation
adjustments  have  been  recorded as a component of comprehensive income (loss),
included  as  a  separate  item  in  shareholders'  equity.

The cumulative translation adjustment was approximately $190,000 at July 1, 2003
and  approximately  $123,000 at June 30, 2004. In June 2004, a $74,814 reduction
to other comprehensive income was recorded and recognized as a component of gain
on discontinued operations as a result of the liquidation of NCT.

FOREIGN CURRENCY TRANSACTIONS:

Gains  and  losses from foreign currency transactions are included in net income
(loss).  Foreign  currency  transaction  gains  and  losses were not significant
during  the  years  ended  June  30,  2004  and  2003.

COMPREHENSIVE INCOME:

SFAS No. 130, Reporting Comprehensive Income, requires the reporting and display
of  comprehensive  income  and its components.  SFAS No. 130 requires unrealized
gains and losses on the Company's foreign currency translation adjustments to be
included  in  comprehensive  income  (loss).

LOSS PER SHARE:

SFAS  No.  128,  Earnings  per  Share,  requires  dual presentation of basic and
diluted  earnings or loss per share (EPS) with a reconciliation of the numerator
and denominator of the basic EPS computation to the numerator and denominator of
the diluted EPS computation.  Basic EPS excludes dilution.  Diluted EPS reflects
the  potential  dilution  that  could  occur if securities or other contracts to
issue  common stock were exercised or converted into common stock or resulted in
the  issuance  of  common  stock that then shared in the earnings of the entity.

Loss per share of common stock is computed based on the average number of common
shares  outstanding  during  the  year.  Stock  options  and  warrants  are  not
considered  in  the  calculation,  as  the impact of the potential common shares
(77,381,877  shares  at  June  30,  2004 and 17,167,710 shares at June 30, 2003)
would  be  to  decrease  loss  per  share.  Therefore, diluted loss per share is
equivalent  to  basic  loss  per  share.


                                      F-14

<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2004 and 2003

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:

In  January  2003,  the  Financial Accounting Standards Board (FASB) issued SFAS
Interpretation  No.  46, Consolidation of Variable Interest Entities ("FIN 46"),
which  changes  the criteria by which one company includes another entity in its
consolidated  financial  statements.  FIN 46 requires a variable interest entity
("VIE") to be consolidated by a company if that company is subject to a majority
of  the  risk  of  loss  from  the  variable  interest entity's activities or is
entitled  to  receive  a  majority  of the entity's residual returns or both. In
December  2003, the FASB approved a partial deferral of FIN 46 for certain VIE's
created  before  February  2003  to the first interim or annual reporting period
that  ends  after  March  15,  2004.  The  adoption of FIN 46 did not impact the
Company's financial position or results of operations.

In  May  2003,  the  FASB  issued SFAS No. 150, Accounting for Certain Financial
Instruments  with  Characteristics of Both Liabilities and Equity.  SFAS No. 150
establishes  new  standards  on  how  an  issuer classifies and measures certain
financial  instruments  with  characteristics  of  both  liabilities and equity.
Under  previous guidance, issuers could account for many of those instruments as
equity.  SFAS  No.  150  requires  that  those  instruments  be  classified  as
liabilities  in  statements of financial position. SFAS No. 150 is effective for
all  financial  instruments  entered  into  or  modified after May 31, 2003, and
otherwise  is  effective  at the beginning of the first interim period beginning
after  June 15, 2003. The adoption of SFAS No. 150 did not have an impact on the
Company's  results  of  operations  or  financial  condition.

2.   GOING CONCERN AND MANAGEMENT'S PLANS:

The  Company's  financial  statements for the year ended June 30, 2004 have been
prepared  on a going concern basis, which contemplates the realization of assets
and  the  settlement  of  liabilities  and  commitments  in the normal course of
business.  The Company reported a net loss of $1,558,083 for the year ended June
30,  2004,  and  an  accumulated deficit of $22,631,703 as of June 30, 2004. The
Company did not recognize any significant revenues from its PI technology during
the year ended June 30, 2004, the Company's subsidiary NCT was dissolved in June
2004,  and in December 2003, the Company sold a controlling 51% interest in EPT.
In  addition,  the  Company  has  abandoned  and  recorded  an impairment to its
intellectual  property  and is now considering non-technology based alternatives
in  connection  with  its  ongoing  business  plan.

