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, 2003

                                       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 26, 2003, there were 66,023,969
shares outstanding, 57,474,937 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 26, 2003, was approximately
$15,518,233.

     The registrant's revenue for the fiscal year ended June 30, 2003 was
$37,017.

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, 2003, Intercell held
6,376,764 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)")

     The Company, since the acquisition of NCS, has focused on providing the
electronics industry with possible solutions to their "connection" problems,
through not only know-how, but also products and services provided by either the
Company or its subsidiaries.

     The Company has three wholly owned subsidiaries.

     NANOPIERCE CARD TECHNOLOGIES, GMBH ("NANOPIERCE CARD" OR "NCT").
Established in January 2000, NanoPierce Card is 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, NCT filed
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 made a decision in April 2003 to discontinue
operations at NanoPierce Card and liquidate NanoPierce Card, through the German
courts or through self-liquidation. Subsequently, the Court rejected the
application for insolvency and the Company is, at this time, implementing a plan
of self-liquidation as provided by German law.

     NANOPIERCE CONNECTION SYSTEMS, INC. ("NANOPIERCE CONNECTION" OR "NCOS").
NanoPierce Connection is a Nevada corporation, located in Colorado Springs,
Colorado, USA.  Beginning business in January 2002, NanoPierce Connection is the
center of not only research and development activities, but also the development
of various applications of the NCS.  In addition, NanoPierce Connection provides
the WaferPierce(TM) service to potential customers. In September 2003, the
Company entered into a joint venture with Scimaxx, LLC in order to further the
marketing of the services offered by NanoPierce Connection (See - Item 6
"Management's Discussion and Analysis").

     EXYPNOTECH, GMBH ("EXYPNOTECH" OR "EPT").  ExypnoTech was organized in
February 2002. ExypnoTech produces inlay components used in the manufacturing
of, among other things, Smart Labels. ExypnoTech, in addition to the inlay
components, plans to manufacture and sell other types of RFID (Radio Frequency
Identification) components.


                                        1
<PAGE>
In September 2003, the Company signed a letter of intent with Meshed Systems,
GmbH, in which Meshed Systems, GmbH is to make an equity investment in
ExypnoTech in exchange for a 51% equity interest in ExypnoTech. (See - Item 6
"Management's Discussion and Analysis")

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.  The Company has also filed trademark applications with
the U.S. Patent and Trademark Office to protect its name, logo and other
trademarks.

     During the fiscal year ended June 30, 2003, the Company incurred an expense
of $200,000 in connection with the impairment of the original intellectual
property owned by the Company. The decision to record an impairment of the
intellectual property was based primarily on the overall age of the patents in
the intellectual property combined with the Company's current operational
status. This impairment is not indicative of the value of the technology and the
current value of the patent applications and trademark applications the Company
has filed both in the United States and internationally. (See - "Notes to the
Consolidated Financial Statements - Note 1")


                                        2
<PAGE>
BUSINESS STRATEGY

     The Company has developed a business strategy to penetrate all possible
markets with its technology, with the ultimate plan to make NCS the preferred
technology in these markets.  The Company currently provides potential customers
with three possible ways to gain access to the NCS technology.

     1.   WAFERPIERCE SERVICE.  Through its subsidiary, NanoPierce Connection,
          the Company is able to provide a WaferPiercing service to its
          customers. NanoPierce Connection is currently providing this service
          in developing samples for potential customers.

     2.   LICENSING.  For those customers needing NCS or WaferPierce on a larger
          scale than the Company is able to provide at this time through
          NanoPierce Connection, the Company is willing to provide a license to
          the customer, to transfer know-how in connection with various aspects
          or applications of NCS and WaferPierce.

     3.   RFID COMPONENTS.  The Company, through ExypnoTech currently has the
          capability to provide RFID components, using NCS to potential
          customers. In addition, ExypnoTech, in manufacturing the RFID
          components, uses chips that have been treated using the WaferPierce
          process. ExypnoTech has signed contracts with several customers to
          provide RFID components. In the future, the Company plans to continue
          to utilize the strategy of providing the final product to the user in
          those markets where it is economically practical.

While there are numerous possible applications for NCS and WaferPierce, the
Company has decided to focus, at this time, on those specific applications that
are low cost and experience high volumes.

     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 two
          applications being focused on by the Company are Smart Labels and
          Smart Cards. The Company currently offers RFID Components using NCS
          through its subsidiary, ExypnoTech.

     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.

     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.


                                        3
<PAGE>
     In addition to the development and marketing of NCS, the Company through
NanoPierce Card, has generated revenues during the last two fiscal years through
software development and project management for various customers in industries
with potential NCS applications.

     For the fiscal year ended June 30, 2003, the Company recognized $128,947 in
revenue from its software development activities, which were discontinued
effective April 1, 2003.

RESEARCH AND DEVELOPMENT

     Research and development activities are conducted through NanoPierce
Connection, with additional activities occurring at NanoPierce Card and
ExypnoTech.  For the fiscal years ended June 30, 2003 and June 30, 2002,
NanoPierce Connections and ExypnoTech incurred $316,403 and $316,438 in research
and development expenses from continuing operations.  NanoPierce Card incurred
$251,354 and $320,908 in 2003 and 2002, 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 competitors have
substantially greater financial and other resources than the Company.  The
Company believes that each existing technology currently has unacceptable
limitations with regard to electrical/mechanical performance, manufacturability
or cost as compared to NCS.  However, 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, 2003.

EMPLOYEES

     On June 30, 2003, the Company and its subsidiaries had 10 employees.
Messrs. Metzinger, Neuhaus and Ms. Kampmann, key officers of the Company, have
signed employment agreements with the Company or its subsidiaries.  (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.


                                        4
<PAGE>
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. Intercell maintains an administrative office on the premises.

     NanoPierce Connection is located at 4180 Center Park Drive, Colorado
Springs, Colorado 80916.  The Company currently has a 3-year lease on the
property, expiring in March 2006.   From these facilities research and
development activities in connection with application development take place.
The facility also has a clean room for use in the WaferPierce process.

     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 took place through March 31, 2003.

     ExypnoTech leases production space located at
Professor-Hermann-Klare-Strasse 6, D-07407 Rudolstadt, Germany.  ExypnoTech has
a 5-year lease on the facilities, expiring in March 2007.  The lease can be
cancelled with a notice period of 6 months.  ExypnoTech also used the facilities
of NanoPierce Card for certain administrative tasks.

ITEM 3.  LEGAL PROCEEDINGS

DIFRANCESCO LITIGATION

     The Company and Louis DiFrancesco, the inventor of the PI Technology, were
involved in litigation relating to NanoPierce's ownership of its intellectual
property and the rights as to who should receive royalty payments from licenses,
which were outstanding as of September 3, 1996.  In October 2002, the Company
and DiFrancesco signed a settlement agreement enforced by Court Order.  The
Court Order declares that the Company owns the entire, exclusive, incontestable
ownership, right, title and interest in the patents.  The Court Order further
declares that Mr. DiFrancesco owns the sole, exclusive, and incontestable right
to receive and collect all royalties and other payments from all licenses
outstanding on September 3, 1996.  Pursuant to the settlement agreement, Mr.
DiFrancesco was also granted a limited, two-year, non-transferable,
royalty-bearing license with no right to sublicense.

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.  The Company is seeking various forms of relief
including actual, exemplary and treble damages.  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 July 2003,
Harvest Court, LLC filed counterclaims, in this proceeding, against the Company,
Mr. Metzinger, Ms. Kristi Kampmann, Dr. Herbert Neuhaus, Dr. Robert Shaw and
unrelated third parties in the United States District Court for the Southern
District of New York, New York City, New York.  The suit alleges violations of
federal securities laws and common law fraud among other claims.  Harvest Court
is seeking various forms of relief including compensatory and punitive damages.
The Company is preparing appropriate responsive pleadings.


                                        5
<PAGE>
     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.
The Company has filed counterclaims seeking various forms of relief against
Harvest Court, LLC.

OTHER LITIGATION

     In September 2001, litigation was filed by Thomson Kernaghan & Co., Ltd.
against the Company and certain officers/directors of the Company seeking
damages for defamation.  Thomson Kernaghan & Co., subsequently filed for
protection under Canadian bankruptcy laws. In December 2002 this action was
dismissed by the Trustee.

     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 common stock is presently traded on the over-the-counter market on the
OTC Bulletin Board maintained by the National Association of Securities Dealers,
Inc. (the "NASD") The NASDAQ symbol for the Common Stock is "NPCT".  The common
stock of the Company is also traded on the Frankfurt Exchange and the Hamburg
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>
          2002 FISCAL YEAR                HIGH             LOW
          ------------------             -----            -----
<S>                                      <C>              <C>
          September 30, 2001             $0.70            $0.64
          December 31, 2001               0.70             0.67
          March 31, 2002                  1.54             1.42
          June 30, 2002                   0.96             0.91

          2003 FISCAL YEAR
          ------------------
          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
</TABLE>


                                        6
<PAGE>
     As of June 30, 2003, there were approximately 339 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

     The Company made the following unregistered sales of its securities from
March 31, 2003 through June 30, 2003.

<TABLE>
<CAPTION>
               TITLE OF      NO. OF
              ------------  ---------
      DATE     SECURITIES     SHARES   CONSIDERATION    PURCHASER
     -------  ------------  ---------  -------------  -------------
<C>           <S>           <C>        <C>            <C>
      4/3/03  Common Stock  1,333,334  Financing      Neptune
                                                      Investment
                                                      Group, Ltd.
      4/3/03  Warrant       1,333,334  Financing      Neptune
                                                      Investment
                                                      Group, Ltd.
     6/20/03  Common Stock    240,842  Financing      John Provazek
</TABLE>

     EXEMPTION FROM REGISTRATION CLAIMED.  The issuance by the Company of its
unregistered securities was made by Registrant in reliance upon Section 4(2) of
the Securities Act of 1933, as amended.  The persons, who received the
unregistered securities, were employees of the Company.  The persons were
provided access to all material information, which it requested, and all
information necessary to verify such information and were afforded access to
management of the Company in connection with the issuance.  The persons, who
received such unregistered securities, acquired such securities for investment
and not with a view toward distribution acknowledging such intent to the
Company.  All certificates or agreements representing the securities that were
issued contained restrictive legends, prohibiting further transfer of the
certificates or agreements representing such securities, without such securities
either being first registered or otherwise exempt from registration in any
further resale or disposition.

