part of china deal details

Approval of Asset Sale to Saddington

Sale of Assets

As previously reported in Form 8-K filed on November 17, 2008, on November 3, 2008, the Company entered into an Asset Sale Agreement (the “Asset Agreement”) which contemplated the sale and transfer to Saddington Limited of all or substantially all of the assets of the Company, including:


· The Company’s interest in the contract with the State General Administration for Quality Supervision, Inspection and Quarantine of the People's Republic of China (“AQSIQ”) for implementation of a program of authentication and tracking of propane gas tanks in the People’s Republic of China (the “AQSIQ Chinese National Gas Tank Contract”. The AQSIQ Chinese National Gas Tank Contract is described in, among other filings, the Company’s Forms 10-Q filed November 14, 2007, February 14, 2008, and May 20, 2008 and Form 10-K/A filed October 15, 2008.



· The Company’s interest in: (i) the product authentication technology referred to as Synthetic DNA, SDNA, and KMACK; (ii) any and all technologies related to the Company’s projects in China and other parts of Asia, including, but not limited to, the AQSIQ Chinese National Gas Tank Contract, (iii) the technologies described in the patent applications described Exhibit 6 to the Asset Agreement, and (iv) all trademarks, patents, marks and logos (whether registered or not) held or applied by the Company; and



· The Company’s interest in its affiliates in Hong Kong and Beijing.



The consideration to be paid by Saddington for the assets it acquires pursuant to the Asset Agreement consists of:


· Assumption of the Company’s obligations and liabilities under the AQSIQ Chinese National Gas Tank Contract;



· $2.5 Million in cash at or before closing, allocated as follows: $1.75 Million towards the AQSIQ Chinese National Gas Contract; $250,000 towards rent, wages and other expenses for TPID Beijing, and $500,000 towards accounting, auditing and other expenses for TPID.



· participation in the proceeds of the AQSIQ Chinese National Gas Tank Contract as follows –



o Five percent (5%) of Saddington’s Net Operating Profit Before Taxes (“NOPBT”) for the first thirty (30) months beginning with the month of first revenue receipts. NOPBT is defined as the total amount of Saddington’s operating revenues less the operating expenses including costs of goods or technology supplied and share costs of distribution and selling and administrative expenses and headquarters expenses of Saddington and prior to applying taxes, as adjusted for interest expense on the present value of operating leases but excluding interest expense or income on debt and cash.



o Five percent (5%) of the Gross Receipts for the duration of the unexpired sixty (60) month term of the AQSIQ Chinese National Gas Tank Contract. Gross Receipts is defined as the total amount of funds actually received and collected by Saddington and its respective affiliates from sales of product or service utilizing the Subject Technology, as further defined in the Asset Agreement.



· participation in the proceeds (under the formulas applicable to the AQSIQ) from:




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o the Chinese National Car and Motorcycle Part Contract with the China Federation of Industry and Commerce Auto & Motorbike Parts articles for Use Chamber of Commerce (as reported in TPID’s press release on Business Wire on October 24, 2006),



o the Chinese Painting and Calligraphy Contract with the Beijing & Calligraphy Collector Association (as reported in TPID’s press release on Business Wire on March 8, 2007 and November 16, 2007), and



o the Chinese Pharmaceutical Contract with Helida (Xinyang) Pharmaceuticals Co., Ltd.



· A License Agreement (the “License Agreement”), granting the Company the exclusive right (exclusive even to Saddington) to market and distribute the technology perfected by Saddington in the course of the AQSIQ Chinese National Gas Tank Contract for the United States, Europe, and other parts of the world outside Asia. Under the License Agreement,



o the Company has to exclusive right to market and distribute the perfected technology in the United States on a royalty-free basis for a term of five years.



o For Europe and other parts of the world outside Asia, and for the United States after the initial five year term, the Company’s exclusive distribution rights are subject to the same revenue sharing arrangement which Saddington has given to TPID for the AQSIQ Chinese National Gas Tank Contract and other Chinese contracts.



Effect of the Saddington Agreements


Under the Saddington Agreements, Saddington will provide all of the funding needed to immediately roll out the AQSIQ Chinese National Gas Tank Contract. Upon meeting Saddington representatives, the Chinese Government AQSIQ, which had waited for funding from TPID for the Chinese National Gas Tank Project for over a year, has authorized the immediate rollout of the AQSIQ Chinese National Gas Tank Contract for all 23 provinces, 4 municipalities, and 5 autonomous regions in China. Previously, the initial rollout of the AQSIQ Chinese National Gas Tank Project was planned for six provinces.