These factors raise substantial doubt about the Company's ability to continue as
a  going  concern.  The  financial  statements  do  not  include any adjustments
relating  to  the recoverability and classification of assets or the amounts and
classification  of  liabilities  that  might  be necessary should the Company be
unable  to  continue  as  a  going  concern.


                                      F-15
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2004 and 2003

To  address  its liquidity needs, the Company is relying on cash received from a
January  2004,  equity  financing  agreement,  of  which  the  Company initially
received  $1.8  million,  net  offering  costs,  upon the issuance of restricted
common  stock  (Note  8).  The  Company  intends  to  use these funds to support
operations  and  for  possible  business  acquisitions.

Currently,  the  Company  does  not  have  a  revolving  loan agreement with any
financial institution, nor can the Company provide any assurance it will be able
to  enter  into  any  such  agreement  in  the future, or be able to raise funds
through  a  further  issuance  of  debt  or  equity  in  the  Company.

3.   DISCONTINUED OPERATIONS:

On  April 1, 2003, NCT filed insolvency with the Courts of Munich, Germany.  The
insolvency  filing  was  necessary in order to comply with specific German legal
requirements.  In  conjunction  with  the  insolvency  filing, management made a
decision  in  April  2003,  to  discontinue  NCT  operations  and liquidate NCT,
pursuant to a plan of self-liquidation as provided by German law.  In June 2004,
NCT  completed  its  plan  of  self-liquidation,  and  the  German court legally
dissolved  NCT.

At June 30, 2004, NCT has no remaining assets or liabilities. NCT's revenues for
the  years ended June 30, 2004 and 2003 reported in discontinued operations were
$0  and  $128,947,  respectively.  The  Company  recorded a $454,882 gain on the
disposal  of  NCT  in 2004, which was primarily due to the extinguishment of NCT
liabilities  and  gains  recognized  from  the  sales of equipment. In 2003, NCT
incurred a loss of $882,718. NCT did not incur any income taxes in 2004 or 2003.

4.   RISK CONSIDERATIONS:

BUSINESS RISK:

The  Company  is  subject  to risks and uncertainties common to technology-based
companies,  including  rapid  technological  change,  dependence  on  principal
products  and  third  party  technology,  new  product  introductions  and other
activities  of  competitors,  dependence on key personnel, and limited operating
history.

INTERNATIONAL OPERATIONS:

The  Company's foreign subsidiary (NCT) operations and foreign equity investment
(EPT) operations are located in Germany.  NCT and EPT transactions are conducted
in  currencies  other  than  the  U.S. dollar (the currency into which NCT's and
EPT's  historical financial statements have been translated) primarily the Euro.
As  a  result,  the  Company is exposed to adverse movements in foreign currency
exchange  rates.  In addition, the Company is subject to risks including adverse
developments  in the foreign political and economic environment, trade barriers,
managing foreign operations and potentially adverse tax consequences.  There can
be  no  assurance  that  any  of  these factors will not have a material adverse
effect  on  the  Company's  financial  condition or results of operations in the
future.


                                      F-16
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2004 and 2003

5.   NOTES RECEIVABLE:

In  October  2002,  the  remaining  balance ($144,709) of an unsecured, 12% note
receivable  and related interest from a third party investment group involved in
assisting the Company with its financing efforts were received in full.

Prior  to  July  1,  2002, the Company loaned $50,000 to a representative of the
investment  group  described  above  in  exchange  for  an  unsecured,  8%  note
receivable  due in October 2002.  A payment of $23,930 was received in May 2002.
In  September  2002,  the  remaining  balance  of the note ($26,070) and related
interest  was  received  in  full.

6.   INVESTMENTS IN AFFILIATES:

INVESTMENT IN EPT:

On  December  11,  2003,  a  German  entity  formed, by former employees of EPT,
purchased  a  controlling 51% equity interest in EPT in exchange for $98,000, of
which  $62,787  has  been  received  through  June 30, 2004. No gain or loss was
incurred  by  the  Company  as  a result of this transaction. As a result of the
Company's  reduced  ownership  interest  and loss of control of EPT, the Company
deconsolidated  EPT  as  of  December  11,  2003,  and  began accounting for its
investment  in EPT under the equity method of accounting at that time. Under the
equity  method of accounting, the carrying amount of the Company's investment in
EPT  ($203,654  at  June  30,  2004)  is  adjusted  to  recognize  the Company's
proportionate  share  of  EPT's  income  (loss)  each  period.