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, 2003, 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.


                                        7
<PAGE>
RESULTS OF OPERATIONS

     On April 1, 2003, NCT filed insolvency with the Courts of Munich, Germany.
The insolvency filing was necessary, in the view of the Company, in order to
comply with specific German legal requirements.  NCT is presented as
discontinued operations in the Company's consolidated financial statements.
During the year ended June 30, 2003, NCT had losses of $882,718 compared to
losses of $782,858 during the year ended June 30, 2002.  In September 2003, the
court rejected the application for insolvency and the Company is now under
self-liquidation in accordance with German law.

     The Company recognized $37,017 of revenues from continuing operations
during the fiscal year ended June 30, 2003 compared to $4,737 in the fiscal year
ended June 30, 2002.  Revenues recognized by discontinued operations were
$128,947 during the fiscal year ended June 30, 2003 and $151,392 for the fiscal
year ended June 30, 2002.  The revenue generated from discontinued operations
was from various software development contracts generated by NanoPierce Card and
the remaining $37,017 was from the preparation of samples using WaferPierce for
potential customers by NanoPierce Connection ($3,900) and the sale of inlays by
ExypnoTech ($33,117).  The Company expects to continue to generate revenues
through its subsidiaries, NanoPierce Connection and ExypnoTech.

     The Company recognized $7,251 in interest income during the fiscal year
ended June 30, 2003 compared to $98,574 during the fiscal year ended June 30,
2002.  The decrease of $91,323 is due primarily to the need for capital to
support operations throughout the year.

     Total operating expenses from continuing operations during the fiscal year
ended June 30, 2003 were $3,179,297, compared to $4,049,525 for the fiscal year
ended June 30, 2002.  The decrease of $870,228 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,
2003 were $2,414,077 compared to $3,516,534 for the fiscal year ended June 30,
2002. The decrease of $1,102,457 is mainly attributable to decreases in legal
expenses, payroll and investor relations. In April 2001, the Company issued
3,125,000 of its common shares, valued at $1,000,000 in connection with legal
costs related to the Harvest Court Litigation, as part of a Contingency Fee
Agreement, to cover expenses to be incurred on its behalf. The Company amortized
the value of the shares, over a one-year period. Prior to July 1, 2001, $175,343
was amortized. The remaining $824,657 was amortized during the fiscal year ended
June 30, 2002. Selling and marketing expenses during the fiscal year ended June
30, 2003 were $238,817 compared to $112,178 during the fiscal year ended June
30, 2002. The increase of $126,639 was due to an increase in marketing
activities, including appearances at various trade shows. Research and
development expenses during the fiscal year ended June 30, 2003 were $316,403
compared to $316,438 for the fiscal year ended June 30, 2002.

     During the fiscal year ended June 30, 2003, the Company incurred an expense
of $200,000 in connection with the impairment of the original intellectual
property owned by the Company. The decision to record an impairment of the
intellectual property was based primarily on the overall age of the patents
underlying the intellectual property combined with the Company's current
operational status. This impairment is not indicative of the value of the
technology and the current value of the separate and independent patent
applications and trademark applications the Company has filed both in the United
States and internationally.


                                        8
<PAGE>
     During the fiscal year ended June 30, 2003, the Company incurred an expense
of  $10,000  in  connection with the impairment of the WaferPierce System bought
and  modified  by Company for the application of NCS on wafers.  This impairment
is  not  indicative to the value of the technology, nor does the Company believe
that  it  limits  the  Company's  ability  to  market NCS.  The Company does not
believe that there has been any impairment to other long-lived assets as of June
30,  2003.

     During the fiscal year ended June 30, 2002, the Company incurred an expense
of $104,375 in connection with the impairment of equipment built by the Company
to develop the application of the NanoPierce Connection System (NCS(TM)) on
flexible substrates.  Given the Company's focus on the application of NCS at the
wafer-level and based on management's operational plans and developments for the
future, it was decided that because the equipment had no resale value to the
Company, to write off the carrying value of the equipment.  This write off is
not indicative to the value of the technology, nor does the Company believe that
it limits the Company's ability to market NCS in markets using flexible
substrates.

     During the fiscal year ended June 30, 2003, the Company recognized a net
loss of $4,017,785 compared to a net loss of $4,729,072 during the fiscal year
ended June 30, 2002. The decrease of $711,287 is explained by the decrease of
$870,228 in operating expenses, offset by a $91,323 decrease in interest income
and a $99,860 increase in the loss from discontinued operations between 2003 and
2002.

LIQUIDITY AND FINANCIAL CONDITION

     Net cash used in operating activities from continuing operations in 2003
was $1,754,247, compared to net cash used in operating activities from
continuing operations in 2002 of $2,777,705.  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, and changes in operating assets and liabilities
and other adjustments which net to $754,570.

     In 2002, the net cash used represented a net loss of $4,729,072, adjusted
for the loss from discontinued operations of $782,858, amortization and
depreciation expense of $1,142,334, impairment charges of $104,375, and changes
in operating assets and liabilities and other adjustments which net to
($78,200).

     During the 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 provision.  The funds were raised to support operations.

     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 is 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 consists 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 includes a $10,000 monthly advisory fee, payable in cash
beginning in June 2003. In addition, the Company is exploring other financing
opportunities to support continuing operations.

     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.  At
June 30, 2003, the note balance was $10,000 and related accrued interest was
$38.


                                        9
<PAGE>
     In April 2002, the Company entered into a $2,000,000 equity financing. The
Company received the first of two available tranches of $1,000,000 per tranche
($900,000 net of $100,000 of offering costs) and in return issued 800,000 free
trading common shares to the investor. In addition, the Company issued 1,073,000
of its free-trading common shares, which are being held by an escrow agent for
the potential issuance upon exercise of the warrants issued in connection with
the financing. Such warrants have a term of five years, with an exercise price
of $1.45 per share. The second tranche of $1,000,000 was made available to the
Company sixty days after the take down of the first. The Company declined to
take down the second tranche, due to depressed market conditions, at that time,
and possible dilutive effects on its stock. The second tranche is no longer
available to the Company, pursuant to terms of expiration.

     During the fiscal year ended June 30, 2001, the Company loaned $500,000 to
an unrelated third party, Global Capital Partners, Inc. ("Global") in exchange
for a 12% note receivable due in November 2001. Through June 30, 2002, principal
payments of $230,291 were received. In October 2002 the remaining principal of
$144,709 was received in full.

     In April 2002, the Company loaned $50,000 to a representative of the
unrelated third party, which had been assigned the Global note, in exchange for
a unsecured, 8% note receivable due in October 2002. In May 2002, the Company
received $23,930. In September 2002, the remaining principal balance of $26,859
was received.

     At July 1, 2001, the Company also had a $300,000 loan receivable from a
third party. In September 2001, the outstanding amount was received.

     At July 1, 2001, the Company had an unsecured note receivable from
Intercell of $92,500. During the year ended June 30, 2002, the Company advanced
an additional $35,000 to Intercell. The entire amount was collected by June 30,
2002.

     During the fiscal year ended June 30, 2003, the Company made investments in
machinery and equipment of approximately $351,431 in continuing operations
($8,358 by NanoPierce Card, presented in discontinued operations) to support its
expanded activities at ExypnoTech, as compared to $188,755 in continuing
operations ($12,136 by NanoPierce Card, presented in discontinued operations)
during the fiscal year ended June 30, 2002.  In August 2002, ExypnoTech accepted
delivery on machinery to begin the production of RFID components for usage in
Smart Labels.

     During the fiscal year ended June 30, 2003, the Company expanded the scope
of its patent and trademark applications.  The patent and trademark applications
are being amortized using the straight-line method over ten years.  On June 30,
2003, the Company has patent and trademark applications costs of $431,286,
compared to $242,646 on June 30, 2002.  The increase of $188,640 was due in part
to the filing of trademark applications at the international level and the
filing of new patent applications in connection with development and advancement
of the technology.

PLAN OF OPERATIONS

     The Company has signed various nondisclosure and cooperation agreements
with companies both overseas and in the United States.  The agreements are
applicable to the application of the Company's NCS technology and/or its
WaferPierce method for various products in the smart card/smart label
industries, the LED industry and in the semiconductor industry.  Management is
pursuing the development of further similar agreements both nationally and
internationally with additional companies in not only these but other
industries.  The Company is also involved in creating samples and testing in
connection with these agreements.

     In September 2003, the Company formed a joint venture with Scimaxx, LLC.
The joint venture, Scimaxx Solutions, LLC is to handle marketing of 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.


                                       10
<PAGE>
     Effective September 22, 2003, the Company signed a letter of intent with
Meshed Systems, GmbH ("Meshed Systems"), in which Meshed Systems is to make a
100,000 Euro investment in ExypnoTech for a 51% equity interest. The letter of
intent provides for Meshed Systems to manage the operations of ExypnoTech and to
provide ExypnoTech with working capital on an as needed basis. The Company is to
grant ExypnoTech a non-exclusive, non-royalty bearing worldwide license to
practice its ultrasonic technology. Profit sharing is to based on the equity
ownership. The license will also allow ExypnoTech to sublicense the intellectual
property. Meshed Systems is managed by a former officer and director of the
Company.

     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  May 2003, the Financial Accounting Standards Board ("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.

     In  December 2002, the 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.