AQSIQ has also advised Saddington that Saddington should immediately commence the preparations needed to roll out a commensurate Chinese national campaign for elevator parts, which revenues are expected to be comparable to those for the Chinese National Gas Tank Project. Without immediate funding, the AQSIQ Chinese National Gas Tank Contract would have been lost. (See further discussion in the Company’s Form 10-K for the year ending June 30, 2008, under “Funding Initiatives in 2008”).


In addition to the $2.5 Million funding to be delivered before or at closing, Saddington has secured and will additionally infuse funding sufficient for the AQSIQ Chinese National Gas Tank Contract in the first twelve months of rollout, required for project implementation costs. In addition to meeting AQSIQ requirements, Saddington has also commenced supply agreement negotiations with various suppliers for marking equipment, scanners, identity coding and data cards and is working to place orders with each supplier and start production within the next few weeks to immediately commence rollout of the AQSIQ Chinese National Gas Tank Project.


Meanwhile, full rights to exploitation of TPID’s technology in the world outside Asia are retained by TPID through the License Agreement, and revenue sharing from the AQSIQ Chinese National Gas Tank Contract and Asian Contracts will support TPID’s organic growth and profitability -- TPID’s 5% revenue share from the AQSIQ Chinese National Gas Tank Contract alone is conservatively estimated to be at least $15 Million per year.



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About Saddington


In addition to the necessary funding, Saddington and its affiliates bring the management, operational and technical expertise, manufacturing facilities, related technology, and other resources needed to immediately rollout the AQSIQ Gas Tank Contract and other Chinese contracts. Saddington and its affiliates already operate in the anti-counterfeiting/ biometric/security arena. They have developed and marketed their own advanced mobile scanner, biometric, and security technology. They have access to facilities in China which can manufacture the scanners, identity coding and data cards and other items needed to immediately rollout the AQSIQ Gas Tank Contract.


Saddington and its affiliates have developed relationships, and worked on projects, with the Chinese Government and other governments in Southeast Asia. In addition to their own funds, the Company believes that Saddington has significant relationships, and has worked on projects, with prominent funders in Asia and elsewhere. The Company believes that Saddington brings experience in project management and implementation, product development, corporate and institutional banking and finance and debt and equity capital markets.


Status of the Saddington Agreements


Since the execution of the Asset Agreement on November 3, 2008, Saddington has conducted due diligence, with the support of the Company, as necessary for the closing and has extended certain short-term credit to the Company and TPID Beijing to fund ongoing operations. Saddington has informed the Company that it desires to close the transactions contemplated by the Asset Agreement as soon as practicable after the filing of this Information Statement.


Approvals required for Asset Sale


Under Section 271 of the Delaware General Corporation Law, the holders of a majority of the voting power of the Company must approve the sale of assets to Saddington. The holders of a majority of the voting power of the Company have executed a written consent in lieu of a special meeting approving the asset sale to Saddington. The written consent is effective 20 days after the filing of this definitive information statement. The Company anticipates the consent action will be effective on or about June 29, 2009, and intends to consummate the transactions contemplated by the Asset Agreement as soon thereafter as practicable.



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Beneficial Ownership of Principal Stockholders, Directors, and Management

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The table below shows the amount and class of stock of the Company beneficially owned as of June 3, 2009 by each of our directors and executive officers, each person whom we believe beneficially owns more than 5% of our outstanding voting stock; and all executive officers and directors as a group. In accordance with the rules of the Securities and Exchange Commission, beneficial ownership as disclosed in the table below includes shares currently owned as well as shares which the named person has the right to acquire beneficial ownership of within 60 days, through the exercise of options.

Name of Beneficial Owner Amount and Nature of Beneficial Ownership of Stock Percentage of Votes
James MacKay (3)
Unit 301 3/F Dannies
20 Luard Road
Wan Chai Hong Kong 20,406,006 96.35%
Michael J. Antonoplos (1) (2)
1615 Walnut Street, 3rd Floor, Philadelphia, PA 19103 800,000 -%
All of our directors and officers
as a group including those named above
(1 person) 800,000 -%



(1) Director



(2) Officer



(3) Includes 19,406,006 shares of Common Stock registered in the name of Sino Fortune Asia Limited and 1,000,000 shares of Series B Preferred Stock registered in the name of James MacKay. Each share of Series B Preferred Stock is convertible into one share of Common Stock at the option of the holder, and is entitled to 1,000 votes per share. Common stock and preferred stock vote together as a single class on all matters submitted to a stockholder vote.





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Other Matters


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No matters other than those discussed in this Information Statement are contained in the written consent signed by the holders of a majority of the voting power of the Company.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ Michael J. Antonoplos
Michael J. Antonoplos, Secretary