Unaudited  financial  information of EPT as of June 30, 2004, and for the period
from December 11, 2003 through June 30, 2004 is as follows:

<TABLE>
<CAPTION>
<S>                                    <C>
Assets:
   Current assets(1)                   $   93,497
   Equipment                              295,859
                                       ----------

Total assets                           $  389,356
                                       ==========

Liabilities and members' equity:
   Current liabilities(2)              $  172,370
   Members' equity                        216,986
                                       ----------

Total liabilities and members' equity  $  389,356
                                       ==========
</TABLE>


                                      F-17
<PAGE>
<TABLE>
<CAPTION>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2004 and 2003


                     December 11, 2003
                          through
                       June 30, 2004
                    -------------------
<S>                 <C>
Revenues(3)         $           42,143
Expenses                     ( 144,094)
                    -------------------

Net loss            $         (101,951)
                    ===================
<FN>

(1)  Current assets include receivables in the amount of $9,562 due from the 51%
     owner  of  EPT.

(2)  Current  liabilities  include a payable of $19,070 to the 51% owner of EPT.

(3)  Revenues  include  $32,180  of  sales  to  the  51%  owner  of  EPT.
</TABLE>

At June 30, 2004, the Company has an $8,074 receivable from EPT. The Company has
recorded  an  allowance for this receivable due to uncertainty as to collection.

Pro  forma  results  of the Company's operations for the fiscal years ended June
30,  2004  and  2003, assuming the deconsolidation of EPT occurred as of July 1,
2003  and  2002,  are  as  follows:

<TABLE>
<CAPTION>
                           2004           2003
                    ------------  -------------
<S>                 <C>           <C>

Revenues            $     5,809   $          -
Operating expenses  $(1,869,029)  $( 2,602,791)
Net loss            $(1,427,650)  $( 3,474,396)
</TABLE>

INVESTMENT IN JOINT VENTURE INTEREST:

On  September  15, 2003, the Company entered into a joint venture agreement with
Scimaxx,  LLC, an entity related to the Company in that a member of Scimaxx, LLC
is an officer/director of the Company.  The name of the joint venture is Scimaxx
Solutions,  LLC  (Scimaxx Solutions, a Colorado Limited Liability company formed
in  September  2003).  The  purpose  of  the  joint  venture  is  to provide the
electronics industry with technical solutions to manufacturing problems based on
the  need  for  electrical  connectivity.

The  Company  received  a  50%  interest  in the joint venture in exchange for a
contribution  of  NCOS equipment with a carrying value of approximately $132,000
at  September  15,  2003. The Company also granted Scimaxx Solutions a ten-year,
non-exclusive,  non-royalty  bearing  worldwide  license  to  use  the Company's
intellectual  property.  Scimaxx,  LLC  was  to  invest  $50,000  cash, of which
$22,900  has  been received as of June 30, 2004.  The terms of the joint venture
provide  for  the  Company to share in 50% of joint venture net profits, if any.
The  Company  is  to  share  in 50% of joint venture net losses beyond the first
$50,000.  The  Company  has  a  49%  voting  interest in the joint venture.  The
Company determined that Scimaxx LLC is the controlling financial interest holder
and therefore, the Company is accounting for its investment in Scimaxx Solutions
as  an  equity method investment.  At June 30, 2004, the Company's investment in
Scimaxx  Solutions  is  $100,312.


                                      F-18
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2004 and 2003

Unaudited  financial  information  of Scimaxx Solutions as of June 30, 2004, and
for  the period from September 15, 2003 (inception) through June 30, 2004, is as
follows:

<TABLE>
<CAPTION>
<S>                                     <C>
Assets:
   Current assets                       $ 11,027
   Equipment                              96,262
                                        --------

Total assets                            $107,289
                                        ========

Liabilities and members' equity:
   Current liabilities                  $ 41,616
   Members' equity                        65,673
                                        --------

Total liabilities and members' equity   $107,289
                                        ========
</TABLE>

<TABLE>
<CAPTION>
                      September 15, 2003
                           through
                         June 30, 2004
                    --------------------
<S>                 <C>

Revenues            $            17,458
Expenses                       (245,850)
                    --------------------

Net loss            $          (228,392)
                    ====================
</TABLE>

During  the  quarter ended June 30, 2004, the Company advanced Scimaxx Solutions
$50,000  to  support  continuing operations.  Based on uncertainty regarding the
ultimate  collection  of  this receivable, the Company has fully allowed for the
receivable  balance  as  of  June  30,  2004.