     In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or  Disposal  of  Long-Lived  Assets,  which  addresses accounting and financial
reporting  for  the  impairment  or  disposal of long-lived assets.  The Company
adopted  SFAS  No. 144 effective July 1, 2002, and has applied the provisions of
SFAS  No. 144 in connection with its accounting for the impairment of long-lived
assets,  discussed  above.  Management  does not believe the application of SFAS
No.  144 resulted in a 2003 impairment charge different from that under previous
accounting  standards.  The  provisions  of  SFAS  No.  144 were also applied in
connection  with  the  Company's  accounting  for  discontinued  operations.


                                       11
<PAGE>
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, amortization of intangible 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, the 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.


                                       12
<PAGE>
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, 2003,
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 both the original intellectual property
and the WaferPierce System located at NanoPierce Connections. During 2003, the
Company recognized an impairment of $200,000 on the intellectual property and an
impairment of $10,000 on the WaferPierce System. The Company does not believe
that there has been any other impairment to long-lived assets as of June 30,
2003.

International operations

     The Company's two foreign subsidiaries (NanoPierce Card and 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.

     The Company derived most of its revenue through discontinued operations of
its German subsidiary, NanoPierce Card, which 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
preformed and when no significant obligations remain related to implementation.
Revenues are deferred if significant future obligations are to be fulfilled or
if connection is not probable.

Litigation

     The Company is involved in certain legal proceedings, as described in Note
8 and 9 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.


                                       13
<PAGE>
Contractual obligations

     For more information on the Company's contractual obligations on operating
leases, refer to Note 10 of the Consolidated Financial Statements.  At June 30,
2003, the Company's commitments under these obligations were as follows (in
thousands):

<TABLE>
<CAPTION>
                                              OPERATING LEASES
                                              -----------------
<S>                                           <C>

                       Year ending June 30,
                       2004                   $ 125
                       2005                      91
                       2006                      67
                                              -----
                                                283
                                              =====
</TABLE>

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.


                                       14
<PAGE>
                                    PART III

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

EXECUTIVE OFFICERS AND DIRECTORS

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

<TABLE>
<CAPTION>
        NAME AND AGE                  POSITION                     PERIOD
---------------------------  --------------------------  --------------------------
<S>                          <C>                         <C>
Paul H. Metzinger (64)       Director, President, Chief  December 1998 to present
                             Executive Officer,
                             General Manager of          January 2000 to present
                             NanoPierce Card
Dr. Herbert J. Neuhaus (44)  Director, Executive Vice    January 1999 to present
                             President of Technology &
                             Marketing,
                             President & Chief           January 2002 to present
                             Executive Officer of
                             NanoPierce Connection
Dr. Michael E. Wernle (41)   Director, Executive Vice    November 1999 to
                             President of Strategic        September 2003
                             Business Development,
                             President & Chief
                             Executive Officer of        January 2000 to May 2003
                             NanoPierce Card,
                             President & Chief
                             Executive Officer of        February 2002 to
                             ExypnoTech                    August 2003
Kristi J. Kampmann (30)      Chief Financial Officer,    October 1999 to present
                             Secretary                   February 1998 to present
Dr. Robert Shaw (63)         Director                    October 2000 to present
Dr. Noel Eberhardt (65)      Director                    November 2001 to present
John Hoback (63)             Director                    April 2002 to present
Richard Lancaster (36)       Chief Financial Officer of
                             NanoPierce Card &           February 2002 to June 2003
                             ExypnoTech
</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.


                                       15
<PAGE>
    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 has served as the General Manager of
NanoPierce Card since January 19, 2000.  In addition, he serves as the
President, Chief Executive Officer, Chief Financial Officer and a Director of
Intercell International Corporation.  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 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.

     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 formerly Chief Operations Officer for Meinen, Ziegel & Co., GmbH, Munich,
Germany.  He also served as the Director of Production for Mikron/Philips-Graz,
Graz, Austria. 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.

     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.  She has served as the 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.


                                       16
<PAGE>
     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.  Among others, he has held 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.

     NOEL EBERHARDT.  Mr. Eberhardt has been a Director of the Company since
November 28, 2001.  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.

     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.  Among others, he has held positions with CTS, Amoco Chemical,
Electro-Kinetic Systems, Inc. and EMCA/Rohm & Haas Company.

     RICHARD LANCASTER.  Mr. Lancaster served as the Chief Financial Officer of
NanoPierce Card from February 1, 2002 to June 30, 2003 and of ExypnoTech from
February 2002 to June 30, 2003.  From 1995 to February 1, 2002 Mr. Lancaster was
with Booz, Allen & Hamilton Management consultants, focusing on managing key
financial programs for international technology companies.  Mr. Lancaster also
served as a project leader with ICI Chemicals and Poymers, Plc and with EDS
(Electronic Data Systems) Consulting.  Mr. Lancaster received his masters in
electrical and information engineering from the University of Cambridge, UK and
an MBA from INSEAD, France.


                                       17
<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, 2003
and 2002 (the "Named Executive Officers"):

<TABLE>
<CAPTION>
                                               ANNUAL COMPENSATION                         LONG TERM COMPENSATION
                                               -------------------                         ----------------------
                                                                                         AWARDS                  PAYOUTS
                                                                                         ------                  -------

NAME & PRINCIPAL                    YEAR     SALARY     BONUS     OTHER      RESTRICTED   SECURITIES     LTIP     ALL OTHER
POSITION                                       ($)       ($)      ANNUAL       STOCK      UNDERLYING    PAYOUTS   COMPENSA-
                                                                COMPENSA-    AWARDS ($)   OPTIONS (#)     ($)        TION
                                                                   TION
<S>                               <C>       <C>        <C>      <C>         <C>           <C>          <C>        <C>
Paul H.
Metzinger,
Director,                             2003  $ 132,500  $   -0-  $      -0-  $    -0-         -0-       $  -0-     $   -0-
President & CEO(1)                    2002  $ 190,750  $   -0-  $      -0-  $    -0-         -0-       $  -0-     $   -0-
Dr. Herbert J.
Neuhaus,
Director, Ex. VP                      2003  $ 148,333  $   -0-  $      -0-  $    -0-         -0-       $  -0-     $   -0-
of Technology &                       2002  $ 190,750  $   -0-  $      -0-  $    -0-         -0-       $  -0-     $   -0-
Marketing, Pre &
CEO of NanoPierce Connection (2)
Dr. Michael E.
Wernle, Director,
Ex. VP of                             2003  $ 128,000  $   -0-  $      -0-  $    -0-        365,000    $  -0-     $   -0-
Strategic                             2002  $ 160,000  $   -0-  $      -0-  $    -0-         -0-       $  -0-     $   -0-
Business Dvlpmt,
Pres & CEO of
ExypnoTech (3)
Kristi J.
Kampmann, Chief
Financial Officer                     2003  $  58,125  $   -0-  $      -0-  $    -0-          -0-      $  -0-     $   -0-
& Secretary(4)                        2002  $  67,500  $   -0-  $      -0-  $    -0-        100,000    $  -0-     $   -0-
<FN>
-----------------
(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, resulting in a gross amount of $80,000.
(2) Dr. Neuhaus has served as the Executive Vice President of Technology and
Marketing since January 1999. He has served as the President and CEO of
NanoPierce Connection since January 2002. He is 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.
(3) Dr. Wernle served as the Executive Vice President of Strategic Business
Development till September 2003. He has served as the President & CEO of
NanoPierce Card since January 2000. He has served as the President & CEO of
ExypnoTech, since February 2002. He is 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 2203, 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 July
15, 2002, at an annual salary of $60,000. On July 15, 2002, Ms. Kampmann agreed
to take a 20% cut in the gross amount of her salary, resulting in an annual
salary of $60,000. In February 2003, she agreed to a further reduction in
salary, resulting in a gross amount of $52,500.
</TABLE>


                                       18
<PAGE>
     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, 2003.

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

                       # OF        % OF TOTAL
                    UNDERLYING    OPTIONS/SARS
                   OPTIONS/SARS    GRANTED TO
                   GRANTED (#)    EMPLOYEES IN    EXERCISE OF BASE    EXPIRATION
     NAME          FISCAL YEAR(1)                  PRICE ($/SHARE)       DATE
<S>               <C>             <C>            <C>                 <C>
Paul H.Metzinger               0             0%                 -0-         -0-
Dr. Herbert J.                 0             0%                 -0-         -0-
Neuhaus
Dr. Michael E.           365,000            81%  $             0.61        2012
Wernle
Kristi J.                      0             0                  -0-         -0-
Kampmann
<FN>
-----------------
(1) Based on a total of 450,000 options granted to employees in the fiscal year
ended June 30, 2003.
</TABLE>


             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, 2003 by the Company's executive
officers and the 2003 fiscal year-end value of unexercised options.

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

                                         EXERCISABLE/UNEXERCISABLE    EXERCISABLE/UNEXERCISABLE
                                         --------------------------  ---------------------------
<S>             <C>           <C>        <C>                         <C>
Paul H.                    0          0                 2,500,000/0  $                 750,000/0
Metzinger
Dr. Herbert J.             0          0                 1,350,000/0  $                 405,000/0
Neuhuas
Dr. Michael E.             0          0                 1,350,000/0  $                 405,000/0
Wernle
Kristi                     0          0                   325,000/0  $                  97,500/0
J.Kampmann
<FN>
-----------------
(1) The average of the closing bid and asked price of the Common Stock on June 30, 2003 ($0.30)
was used to calculate the option value.
</TABLE>


                                       19
<PAGE>
EMPLOYMENT AGREEMENTS

     On January 1, 2003, 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 December 31, 2005.
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.

     On July 15, 2003, the Company entered into an employment agreement with
Kristi J. Kampmann to serve as the Chief Financial Officer.  Such employment
agreement expires on July 15, 2004.  Pursuant to her employment agreement Ms.
Kampmann receives an annual salary of $52,500.

     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 Employee Agreement without cause, all of such
Employee's rights to compensation would cease upon the date of his termination.
If the Company terminates an Employment Agreement without cause, the Employee
terminates his Employment Agreement for cause, or in the event of a change in
control, the Company will pay to the Employee all compensation and other
benefits that would have accrued and/or been payable to the 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 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 noncompete
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,
2003, 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 8,787,542 options outstanding. A total of 8,322,524
options are exercisable at June 30, 2003, under these plans. During the fiscal
year ended June 30, 2003, the Company granted options pursuant to its registered
2000 Compensatory Stock Option Plan to purchase 450,000 shares of common stock
to directors, officers, and employees of the Company and its subsidiaries. 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.


                                       20
<PAGE>
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 common Stock as of June 30, 2003 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.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
NAME, ADDRESS & NATURE OF
-------------------------
   BENEFICIAL OWNER                            TITLE OF CLASS     AMOUNT     PERCENT OF CLASS (9)
-------------------------------------------------------------------------------------------------
<S>                                            <C>             <C>           <C>
The Paul H. Metzinger Trust
Paul H. Metzinger, President &                 Common Stock    4,543,188(1)               5.53%
CEO, Director
370 17th Street, Suite 3640 Denver, CO 80202
-------------------------------------------------------------------------------------------------
The Cheri L. Metzinger Trust
Cheri L. Metzinger, Wife of                    Common Stock    4,543,188(2)               5.53%
Paul H. Metzinger
3236 Jellison Street
Wheatridge, CO 80033
-------------------------------------------------------------------------------------------------
Dr. Herbert J. Neuhaus, Ex. VP
of Technology & Marketing,                     Common Stock    1,460,000(3)               1.78%
Director, President & CEO
NanoPierce Connection
770 Maroonglen Court
Colorado Springs, CO 80906
-------------------------------------------------------------------------------------------------
Dr. Michael E. Wernle, Ex VP
of Strategic Business                          Options         1,350,000(4)               1.64%
Development, Director,
President & CEO of ExypnoTech
Lise-Meitner-Strasse
1D-85662 Hohenbrunn
Germany
-------------------------------------------------------------------------------------------------
Kristi J. Kampmann, Chief
Financial Officer & Secretary                  Common Stock      344,080(5)               0.42%
370 17th Street, Suite 3640
Denver, CO 80202
-------------------------------------------------------------------------------------------------
Dr. Robert E. Shaw, Director                   Options           400,000(6)               0.49%
8 Nicklaus Court
Florham Park, NJ 07932
-------------------------------------------------------------------------------------------------
Dr. Noel Eberhardt, Director                   Options           400,000(7)               0.49%
21407 Krzich Place
Cupertino, CA 95014
-------------------------------------------------------------------------------------------------
John Hoback, Director                          Options           400,000(8)               0.49%
20 White Heron Lake
East Stroudsburg, PA 18301
-------------------------------------------------------------------------------------------------
Intercell International
Corporation                                    Common Stock      6,376,764                7.76%
370 17th Street, Suite 3640
Denver, CO 80202
-------------------------------------------------------------------------------------------------
All Officers & Directors as a                  Common Stock      8,897,268               10.91%
Group (7 persons)
-------------------------------------------------------------------------------------------------


<PAGE>
<FN>
(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 500,000 shares exercisable at $2.125 per
share, 500,000 shares exercisable at $0.52 per share and 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 option owned beneficially by her husband.
(3) Based on 110,000 common shares and options consisting of 500,000 shares
exercisable at $2.125 per share, 100,000 shares exercisable at $2.75 per share,
250,000 shares exercisable at $0.52 per share and 500,000 shares exercisable at
$0.20 per share.
(4) Based on options consisting of 500,000 shares exercisable at $2.125 per
share, 160,000 shares exercisable at $2.75 per share, 25,000 shares exercisable
at $0.52 per share, 300,000 shares at $0.45 per share and 365,000 shares
exercisable at $0.60 per share.
(5) Based on 19,080 common shares and options; 100,000 shares exercisable at
$0.84 per share, 75,000 shares exercisable at $2.125 per share, 50,000 shares
exercisable at $2.75 per share, 50,000 shares exercisable at $0.52 per share and
50,000 shares exercisable at $0.3250 per share.
(6) Based on options consisting of 250,000 shares exercisable at $0.97 per
share, 50,000 shares exercisable at $0.67 per share, and 100,000 shares
exercisable at $2.00 per share.
(7) Based on options consisting of 300,000 shares exercisable at $0.70 per share
and 100,000 shares exercisable at $0.70 per share.
(8) Based on options consisting of 400,000 shares exercisable at $1.35 per
share.
(9) Based on 65,054,738 shares of common stock issued and outstanding on June
30, 2003 and assuming exercise of all 8,787,524 presently exercisable options
and exercise of 8,380,186 outstanding warrants, there would be 82,222,448 shares
outstanding. Mr. Metzinger's and Mrs. Metzinger's stock ownership are not
duplicated in this computation.
</TABLE>


ITEM 12.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     As previously stated a stock option was granted to Dr. Michael E. Wernle,
an officer and director of the Company, during the fiscal year ended June 30,
2003.

     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.  At June 30, 2003, the note
balance was $10,000 and related accrued interest of $38.

     In September 2003, Mr. Metzinger, the President and Chief Executive Officer
and director of the Company, loaned the Company $30,000, in exchange for an
unsecured 7% note payable.

     In September 2003, the Company formed a joint venture with Scimaxx, LLC.
The joint venture, Scimaxx Solutions, LLC is to handle marketing of 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.

     In September 2003, the Company signed a letter of intent with Meshed
Systems, GmbH to make an equity investment in ExypnoTech for a 51% equity
interest in ExypnoTech.  The letter of intent provides for Meshed Systems to
take over the management of the operations of ET, make a cash contribution and
to provide ExpynoTech working capital on an as needed basis.  The Company will
grant ET a non-exclusive, non-royalty bearing worldwide license to practice its
ultrasonic technology.  Profit sharing will be based on the equity ownership.
The license will also allow ExypnoTech to sublicense the intellectual property.
Meshed Systems, GmbH is managed by a former officer and director of the Company.


                                       22
<PAGE>
                                     PART IV
ITEM 13.     EXHIBITS

     (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 registrant,
             Particle Interconnect Corporation and Intercell Corporation 6
  2.02       Application and Development Agreement, dated April 15, 1999, by
             and among the registrant and Multitape & Co., Gmbh, KG.  4
  2.03       Technology Cooperation Agreement, dated May 17, 1999, by and
             among the registrant and Meinen, Zeigel & Co.  4
  2.04       Technology Development Agreement, dated June 11, 1999, by and
             among the registrant and ORGA Kartensysteme, GmbH. 4
  2.05       Agreement-In-Principle, dated May 18, 1999, by and among the
             registrant and Cirrex Corporation.  4
  4.01       The Articles of Incorporation of the Company  5
  4.02       Amendment to the Articles of Incorporation of the Company  5
  4.03       Certificate of Designation of Rights and Preferences of the
             Series A Preferred Stock  6
  4.04       Certificate of Designation of Rights and Preferences of the
             Series B Preferred Stock  7
  4.05       Certificate of Designation of Rights and Preferences of the
             Series C Preferred Stock  7
  4.06       Form of Common Stock Certificate  5
  4.07       The By-laws of the Company  5
  10.01      Employment and Non-Disclosure, Non-Competition Agreement, dated
             January 1, 1999, between Paul H. Metzinger and the registrant  4
  10.02      Employment and Non-Disclosure, Non-Competition Agreement, dated
             January 1, 2002 between Dr. Herbert J. Neuhaus and the registrant2
  10.03      Employment and Non-Disclosure, Non-Competition Agreement, dated
             July 15, 2002, between Kristi J. Kampmann and the registrant  2
  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
<FN>
-------------------
1    Filed herewith
2    Incorporated by reference to the Registrant's Annual Report on Form 10-KSB
     for the year ended June 30, 2001.
3    Incorporated by reference to the Registrant's Annual Report on Form 10-KSB
     for the year ended June 30, 2000.
4    Incorporated by reference to the Registrant's Annual Report on Form 10-KSB
     for the year ended June 30, 1999.
5    Incorporated by reference to the Registrant's Annual Report on Form 10-KSB
     for the year ended June 30, 1998.
6    Incorporated by reference to the Company's Current Report on Form 8-K,
     dated February 26, 1998.
7    Incorporated by reference to the Company's Current Report on Form 8-K,
     dated July 23, 1998
</TABLE>


                                       23
<PAGE>
     (b)  REPORTS ON FORM 8-K.
     The Registrant filed the following reports on Form 8-K during the fourth
     quarter of the year ended June 30, 2003:

          (i)  Current Report on Form 8-K filed with the Securities and Exchange
               Commission April 1, 2003

ITEM 14.     CONTROLS AND PROCEDURES

     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 effectives 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 affective 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 change is the Company's internal controls or
in other factors, which could significantly affect such controls.


                                       24
<PAGE>
                                   SIGNATURES

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

                                  NANOPIERCE TECHNOLGIES, INC.
                                   (a Nevada corporation)


Date:  September 26, 2003             By:  /s/ Paul H. Metzinger
                                      ------------------------------------------
                                      Paul H. Metzinger, Director, Chief
                                      Executive Officer & President



Date:  September 26, 2003             By:  /s/ Kristi J. Kampmann
                                      ------------------------------------------
                                      Kristi J. Kampmann, Chief
                                      Financial Officer & Chief
                                      Accounting Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and the capacities and on the dates indicated.