7.   NOTES PAYABLE:

RELATED PARTIES:

In  June  2003, an officer/director of the Company loaned $10,000 to the Company
in exchange for an unsecured 7% note payable due in December 2003.  In September
2003,  the  same  officer/director loaned the Company $30,000 in exchange for an
unsecured,  7%  promissory  note,  due  in September 2004.  In January 2004, the
Company  paid  the  $40,000  plus  accrued  interest  of  $1,247.

In  September  2003,  Intercell, an affiliate of the Company at the time, loaned
the  Company  $35,000  in  exchange  for an unsecured, 7% promissory note due in
September  2004.  In  November  2003,  Intercell  loaned the Company $100,000 in
exchange for a 7% promissory note due in November 2004. This promissory note was
collateralized  by  an assignment of a 51% interest in the proceeds, if any, the
Company  may have received in connection with the Financing Agreement litigation
(Note  9). In January 2004, the Company paid the $135,000, plus accrued interest
of  $2,493.

OTHER:

In  February  2004,  the  Company  converted  vendor payables of $92,100 into an
unsecured,  non-interest  bearing  note  payable  due in March 2005. This vendor
along  with one other vendor, agreed to forgive $52,500 of the liabilities owed,
and  as  a  result,  the  Company  recognized  a  gain  on the extinguishment of
liabilities  in  2004.


                                      F-19
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2004 and 2003

8.   SHAREHOLDERS' EQUITY:

COMMON STOCK:

2004 Transactions:

On  January  20, 2004, the Company sold 20,000,000 units at a price of $0.10 per
unit for $ 1.8 million cash, pursuant to a Securities Purchase Agreement (net of
$272,000  of  offering costs, discussed below). A unit consists of (i) one share
of  the  Company's  common stock, (ii) a warrant to purchase one share of common
stock  at  an exercise price of $0.10 per share, and (iii) a warrant to purchase
two  shares  of  the  Company's  common  stock at an exercise price of $0.25 per
share.  All warrants have an expiration date of January 20, 2009. As a result of
the  sale, the Company issued 20,000,000 shares of its common stock, warrants to
purchase  20,000,000  shares  of  common stock at an exercise price of $0.10 per
share, and warrants to purchase 40,000,000 shares of common stock at an exercise
price  of  $0.25  per  share.

In  connection  with  the  sale of the units, the placement agent received a fee
consisting  of  a  cash  payment  equal  to  3%  of  the gross proceeds from the
transaction  ($60,000) and warrants to purchase 3% of the total number of shares
of  common stock issued to the investors on the closing date. The Company issued
to  the placement agent warrants to purchase 600,000 shares of common stock with
an  exercise  price of $0.10 per share. The warrants expire on January 20, 2009.
The placement agent is also entitled to receive an additional cash payment equal
to  3% of the gross proceeds, if any, received by the Company as a result of the
exercise  of  the  $0.10  warrants and additional warrants to purchase 3% of the
total number of shares issued as a result of the exercise of the $0.10 warrants.
The  Company  also  paid a $200,000 finders fee to a third party (the "finder")
and  issued  warrants  to  purchase  2,000,000  shares  of  common stock with an
exercise price of $0.10 per share. The warrants expire on January 20, 2009. This
third party is also entitled to receive an additional cash payment of 10% of the
gross  proceeds,  if any, received by the Company as a result of the exercise of
the  $0.10  warrants and additional warrants to purchase 10% of the total number
of shares issued as a result of the exercise of the $ 0.10 warrants. The Company
also  incurred  an  additional $12,000 of offering costs, primarily legal costs.