Date:  September 26, 2003             By:  /s/ Paul H. Metzinger
                                      ------------------------------------------
                                      Paul H. Metzinger, Director, Chief
                                      Executive Officer & President


Date:  September 26, 2003             By:  /s/ Herbert J. Neuhaus
                                      ------------------------------------------
                                      Herbert J. Neuhaus, Director &
                                      Executive Vice-President of
                                      Technology & Marketing



Date:  September 26, 2003             By:  /s/ Robert Shaw
                                      ------------------------------------------
                                      Robert Shaw, Director



Date:  September 26, 2003             By:  /s/ Noel Eberhardt
                                      ------------------------------------------
                                      Noel Eberhardt, Director



Date:  September 26, 2003             By:  /s/ John Hoback
                                      ------------------------------------------
                                      John Hoback, Director


                                       25
<PAGE>
<TABLE>
<CAPTION>
                          NANOPIERCE TECHNOLOGIES, INC.
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS




                                                                  Page
                                                                  ----
<S>                                                               <C>
Independent Auditors' Report                                       F-2

Financial Statements:

     Consolidated Balance Sheet - June 30, 2003                    F-3

     Consolidated Statements of Operations -
        Years ended June 30, 2003 and 2002                         F-5

     Consolidated Statements of Comprehensive Loss -
        Years ended June 30, 2003 and 2002                         F-6

     Consolidated Statements of Shareholders' Equity -
        Years ended June 30, 2003 and 2002                         F-7

     Consolidated Statements of Cash Flows -
        Years ended June 30, 2003 and 2002                         F-9

     Notes to Consolidated Financial Statements                   F-11
</TABLE>


                                      F-1
<PAGE>
                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------



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,  2003, and the related
consolidated  statements of operations, comprehensive loss, shareholders' equity
and cash flows for each of the years in the two-year period ended June 30, 2003.
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 auditing standards generally accepted
in  the  United  States  of  America.  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, 2003, and the results of
their  operations  and  their  cash  flows for each of the years in the two-year
period  ended  June 30, 2003, 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
$4,017,785  for  the  year  ended  June  30, 2003, and an accumulated deficit of
$21,073,620  as  of  June 30, 2003.  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  22,  2003


                                       F-2
<PAGE>
<TABLE>
<CAPTION>

                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheet
                                  June 30, 2003



<S>                                                                 <C>

                           Assets
                           ------
Current assets:
  Cash and cash equivalents                                         $  200,741
  Accounts receivable                                                   21,235
  Inventory                                                             39,259
  Deferred consulting costs and other prepaid expenses                 168,687
  Assets of discontinued operations (Note 3)                            21,977
                                                                    -----------
    Total current assets                                               451,899
                                                                    -----------

Property and equipment:
  Machinery                                                            431,125
  Office equipment and furniture                                       328,386
  Leasehold improvements                                               138,776
                                                                    -----------
                                                                       898,287
  Less accumulated depreciation                                       (353,413)
                                                                    -----------
                                                                       544,874
                                                                    -----------

Other assets:
  Assets of discontinued operations (Note 3)                            20,287
  Deposits and other                                                    19,510
  Intellectual property rights, net of accumulated
    amortization of $534,315                                           265,685
  Patent and trademark applications, net of accumulated
    amortization of $77,877                                            431,286
                                                                    -----------
                                                                       736,768
                                                                    -----------

       Total assets                                                 $1,733,541
                                                                    ===========
</TABLE>


                                   (continued)


                                       F-3
<PAGE>
<TABLE>
<CAPTION>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheet
                                  June 30, 2003
                                   (Continued)




                           Liabilities and Shareholders' Equity
                           ------------------------------------
<S>                                                                <C>
Current liabilities:
  Accounts payable                                                 $    576,561
  Accrued liabilities                                                    53,230
  Note payable - related party (Note 6)                                  10,000
  Liabilities of discontinued operations (Note 3)                       402,968
                                                                   -------------

    Total liabilities - all current                                   1,042,759
                                                                   -------------

Commitments and contingencies (Notes 4, 8 and 10)

Shareholders' equity (Note 7):
  Preferred stock; $0.0001 par value;
   5,000,000 shares authorized:
   Series A; no shares issued and outstanding
   Series B; maximum of 75,000 shares issuable; no
     shares issued and outstanding
   Series C; maximum of 700,000 shares issuable; no
     shares issued and outstanding
  Common stock; $0.0001 par value; 200,000,000 shares authorized
     65,054,738 shares issued and outstanding                             6,505
  Additional paid-in capital                                         21,567,807
  Accumulated other comprehensive income                                190,090
  Accumulated deficit                                               (21,073,620)
                                                                   -------------
      Total shareholders' equity                                        690,782
                                                                   -------------

        Total liabilities and shareholders' equity                 $  1,733,541
                                                                   =============
</TABLE>


See notes to the consolidated financial statements.


                                       F-4
<PAGE>
<TABLE>
<CAPTION>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                      Consolidated Statements of Operations
                       Years Ended June 30, 2003 and 2002



                                            2003         2002
                                        ------------  -----------
<S>                                     <C>           <C>
Revenues                                $    37,017        4,737
                                        ------------  -----------

Operating expenses:
  Research and development                  316,403      316,438
  General and administrative              2,414,077    3,516,534
  Selling and marketing                     238,817      112,178
  Impairment of intellectual property
    and equipment(Note 1)                   210,000      104,375
                                        ------------  -----------
                                          3,179,297    4,049,525
                                        ------------  -----------

Loss from operations                     (3,142,280)  (4,044,788)
                                        ------------  -----------

Other income (expense):
  Interest income                             7,251       98,574
  Interest expense                              (38)           -
                                        ------------  -----------
                                              7,213       98,574
                                        ------------  -----------

Loss from continuing operations          (3,135,067)  (3,946,214)
                                        ------------  -----------

Discontinued operations, loss from
  operations of subsidiary (Note 3)        (882,718)    (782,858)
                                        ------------  -----------

Net loss                                $(4,017,785)  (4,729,072)
                                        ============  ===========

Basic and diluted loss per share:
  Loss from continuing operations       $     (0.05)       (0.07)
  Loss from discontinued operations           (0.02)       (0.01)
                                        ------------  -----------

Net loss per share, basic and diluted   $     (0.07)       (0.08)
                                        ============  ===========

Weighted average number of common
  shares outstanding                     61,647,688   56,194,682
                                        ============  ===========

</TABLE>


     See notes to the consolidated financial statements.


                                       F-5
<PAGE>
<TABLE>
<CAPTION>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                  Consolidated Statements of Comprehensive Loss
                       Years Ended June 30, 2003 and 2002



                                                 2003         2002
                                             ------------  -----------
<S>                                          <C>           <C>
     Net loss                                $(4,017,785)  (4,729,072)

     Change in unrealized gain on
       securities                                   (237)        (261)

     Change in foreign currency
       translation adjustments                    48,915      135,408
                                             ------------  -----------

     Comprehensive loss                      $(3,969,107)  (4,593,925)
                                             ============  ===========
</TABLE>


     See notes to the consolidated financial statements.


                                       F-6
<PAGE>
<TABLE>
<CAPTION>
                                         NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                         Consolidated Statements of Shareholders' Equity
                                               Years Ended June 30, 2003 and 2002



                                       Common stock                         Accumulated other                        Total
                                   -------------------     Additional         comprehensive      Accumulated     shareholders'
                                     Shares    Amount    paid-in capital      income(loss)         deficit          equity
                                   ----------  -------  -----------------  -------------------  -------------  -----------------
<S>                                <C>         <C>      <C>                <C>                  <C>            <C>
Balances, July 1, 2001             55,701,398  $ 5,570  $     18,451,781   $            6,265   $(12,326,763)  $      6,136,853

Common stock issued for cash in
 connection with financing
 agreement, net of $100,000
 of offering costs                  1,873,000      187           899,813                    -              -            900,000

Common stock issued for services       46,000        5            40,055                    -              -             40,060

Common stock issued upon exercise
 of stock options                      16,604        2                (2)                   -              -                  -

Warrants issued for services                -        -           104,800                    -              -            104,800

Net loss                                    -        -                 -                    -     (4,729,072)        (4,729,072)

Other comprehensive income:
  Change in unrealized gain on
   securities                               -        -                 -                 (261)             -               (261)
  Foreign currency translation
   adjustments                              -        -                 -              135,408              -            135,408
                                   ----------  -------  -----------------  -------------------  -------------  -----------------

Balances, June 30, 2002            57,637,002  $ 5,764  $     19,496,447   $          141,412   $(17,055,835)  $      2,587,788
                                   ==========  =======  =================  ===================  =============  =================
</TABLE>


                                   (continued)


                                       F-7
<PAGE>
<TABLE>
<CAPTION>
                                  NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                                 Consolidated Statements of Shareholders' Equity
                                        Years Ended June 30, 2003 and 2002
                                                   (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, 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>


     See notes to the consolidated financial statements.