During  the year ended June 30, 2004, the Company issued 3,850,000 shares of its
common  stock  upon the exercise of 3,850,000 warrants, which included 1,000,000
of  the  warrants  issued to the finder as described above. The Company received
$347,950  cash (net of $37,050 of offering costs, of which $11,050 is accrued at
June 30, 2004) for the exercise. As described above, the Company also granted to
the  placement  agent  and  finder,  warrants  to purchase an additional 370,500
shares.  The  warrants are exercisable at $0.10 per share and expire January 20,
2009.  The  Company  also  issued  185,064 of its common stock upon the cashless
exercise of 403,333 warrants.

During  the  year  ended  June 30, 2004, the Company also sold 769,231 shares of
restricted  common  stock  for cash of $100,000, and  the Company issued 200,000
shares  of  restricted  common  stock  in  satisfaction  of  a  $3,635  payable.


                                      F-20
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2004 and 2003

2003 Transactions:

During  the  year  ended  June  30,  2003,  the Company sold 5,691,190 shares of
restricted  common  stock  along  with  warrants to purchase 4,616,191 shares of
common  stock  at exercise prices ranging from $0.30 to $0.60 per share for cash
of  $1,570,459  (net  of  offering  costs  of  $75,500).  In connection with the
issuance  of 1,119,999 shares out of the total 5,691,190 issued during the year,
the  Company  extended  the  expiration  dates  of existing warrants to purchase
612,500  shares  of  common  stock  held by the purchasers.  These warrants were
scheduled  to  expire  from October 2002 through January 2003, and were extended
for  a  one-year  period.  These warrants expired in January 2004.

During  the  year  ended  June  30, 2003, the Company also sold 75,000 shares of
restricted  common stock along with warrants to purchase 75,000 shares of common
stock  at  exercise  prices  ranging  from  $0.30 to $0.36 per share for cash of
$25,000.   In  addition,  the Company sold 1,574,158 shares of restricted common
stock  along  with  warrants  to purchase 1,333,334 shares of common stock at an
exercise  price  of  $0.15  per  share  for  cash  of  $231,307.

The  warrants issued are exercisable immediately and include a cashless exercise
provision.  Warrants  to  purchase  1,251,191  shares  of  common  stock  have a
three-year  term, and warrants to purchase 4,773,334 shares of common stock have
a  five-year  term.

During  the year ended June 30, 2003, the Company issued 14,000 shares of common
stock  in  exchange  for investment related services.  The shares were valued at
$9,345,  the  quoted  market price of the Company's common stock at the date the
services  were  performed.

During  the  year  ended  June 30, 2003, the Company also issued 7,000 shares of
common  stock  in  connection  with the cashless exercise of a stock option, and
issued 56,388 shares of common stock in connection with the cashless exercise of
warrants.


                                      F-21
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2004 and 2003

Stock Options and Warrants:

Stock Options:

The  Company  has  established  two  Compensatory Stock Option Plans (the Option
Plans) and has reserved 12,500,000 shares of common stock for issuance under the
Option Plans.  Vesting provisions are determined by the Board of Directors.  All
stock  options  expire  10  years  from  the  date  of  grant.

A summary of the Option Plans is as follows:

<TABLE>
<CAPTION>
                                        2004                   2003
                                        ----                   ----
                                           Weighted                Weighted-
                                            average                 average
                                           exercise                 exercise
                                 Shares      price      Shares       price
                                ---------  ---------  -----------  ----------
<S>                             <C>        <C>        <C>          <C>
Outstanding, beginning of
  Year                          8,787,524  $    1.00   8,502,000   $     1.06
Granted                                 -          -     450,000         0.62
Expired                                 -          -  (  150,000)        2.06
Exercised                               -          -  (   14,476)        0.66
                                ---------  ---------  -----------  ----------

Outstanding, end of year        8,787,524  $    1.00   8,787,524   $     1.00
                                =========  =========  ===========  ==========

Options exercisable at
  end of year                   8,537,524  $    1.00   8,322,524   $     1.00
                                =========  =========  ===========  ==========
Weighted-average fair value of
  options granted during the
  year at market                           $       -               $     0.52
                                           =========               ==========
</TABLE>

The following table summarizes information about stock options outstanding as of
June  30,  2004:

<TABLE>
<CAPTION>
             Options  Outstanding         Options  Exercisable
          ---------------------------     --------------------
                          Weighted-
                           average                                 Weighted-
Range of                  remaining       Weighted-                 average
exercise      Number of  contractual       average      Number of   exercise
prices         options   life (years)  exercise price    options     price
------------  ---------  ------------  ---------------  ---------  ----------
<S>           <C>        <C>           <C>              <C>        <C>
$0.20 - 0.50  3,255,000          4.37  $          0.32  3,255,000  $     0.32
 0.51 - 1.00. 2,495,524          8.30             0.67  2,455,524        0.64
 1.01 - 2.00.   860,000          6.34             1.53    650,000        1.58
 2.01 - 3.00. 2,167,000          4.53             2.28  2,167,000        2.28
 5.01 - 6.00.    10,000          5.67             6.00     10,000        6.00
              ---------  ------------  ---------------  ---------  ----------
              8,787,524          6.74  $          1.00  8,537,524  $     1.00
              =========  ============  ===============  =========  ==========
</TABLE>


                                      F-22
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2004 and 2003

Warrants:

At  June  30,  2004,  the  following  warrants  to  purchase  common  stock were
outstanding:

<TABLE>
<CAPTION>
    Number of common         Exercise          Expiration
shares covered by warrant     price                date
-------------------------  ------------  -------------------------
<S>                        <C>           <C>

       20,000              $       1.25    August - September 2005
    1,526,019               0.30 - 2.58    October - December 2005
       75,000               0.30 - 0.36         January 2006
      200,000                      0.65           May 2006
      200,000               0.60 - 1.25         January 2007
    3,440,000               0.50 - 0.60    October - November 2007
    1,333,334                      0.15          April 2008
   19,120,500                      0.10         January 2009
   40,000,000                      0.25         January 2009
     450,000                     $ 0.60         January 2010
-------------
   66,364,853 (1)
=============
</TABLE>

(1)  Does  not  include  2,229,500 of warrants that are issuable pursuant to the
     securities  purchase  agreement  described  above.

During  the  year  ended June 30, 2004, warrants to purchase 3,850,000 shares of
common stock were exercised for net cash proceeds of $347,950 (net of commission
expenses  of $37,050, of which $ 11,050 is accrued at June 30, 2004) in exchange
for 3,850,000 shares of common stock, and warrants to purchase 403,333 shares of
common  stock  were exercised on a cashless basis in exchange for 185,064 shares
of  common  stock.

During  the  year  ended  June  30, 2004, warrants to purchase 732,500 shares of
common stock with exercise prices ranging from $0.30 to $2.81 per share expired.

During  the  year  ended  June 30, 2003, the Company issued warrants to purchase
20,000  shares  of  common stock at $1.25 per share for services received from a
third  party.  The  warrants expire in 2005.  The warrants were valued at $3,190
using  the  Black-Scholes  pricing  model,  which  was  charged  to  general and
administrative  expense.

In  January  2003,  the  Company  issued a warrant to purchase 450,000 shares of
common  stock  with  an  exercise  price of $0.60 per share in consideration for
deferred  consulting services to be received from a third party. The warrant was
fully  vested,  exercisable  and  non-forfeitable  upon  issuance and expires in
January  2010.  The  warrant  provides for a cashless exercise and was valued at
approximately  $230,400  using  the  Black-Scholes  pricing  model.

During  the  year  ended  June  30,  2003,  the  Company extended the term of an
existing  warrant,  held by an unrelated third party, to purchase 300,000 shares
of  common  stock  at  an exercise price of $0.25 per share.  The warrant was to
expire  on  February  24,  2003.  The  Company  agreed to extend the term of the
warrant  by one year, through February 24, 2004.  All other terms of the warrant
remained  unchanged.  In  connection  with  the  extension  of  the  term of the
warrant,  the Company recorded a $2,400 expense, using the Black-Scholes pricing
model.

The  Company  utilized  the Black - Scholes pricing model to value warrants that
were  issued  by  the  company  during  2003  for  services in which expense was
incurred  (  none  were  issued in 2004 ) and utilized the following significant
assumptions  in  using  the  model.

<TABLE>
<CAPTION>
                                  CURRENT
                                 RISK-FREE
                                  INTEREST
                                    RATE
                     EXPECTED     EXPECTED
                    VOLATILITY    FOR THE
                   OF THE PRICE   LIFE OF    EXPECTED   EXPECTED
FISCAL  NUMBER OF   OF COMMON       THE        LIFE     DIVIDEND
YEAR    WARRANTS      STOCK       WARRANTS    (YEARS)    YIELD
------  ---------  ------------  ----------  ---------  --------
<S>     <C>        <C>           <C>         <C>        <C>

2003       10,000            56        4.5%          3         0
2003       10,000            59        4.5           3         0
2003      450,000            91        2.3         5.5         0
</TABLE>


                                      F-23
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2004 and 2003

During  the  year  ended  June  30, 2003, warrants to purchase 630,000 shares of
common  stock  at  an  exercise  price  of  $2.92  per  share  expired.

9.  COMMITMENTS AND CONTINGENCIES

Litigation:

Depository Trust Suit:

In  May  2004,  the Company filed suit against the Depository Trust and Clearing
Corporation,  the Depository Trust Company, and the National Securities Clearing
Corporation in the Second Judicial District Court of the County of Washoe, State
of  Nevada.  The  suit alleges multiple claims under the Nevada Revised Statutes
90.570,  90.580,  90.660  and  598A.060 and on other legal bases.  The complaint
alleges,  among  other  things,  that the DTCC, DTC and NSCC acted in concert to
operate  the  "Stock  Borrow  Program," originally created to address short term
delivery  failures  by  sellers of securities in the stock market.  According to
the  complaint,  the  DTCC,  NSCC and DTC conspired to maintain significant open
fail  deliver  positions of millions of shares of the Company's common stock for
extended  periods  of time by using the Stock Borrow Program to cover these open
and  unsettled  positions.  By  permitting  shares of the Company to be borrowed
through  the  program,  DTCC,  NSCC and DTC allegedly jointly conspired to drive
down  the  price  of  the  Company's stock.  The complaint also alleges that the
operation  of the Stock Borrow Program allowed the manipulation of the Company's
stock  by  various  sellers  who  failed  to  deliver shares to the Company.  By
covering  open  fail to deliver positions with shares borrowed through the Stock
Borrow  Program  and  delivering  borrowed  shares  to the buyers, the complaint
contends that DTCC, NSCC and DTC artificially created unregistered, free trading
shares  of  the Company's common stock and increased the supply of the Company's
shares  in  the  market  place.  The Company is seeking damages in the amount of
$25,000,000  and  treble  damages.  Responsive  pleadings have been filed by the
defendants.

Financing Agreement Suit:

In  connection  with  a  financing  obtained  in October 2000, the Company filed
various actions in the United States District Court for the District of Colorado
against,  among others, Harvest Court, LLC, Southridge Capital Investments, LLC,
Daniel  Pickett,  Patricia  Singer and Thomson Kernaghan, Ltd. for violations of
federal  and  state  securities laws, conspiracy, aiding and abetting and common
law  fraud  among  other  claims.  As a result of various procedural rulings, in
January  2002,  the  United  States  District Court for the District of Colorado
transferred  the  case  to  the  United  States  District Court for the Southern
District  of  New  York,  New  York City, New York.  In this litigation, Harvest
Court, LLC filed counterclaims against the Company, Mr. Metzinger, Ms. Kampmann,
Dr.  Neuhaus,  Dr.  Shaw  and  a  number  of  unrelated  third  parties.  The
counterclaims  allege  violations  of  federal  securities  laws and other laws.
Harvest Court, LLC is seeking various forms of relief including compensatory and
punitive  damages.  Responsive  pleadings  have been filed and the litigation is
currently  in  the  discovery  stage.


                                      F-24
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2004 and 2003

In  May  2001,  Harvest Court, LLC filed suit against the Company in the Supreme
Court  of  the State of New York, County of New York.  The suit alleges that the
Company  breached  an  October 20, 2000 Stock Purchase Agreement, by not issuing
7,418,895  free  trading shares of the Company's common stock in connection with
the  reset provisions of the Purchase Agreement due on the second reset date and
approximately  4,545,303  shares  due  in  connection with the third reset date.
Harvest  Court,  LLC  is  seeking  the delivery of such shares or damages in the
alternative.  In August 2001, the Supreme Court of the State of New York, County
of  New York issued a preliminary injunction ordering the Company to reserve and
not  transfer  the  shares allegedly due to Harvest Court, LLC.  The Company has
filed  counterclaims seeking various forms of relief against Harvest Court, LLC.