                                       F-8
<PAGE>
<TABLE>
<CAPTION>
                  NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                       Consolidated Statements of Cash Flows
                        Years Ended June 30, 2003 and 2002


                                                                  2003         2002
                                                              ------------  -----------
<S>                                                           <C>           <C>
Cash flows from operating activities:
 Net loss                                                     $(4,017,785)  (4,729,072)
                                                              ------------  -----------
 Adjustments to reconcile net loss to net cash used
  in operating activities from continuing operations:
  Loss from discontinued operations                               882,718      782,858
  Amortization expense                                            150,916      126,961
  Depreciation expense                                            157,393      190,716
  Amortization of deferred legal and consulting costs             107,941      824,657
  Impairment of intellectual property and equipment               210,000      104,375
  Expenses incurred in exchange for
    common stock, warrants and options                             14,935      144,860
  Changes in operating assets and liabilities:
   Decrease (increase) in accounts receivable                      29,139      (37,570)
   Decrease (increase) in prepaid expenses                          4,001      (21,807)
   Decrease (increase) in deposits and other assets               240,013     (220,867)
   Increase in accounts payable and
     accrued liabilities                                          466,482       57,184
                                                              ------------  -----------

 Total adjustments                                              2,263,538    1,951,367
                                                              ------------  -----------

    Net cash used in operating activities
      from continuing operations                               (1,754,247)  (2,777,705)
                                                              ------------  -----------

Cash flows from investing activities:
  Increase in patent and trademark applications                  (239,556)    (186,297)
  Purchases of property and equipment                            (351,431)    (188,755)
  Increase in notes receivable                                          -      (85,000)
  Payments received on notes receivable                           170,779      681,721
                                                              ------------  -----------
    Net cash (used in) provided by investing activities
      from continuing operations                                 (420,208)     221,669
                                                              ------------  -----------

Cash flows from financing activities:
  Issuance of common stock and warrants for cash                1,826,766      900,000
  Issuance of note payable - related party                         10,000            -
                                                              ------------  -----------
    Net cash provided by financing activities
      from continuing operations                                1,836,766      900,000
                                                              ------------  -----------

Effect of exchange rate changes on cash
  and cash equivalents                                             44,098      117,625
                                                              ------------  -----------

Net cash used in discontinued operations                         (184,877)    (458,899)
                                                              ------------  -----------

Net decrease in cash and cash equivalents                        (478,468)  (1,997,310)

Cash and cash equivalents, beginning                              679,209    2,676,519
                                                              ------------  -----------

Cash and cash equivalents, ending                             $   200,741      679,209
                                                              ============  ===========
</TABLE>


                                   (continued)


                                       F-9
<PAGE>
<TABLE>
<CAPTION>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                       Years Ended June 30, 2003 and 2002
                                   (Continued)


                                                              2003           2002
                                                            --------       --------
<S>                                                         <C>            <C>
Supplemental disclosure of cash flow information:
  Cash paid for interest                                    $      -            120
                                                            ========       ========

Supplemental disclosure of non-cash investing and
  financing activities:
  Warrant issued in exchange for deferred consulting costs  $230,400              -
                                                            ========       ========
</TABLE>


See notes to the consolidated financial statements.


                                      F-10
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2003 and 2002

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  subsidiary,  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
ExypnoTech,  GmbH  (EPT),  both  German subsidiaries, which were incorporated in
January  2000 and February 2002, respectively. During the quarter ended June 30,
2003,  NCT  effectively  discontinued  its  operations (Note 3). All significant
intercompany  accounts  and  transactions have been eliminated in consolidation.

BUSINESS:

The  Company  is  engaged  in  the design, development and licensing of products
using  its intellectual property, the PI Technology.  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  and  is  commercializing  its  PI  Technology  as  the
NanoPierce  Connection  System  (NCS(TM))  and  markets  the  PI  Technology  to
companies  in  various  industries  for  a  wide  range  of  applications.

NCOS business activities are to include the licensing, sale and or manufacturing
of  certain electronic products using the NCS technology. Through June 30, 2003,
NCOS  activities have primarily consisted of research and development, marketing
and administrative functions.  Prior to discontinuing operations, NCT activities
consisted  primarily  of  providing  software  development  and  implementation
services,  and  performing administrative, research and development, and selling
and  marketing  activities. Through June 30, 2003, EPT activities have 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.

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-11
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2003 and 2002

FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS:

The  fair values of the Company's cash and cash equivalents, accounts receivable
and  accounts  payable  approximate  their  carrying  amounts  due  to the short
maturities  of  these  instruments.  The  fair  value  of  the  Company's  note
payable-related  party  is not practicable to estimate, due to the related party
nature  of  the  underlying  transaction.

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.

INVENTORY:

Inventory  consists primarily of chips and antennas for use in the production of
inlays by EPT and is stated at the lower of cost (first-in, first-out) or market
value.

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 acts
as  financial advisor to the Company and serves as its exclusive placement agent
for a private placement of equity securities during the twelve-month term of the
agreement.  Compensation  includes a non-refundable retainer fee, which consists
of  a  warrant  to  purchase  up to 450,000 shares of the Company's common stock
(Notes  7 and 8).  The  warrant  was  valued at approximately $230,000 using the
Black-Scholes  pricing  model.  The  deferred  cost  is  being  amortized  on  a
straight-line  basis over a twelve-month period from the date of issuance, which
represents  the  estimated  period  the  expenses  are  expected to be incurred.
Through  June  30,  2003,  $107,941 was expensed in connection with the warrant.

In  April  2001,  the  Company recorded deferred legal costs in exchange for the
issuance  of  3,125,000  shares  of common stock valued at $1,000,000 ($0.32 per
share).  The  shares were issued as a non-refundable retainer for legal services
to  be  performed.  The  Company  amortized  these deferred costs to general and
administrative expense on a straight-line basis over a one-year period ending in
April  2002,  which  represented  the estimated period the benefits of the legal
costs  were expected to be received. The Company amortized remaining legal costs
of  $824,657  during  the  year  ended  June  30,  2002.


                                      F-12
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2003 and 2002

INTELLECTUAL  PROPERTY  RIGHTS  AND  PATENT  AND  TRADEMARK  APPLICATIONS:

The  PI  Technology was acquired upon the issuance of 7,250,000 shares of common
stock  and  100 shares of Series A preferred stock of the Company and was valued
at  the  estimated  fair  value  of the PI Technology at the date of acquisition
based on a written cash offer from an outside third party. This third party is a
manufacturer  in a field, which uses the intellectual property. The intellectual
property  has been amortized using the straight-line method over 10 years, which
was  based in an average protection period of underlying patents. In conjunction
with  the  Company's  assessment  of its long-lived assets, discussed below, the
Company  reviewed  the  estimated  remaining  useful  life  of  the intellectual
property  and  made a determination in the fourth quarter ended June 30, 2003 to
prospectively  utilize a remaining useful life of 2-5 years, which is consistent
with  the  remaining  average  patent  protection  period  of  the  remaining
intellectual  property.

Costs incurred to establish patents and trademarks are 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
are  amortized  over  a  period  of 10 years.  Unsuccessful patent and trademark
application  costs  are  expensed  as  incurred.

Estimated  amortization  expense for each of the five succeeding fiscal years is
as  follows:

<TABLE>
<CAPTION>
                            Year              Amount
                            ----             --------
<S>                                          <C>
                            2004             $178,000
                            2005              178,000
                            2006              144,000
                            2007               78,000
                            2008               78,000
</TABLE>

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.  Based on its evaluation, in the fourth quarter ended June 30, 2003, the
Company  determined  that  a  $200,000  impairment  charge  to  the intellectual
property was necessary. The decision to record an impairment of the intellectual
property was based primarily on the remaining life of the patents underlying the
intellectual  property  and  the Company's assessment of current operational and
marketing  activities.


                                      F-13
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2003 and 2002

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.  Leasehold  improvements  are  depreciated  over the shorter of the
useful  lives  of  the  assets or the length of the respective leases, whichever
period  is shorter.  The estimated useful lives of property and equipment are as
follows:

     Machinery                                       7  years
     Office equipment and furniture                  5-7  years
     Leasehold  improvements                         3  years

In the fourth quarter ended June 30, 2003, the Company made a decision to record
an  impairment charge of $10,000 to the net carrying amount of certain equipment
of  NCOS  in Colorado Springs, Colorado. The decision to record an impairment of
the equipment was based primarily on current and projected NCOS operations data.

In  the  fiscal year ended June 30, 2002, the Company made a decision to abandon
certain  NCS  equipment  located in Colorado Springs, Colorado and wrote off the
$104,375  carrying  amount  of  this equipment. The decision to abandon this NCS
equipment was based primarily on NCOS's focus on WaferPierce applications of the
NCS  technology.

REVENUE  RECOGNITION:

Revenues  from  the  sales of product are recognized at time of shipment. During
each  of  the  two  years  ended  June  30, 2003, NCT 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, 2003, there were no deferred revenues
related  to  contract  services  in  progress.

RESEARCH  AND  DEVELOPMENT:

Research  and  development  costs  are  expensed  as  incurred.

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.


                                      F-14
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2003 and 2002

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>
                                             2003              2002
                                         ------------       -----------
<S>                                      <C>                <C>

Net loss, as reported                    $(4,017,785)       (4,729,072)
Total stock-based employee compensation
expense determined under fair value
based method for all awards               (  233,000)       (  445,000)
                                         ------------       -----------
Net loss, pro forma                      $(4,250,785)       (5,174,072)
                                         ============       ===========
Net loss per share as reported           $(     0.07)       (     0.08)
Net loss per share pro forma             $(     0.07)       (     0.09)
</TABLE>



The  fair value of options granted during 2003 and 2002 is estimated on the date
of  grant  using  the  Black-Scholes  option-pricing  model  with  the following
weighted-average  assumptions:

<TABLE>
<CAPTION>
                                            2003                2002
                                         ----------          ----------
<S>                                      <C>                 <C>
Expected dividend yield                          0%                  0%
Expected stock price volatility                105%                 53%
Risk-free interest rate                        2.9%                5.0%
Expected life of options                 6.5 years           6.5 years
</TABLE>

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.

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,  2003  and  2002.


                                      F-15
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2003 and 2002



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 available-for-sale securities and 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
(17,167,710  shares  at  June  30,  2003 and 10,822,661 shares at June 30, 2002)
would  be  to  decrease  loss  per  share.  Therefore, diluted loss per share is
equivalent  to  basic  loss  per  share.

RECENTLY  ISSUED  ACCOUNTING  PRONOUNCEMENTS:

In  May  2003, the Financial Accounting Standards Board ("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.


                                      F-16
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2003 and 2002

In  December  2002,  the  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.

In  August  2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal  of  Long-Lived  Assets,  which  addresses  accounting  and  financial
reporting  for  the  impairment  or  disposal of long-lived assets.  The Company
adopted  SFAS  No. 144 effective July 1, 2002, and has applied the provisions of
SFAS  No. 144 in connection with its accounting for the impairment of long-lived
assets,  discussed  above.  Management  does not believe the application of SFAS
No.  144 resulted in a 2003 impairment charge different from that under previous
accounting  standards.  The  provisions  of  SFAS  No.  144 were also applied in
connection  with  the Company's accounting for discontinued operations (Note 3).

RECLASSIFICATIONS:

Certain amounts reported in the 2002 financial statements have been reclassified
to  conform  to  the  2003  presentation.

2.   GOING  CONCERN,  RESULTS  OF  OPERATIONS,  AND  MANAGEMENT'S  PLANS:

The  Company's  financial  statements for the year ended June 30, 2003 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 $4,017,785 for the year ended June
30,  2003,  and  an accumulated deficit of $21,073,620 as of June 30, 2003.  The
Company  has not recognized any significant revenues from its PI technology, and
the  Company  expects  to  use  cash  in  operations  during  the next year.  In
addition,  during  the  quarter  ended  June  30,  2003,  NCT  discontinued  its
operations  (Note  3).

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-17
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2003 and 2002

To  address  its  current  cash flow concerns, the Company is performing certain
activities  and  considering  certain  strategies,  as  follows:

          (a)  The  Company  is  in  discussions  with  investment  bankers  and
               financial  institutions  attempting  to  raise  funds  to support
               current  and future operations. This includes attempting to raise
               additional working capital through the sale of additional capital
               stock  or  through  the  issuance of debt. 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.

          (b)  Effective  September  15,  2003, the Company entered into a joint
               venture  with  Scimaxx, LLC, a limited liability company owned by
               an  officer  and director of the Company and two former employees
               of  NCOS.  The  Company  has  a 50% interest in the joint venture
               company,  Scimaxx Solutions, LLC. In exchange for a 50% interest,
               the  Company  contributed  the rights to utilize a license to use
               the  technology  of  the  Company and to utilize the facility and
               equipment  of NCOS. Scimaxx, LLC is to contribute $50,000 in cash
               over  a  specified  period  of  time.

          (c)  Effective  September  22,  2003,  the  Company signed a letter of
               intent  with  Meshed  Systems,  GmbH ("Meshed Systems"), in which
               Meshed  System's  to  make  a  100,000  Euro investment in EPT in
               exchange  for  a 51% equity interest in EPT. The letter of intent
               provides  for  Meshed Systems to manage the operations of EPT and
               to  provide  EPT  with working capital on an as needed basis. The
               Company  is  to  grant  EPT  a non-exclusive, non-royalty bearing
               worldwide  license  to  utilize its ultrasonic technology. Profit
               sharing is to be based on the proportionate equity ownership. The
               license  will  also  allow  EPT  to  sublicense  the intellectual
               property.  Meshed  Systems  is  managed  by  a former officer and
               director  of  the  Company.

          (d)  The Company believes sales of its products and technology license
               rights may provide additional funds to meet the Company's capital
               requirements.


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 operations at NCT and liquidate NCT,
either  though  the  German  courts, or through a self-liquidation. In September
2003,  the  German  court rejected the application for insolvency; therefore NCT
implemented  a  plan  of self-liquidation as provided by German law. The Company
anticipates  that  a  liquidation  will  be completed by June 30, 2004.


                                      F-18
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2003 and 2002

<TABLE>
<CAPTION>
At  June  30,  2003, the carrying amounts of NCT's assets and liabilities are as
follows:
<S>                                           <C>
          Cash                                $      10,492
          Accounts receivable                         6,345
          Other assets                                5,140
                                              -------------
             Total current assets                    21,977
                                              -------------

          Machinery, net                             14,957
          Office equipment, net                       5,330
                                              -------------
                                                     20,287
                                              -------------

             Total assets                     $      42,264
                                              =============

          Accounts payable                    $     360,122
          Accrued liabilities                        42,846
                                              -------------
             Total liabilities
                 (all current)(1)             $     402,968
                                              =============
<FN>
(1)  Liabilities  above  do not include payables to the Company of approximately
     $172,719  at  June  30,  2003.
</TABLE>

NCT's  revenues  for  the  years  ended  June  30,  2003  and  2002  reported in
discontinued  operations  were $128,947 and $151,392, respectively. NCT incurred
losses  in  2003  and  2002, of $882,718 and $782,858, respectively. NCT did not
incur  any  income  taxes  in  2003  or  2002.

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  subsidiaries'  (NCT  and 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-19
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2003 and 2002

5.   NOTES  RECEIVABLE:

RELATED  PARTY:

At  July  1,  2001,  the  Company  had  an unsecured, 5.75% note receivable from
Intercell  International  Corporation  (Intercell)  of  $92,500,  due on demand.
Intercell  is a company that owns 9.8% of the Company's outstanding common stock
at  June 30, 2003.  During the year ended June 30, 2002, the Company advanced an
additional  $35,000  to Intercell under this note receivable.  The entire amount
was  collected  during  the  year  ended  June  30,  2002.

OTHER:

Prior to July 1, 2001, the Company loaned $500,000 to an unrelated third party -
Global  Capital  Partners, Inc. ("Global") in exchange for a 12% note receivable
due  in  November 2001. At July 1, 2001, the note balance was $375,000, of which
$100,000  was  received  in August 2001. The note was not paid in November 2001,
and therefore, in January 2002, the Company agreed to the assignment of the note
($275,000), and related accrued interest ($14,630), by Global, to a third party.
This  third party was an investment group involved in assisting the Company with
its  financing  efforts.  Through  June 30, 2002, principal payments of $130,291
along  with  accrued  interest  of  $19,300  were received. In October 2002, the
remaining  balance of  the note ($144,709) and related interest were received in
full.

In  April 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 were received
in  full.

At July 1, 2001, the Company also had a $300,000 loan receivable from a third
party, which was unsecured and non-interest bearing.  In September 2001, the
outstanding amount was received in full.

6.   NOTE  PAYABLE  -  RELATED  PARTY

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,  an  officer/director  loaned  the  Company  $30,000  in  exchange  for an
unsecured,  7%  promissory  note.


                                      F-20
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2003 and 2002

7.   SHAREHOLDERS'  EQUITY:

COMMON  STOCK:

During the quarter ended December 31, 2002, 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
quarter,  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.

During  the  quarter  ended  March  31,  2003, the Company 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.

During  the  quarter  ended  June 30, 2003, 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.

Subsequent  to  June 30, 2003, the Company issued 969,231 shares of common stock
for cash of $100,000 and for services valued at $7,600.

In  March  2002,  the  Company  increased  its  authorized  common  shares  from
100,000,000  to  200,000,000.

On  March  29,  2002, the Company entered into a $2,000,000 financing agreement,
which  consisted of two tranches of $1,000,000 each.  In April 2002, the Company
issued  800,000  units  at  $1.25  per unit under the first tranche and received
$1,000,000.  The  closing bid price of the Company's common stock on the date of
issuance  was $1.31 per share.  Each unit consists of one share of the Company's
common  stock  and a warrant to purchase 1.1 shares of common stock at $1.45 per
share.  The  warrants have a term of five years and exercise of the warrants can
be  cashless  under  certain  circumstances.  The  Company  incurred transaction
costs, which were settled through a cash payment of $100,000 and the issuance of
warrants  to  purchase 113,000 shares of the Company's common stock at $1.45 per
share and warrants to purchase 80,000 shares of common stock at $1.25 per share.
These warrants have a term of five years and the exercise of the warrants can be
cashless  under  certain  circumstances.  The  Company  issued  1,073,000 common
shares,  which are being held by an escrow agent for the potential issuance upon
the  exercise of the warrants.  The second tranche is no longer available to the
Company,  pursuant  to  the  terms  of  expiration.


                                      F-21
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2003 and 2002

Prior  to  July 1, 2001, the Company entered into a $15,000,000 equity financing
agreement with a third party.  Under the first installment of the agreement, the
Company received $7,500,000 cash, net of $507,989 in offering costs, in exchange
for  4,531,613  shares  of  the  Company's common stock (approximately $1.66 per
share,  before offering costs), a warrant ("the Initial Warrant") to purchase an
additional  453,161 shares of the Company's common stock, and a separate warrant
to  purchase  shares of the Company's common stock ("the Vesting Warrant").  The
$1.66  per  share  amount  was based upon 80% of the average market price of the
Company's  common  stock prior to the closing, as defined in the agreement.  The
Initial  Warrant  is exercisable immediately through October 2005 at an exercise
price  of  $2.586  per  share.  Under the Vesting Warrant, on defined dates, the
warrant  shall  vest  with  respect  to  a  defined  number  of  shares that are
exercisable  at  $0.001  per  share  immediately  and through October 2005.  The
defined  dates are the 65th, 130th, and 195th trading days following the closing
of  the  $7,500,000  transaction.  The  defined  number  of  shares  is equal to
one-third of the initial shares (4,531,613) multiplied by an amount equal to the
initial  purchase  price  multiplied  by  an  initial  percentage  (the  initial
percentage is equal to 115%, 125% and 140% from the 65th, 130th, and 190th days,
respectively,  from  the  initial  closing date), less the reset price, which is
equal  to the average market value of the Company's common stock at those dates.
This  amount  is then divided by the reset price and equals the number of shares
issuable  under the Vesting Warrant.  For the 65th trading day, 2,143,975 shares
were issued in March, 2001 for the first one-third installment under the vesting
warrant.

The  companies  and  individuals  that provided the equity financing have stated
that  7,418,895  shares  are  due for the second one-third installment under the
vesting warrant and 4,545,303 shares are due for the third one-third installment
under the vesting warrant.  The Company does not intend to issue the shares, but
has  reserved  the  shares  pursuant  to a court order (Note 8).  As a result of
lawsuits  filed,  the  second  installment  of  the  equity financing has not be
completed.