The  Company intends to vigorously prosecute all litigation and does not believe
the  outcome  of  the  litigation  will  have  a  material adverse effect on the
financial  condition,  results  of  operations  or  liquidity  of  the  Company.
However, it is too early at this time to determine the ultimate outcome of these
matters.

Financial Advisory and Placement Agent Agreement:

Effective  January  10,  2003,  the  Company  entered  into a 12-month financial
advisory  and  exclusive  placement  agent  agreement  with a third party, which
expired in January 2004.  Under the terms of the agreement, this placement agent
served  as financial advisor to the Company and as its exclusive placement agent
for a private placement of equity securities during the twelve-month term of the
agreement.  Compensation  also  included a $10,000 monthly advisory fee, payable
in  cash,  beginning  in June 2003, and ending in January 2004, of which $60,000
was  expensed  though  June  30,  2004.

Compensation  to  this  placement  agent  consisted  of a retainer fee (deferred
consulting  costs) valued at approximately $230,400, which included a warrant to
purchase  up  to  450,000  shares  of  the  Company's  common  stock.

The cost of the warrant has been amortized over the twelve-month period from the
date  of  issuance  of the warrant.  During the fiscal years ended June 30, 2004
and  2003,  $122,459 and $107,941, respectively, was expensed in connection with
the  warrant.


                                      F-25
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2004 and 2003

Leases:

The  Company  has  entered  into  certain  facilities and equipment leases.  The
leases  are  non-cancelable  operating  leases that expire through September 30,
2006.  Future  minimum  lease  payments  under  these  operating  leases  are as
follows:

<TABLE>
<CAPTION>
Year ending
 June 30,      Amount
------------  --------
<S>           <C>

2005          $ 58,200
2006            58,200
2007            14,550
              --------

              $130,950
              ========
</TABLE>

Aggregate  rental  expense  in  continuing operations under operating leases was
$96,969 and $211,095 for the years ended June 30, 2004 and 2003, respectively.

10.  INCOME TAXES:

The  Company and its subsidiaries did not incur income tax expense for the years
ended  June 30, 2004 and 2003.  The reconciliation between taxes computed at the
statutory federal tax rate of 34% applied to the loss from continuing operations
and  the  effective  tax  rate  for the years ended June 30, 2004 and 2003 is as
follows:

<TABLE>
<CAPTION>
                                    2004        2003
                                 ----------  -----------
<S>                              <C>         <C>

Expected income tax benefit      $(684,000)  (1,066,000)
Increase in valuation allowance    684,000    1,066,000
                                 ----------  -----------
                                 $       -            -
                                 ==========  ===========
</TABLE>

The  tax  effects  of  temporary differences that give rise to substantially all
deferred  tax  assets  at  June  30,  2004  are  as  follows:

<TABLE>
<CAPTION>
<S>                           <C>
Deferred tax assets:
   Net operating loss         $ 4,296,000
   Intangible assets              207,000
   Allowance for receivables       20,000
Less valuation allowance       (4,523,000)
                              ------------
Net deferred tax assets.      $         -
                              ============
</TABLE>

As  of  June  30,  2004,  the  Company  has net operating loss carry forwards of
approximately  $13,300,000,  which  expire between 2013 and 2024.  The Company's
net  operating  loss  carry forwards may be subject to annual limitations, which
could  reduce or defer the utilization of the losses as a result of an ownership
change  as  defined  in  Section  382  of  the  Internal  Revenue  Code.


                                      F-26
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2004 and 2003

11.  FOREIGN AND DOMESTIC OPERATIONS:

Operating  results and long-lived assets of continuing operations as of June 30,
2004  and  for  the  years ended June 30, 2004 and 2003, by geographic area, are
presented  in  the  table below.  There were no significant amounts of transfers
between  geographic  areas.

<TABLE>
<CAPTION>
                       UNITED STATES   GERMANY  TOTAL
                       --------------  -------  ------
<S>                    <C>             <C>      <C>
Revenues for year
  ended June 30, 2004  $        5,809   28,449  34,258
                       ==============  =======  ======
Revenues for year
  ended June 30, 2003  $        3,900   33,117  37,017
                       ==============  =======  ======
Long-lived assets at
  June 30, 2004        $       23,099        -  23,099
                       ==============  =======  ======
</TABLE>


                                      F-27
<PAGE>