During  the  years  ended  June  30, 2003 and 2002, the Company issued shares of
common stock in exchange for services.  The shares were issued for the following
services  and  were  valued  at  the quoted market price of the Company's common
stock  at  the  date  the  services  were  performed:

<TABLE>
<CAPTION>
                                       2003                2002
                                       ----                ----
                                 Shares   Amount   Shares    Amount
                                 ------  --------  ------  ----------
<S>                              <C>     <C>       <C>     <C>
Third parties, investment-
 related services                14,000  $  9,345  36,000  $   27,360
Employees                             -         -  10,000      12,700
                                 ------  --------  ------  ----------
                                 14,000  $  9,345  46,000  $   40,060
                                 ======  ========  ======  ==========
</TABLE>


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


                                      F-22
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2003 and 2002

During  the year ended June 30, 2002, the Company issued 16,604 shares of common
stock  in  connection  with  exercised  stock  options.

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.

<TABLE>
<CAPTION>
A summary of the Option Plans is as follows:

                                         2003                    2002
                                      -----------             -----------
                                             Weighted                Weighted-
                                              average                 average
                                             exercise                 exercise
                                  Shares       price      Shares       price
                                -----------  ---------  -----------  ----------
<S>                             <C>          <C>        <C>          <C>
Outstanding, beginning of
  Year                           8,502,000   $    1.06   6,852,000   $     1.08
Granted                            450,000        0.62   1,675,000         0.98
Expired                         (  150,000)       2.06           -            -
Exercised                       (   14,476)       0.66  (   25,000)        0.45
                                -----------  ---------  -----------  ----------

Outstanding, end of year         8,787,524   $    1.00   8,502,000   $     1.06
                                ===========  =========  ===========  ==========

Options exercisable at
  end of year                    8,322,000   $    1.00   7,502,000   $     1.07
                                ===========  =========  ===========  ==========
Weighted-average fair value of
  options granted during the
  year at market                             $    0.52               $     0.27
                                             =========               ==========
</TABLE>


                                      F-23
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2003 and 2002

<TABLE>
<CAPTION>
The following table summarizes information about stock options outstanding as of June
30, 2003:


                     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          5.37  $          0.32            3,255,000  $     0.32
0.51 - 1.00   2,495,524          9.48             0.67            2,240,524        0.64
1.01 - 2.00     860,000          7.23             1.53              650,000        1.58
2.01 - 3.00   2,167,000          5.28             2.28            2,167,000        2.28
5.01 - 6.00      10,000          6.67             6.00               10,000        6.00
              ---------  ------------  ---------------  -------------------  ----------
              8,787,524          7.80  $          1.00            8,322,524  $     1.00
              =========  ============  ===============  ===================  ==========
</TABLE>

During 2003, options to purchase 450,000 shares of the Company's common stock at
exercise  prices  ranging  from  $0.61  to  $0.97 per share were granted to four
employees of the Company, one of whom is an officer and director of the Company.
The exercise prices were equal to the market value of the Company's common stock
at  the  date  of  grant  and  expire  through  2013.

During 2002, options to purchase 1,675,000 shares of the Company's common stock,
at  exercise  prices  ranging  from $0.65 to $1.47 per share, were granted to 21
employees  of  the Company, six of whom are or were officers and/or directors of
the  Company.  The  exercise  prices  were  equal  to  the  market  value of the
Company's  common  stock  at  the  date  of  grant  and  expire  through  2012.

WARRANTS:

<TABLE>
<CAPTION>
At June 30, 2003, the following warrants to purchase common stock were outstanding:

     Number of common         Exercise          Expiration
shares covered by warrants     price               date
--------------------------  ------------  -----------------------
<C>                         <C>           <S>
          70,000            $       2.81         July 2003
         522,500             0.30 - 2.17  October - December 2003
         440,000             0.25 - 1.50  January - February 2004
          20,000                    1.25  August - September 2005
       1,629,352             0.30 - 2.58  October - December 2005
          75,000             0.30 - 0.36       January 2006
         200,000                    0.65         May 2006
         650,000             0.60 - 1.25       January 2007
       3,440,000             0.50 - 0.60  October - November 2007
       1,333,334                    0.15        April 2008
       ---------
       8,380,186
       =========
</TABLE>


                                      F-24
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2003 and 2002

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
expires  in  January 2010, and is exercisable immediately.  The warrant provides
for  a  cashless  exercise  and  was  valued at approximately $230,400 using the
Black-Scholes  pricing  model (Note 8).

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
remain  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
(Note  8).

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.

During  the  year  ended  June 30, 2002, the Company issued warrants to purchase
200,000  shares  of common stock at $1.25 per share for services received from a
third  party.  The warrants expire in January 2007.  The warrants were valued at
$104,800  using the Black-Scholes pricing model, and that expense was charged to
general  and  administrative  expense.

During  the  year  ended  June  30,  2002, warrants to purchase 50,000 shares of
common  stock  at  $3.52  per  share  expired.

8.  COMMITMENTS  AND  CONTINGENCIES

LICENSE  AGREEMENTS:

The  Company  and  Louis  DiFrancesco,  the  inventor of the PI Technology, were
involved  in  litigation  relating to NanoPierce's ownership of its intellectual
property and the rights as to who should receive royalty payments from licenses,
which  were  outstanding  as of September 3, 1996.  In October 2002, the Company
and  DiFrancesco  signed  a  settlement  agreement enforced by Court Order.  The
Court  Order declares that the Company owns the entire, exclusive, incontestable
ownership,  right,  title  and interest in the patents.  The Court Order further
declares  that Mr. DiFrancesco owns the sole, exclusive, and incontestable right
to  receive  and  collect  all  royalties  and  other payments from all licenses
outstanding  on  September  3,  1996.  Pursuant to the settlement agreement, Mr.
DiFrancesco  was  also  granted  a  limited,  two-year,  non-transferable,
royalty-bearing  license  with  no  right  to  sublicense.


                                      F-25
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2003 and 2002

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 (the
"Placement  Agent"). Under the terms of the agreement, the Placement Agent is to
act 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.  During  the  term  of  the agreement, the Company is prohibited from
directly  or  indirectly  offering  securities,  except  in  connection with (a)
stock-based  compensation  issued  to  employees  or  other  participants,  (b)
securities  sold  prior  to  February  15,  2003,  and  (c)  securities  sold in
connection  with  bridge  financing,  as  defined  in  the  agreement.

Compensation  to  the  Placement  Agent  consists  of  a  retainer fee (deferred
consulting  costs) valued at approximately $230,400, which consists of a warrant
to  purchase  up  to  450,000 shares of the Company's common stock. Compensation
also includes a $10,000 monthly advisory fee, payable in cash, beginning in June
2003.  In  addition,  the  Placement  Agent  is to receive a 6% fee based on the
proceeds raised from a successful offering, payable in cash, along with warrants
to  purchase  shares  of the Company's common stock in an amount equal to 10% of
the  number  of  common  shares  issued  in  an  offering.

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.  The Company is seeking various forms of relief
including  actual,  exemplary  and  treble  damages.  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 July 2003,
Harvest  Court, LLC filed suit against the Company, Mr. Metzinger, Ms. Kampmann,
Dr.  Neuhaus, Dr. Shaw and unrelated third parties in the United States District
Court  for the Southern District of New York, New York City, New York.  The suit
alleges  violations  of federal securities laws and common law fraud among other
claims.  Harvest Court is seeking various forms of relief including compensatory
and  punitive  damages.  The  Company  is  preparing pleadings responsive to the
complaint.


                                      F-26
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2003 and 2002

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.  The Company has filed
counterclaims  seeking  various  forms  of  relief  against  Harvest Court, LLC.

The Company intends to vigorously prosecute this litigation and does not believe
the  outcome  of  this  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.

In September 2001, litigation was filed by Thomson Kernaghan & Co., Ltd. against
the  Company  and  certain officers/directors of the Company seeking damages for
defamation.  Thomson  Kernaghan  &  Co., subsequently filed for protection under
Canadian bankruptcy laws. In December 2002, the Company received notice from the
bankruptcy  trustee of the Thomson Kernaghan & Co., that it would not pursue the
action  and  would  move  for  dismissal  of  the  litigation  with  the  court.

9.     INCOME  TAXES:

The  Company and its subsidiaries did not incur income tax expense for the years
ended  June  30, 2003 and 2002. 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, 2003 and 2002 is as
follows:

<TABLE>
<CAPTION>
                                          2003         2002
                                      ------------  -----------
<S>                                   <C>           <C>
Expected income tax benefit           $(1,066,000)  (1,342,000)
Increase in valuation allowance         1,066,000    1,342,000
                                      ------------  -----------
                                      $         -            -
                                      ============  ===========
</TABLE>


<TABLE>
<CAPTION>
The tax effects of temporary differences that give rise to substantially all of
deferred tax assets at June 30, 2003 are as follows:

<S>                                       <C>
     Deferred tax assets:
        Net operating loss                $ 4,010,000
     Less valuation allowance              (4,010,000)
                                          ------------
     Net deferred tax assets              $         -
                                          ============
</TABLE>


                                      F-27
<PAGE>
                 NANOPIERCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                       Years Ended June 30, 2003 and 2002

As  of  June  30,  2003,  the  Company  has net operating loss carry forwards of
approximately  $11,800,000,  which  expire between 2012 and 2023.  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.

10.     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>
                    2004                             $124,743
                    2005                               90,901
                    2006                               66,601
                                                     --------

                                                     $282,245
                                                     ========
</TABLE>

Aggregate  rental  expense  in  continuing operations under operating leases was
$211,095 and $227,226 for the years ended June 30, 2003 and 2002, respectively.

11.  FOREIGN AND DOMESTIC OPERATIONS:

Operating  results and long-lived assets of continuing operations as of June 30,
2003  and  for  the  years ended June 30, 2003 and 2002, 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, 2003       $        3,900        33,117          37,017
                                 ==============       =======       =========
     Revenues for year
       ended June 30, 2002       $        4,737             -           4,737
                                 ==============       =======       =========
     Long-lived assets at
       June 30, 2003             $      870,831       371,014       1,241,845
                                 ==============       =======       =========
</TABLE>


                                      F-28
<PAGE>