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Originally published April 21, 2011 at 7:38 PM | Page modified April 21, 2011 at 9:41 PM

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Impinj aim: raise $100M in IPO

Seattle-based Impinj, a technology company that designs and sells RFID chips used for tracking everything from pants to prescription drugs, filed papers Thursday to raise up to $100 million through an initial public offering of stock.

Seattle Times staff reporter

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Seattle-based Impinj, a technology company that designs and sells RFID chips used for tracking everything from pants to prescription drugs, filed papers Thursday to raise up to $100 million through an initial public offering of stock.

Net proceeds from the proposed IPO would go to repay as much as $25 million in debt, with the balance invested in developing products and running the business, according to its preliminary prospectus, which did not disclose the expected price or number of shares to be sold.

Morgan Stanley and J.P. Morgan are the lead underwriters for the proposed IPO.

The company, founded in 2000, sells the chips inside advanced radio-frequency identification (RFID) tags, tag readers and software. Each chip contains a unique identifier, and once the tags are affixed to products, tag readers can quickly discover what's in a stack of inventory and relay that information to computer systems.

The chips account for about two-thirds of its revenue.

Impinj focuses on the RFID market's fastest-growing segment — ultrahigh frequency (UHF) chips. The chips offer low cost, longer range and don't have to be visible to tag readers.

The tracking technology helps companies like Walmart and Banana Republic know when certain types of apparel are running low, and gives prescription-drug distributors confidence that their supplies aren't tainted with counterfeits.

Impinj hopes retailers of electronics, cosmetics and jewelry will adopt the new RFID tagging systems. Some governments have mandated such tagging for cars and liquor bottles, the company says.

"We envision a future when a broad array of everyday items are linked to networked information systems," Impinj said in its prospectus. "This global network of connected objects is often referred to as the 'Internet of Things.'"

Revenue has been growing: Last year, the company booked $31.8 million in revenue, up from $20.8 million in 2009. About 36 percent of its 2010 revenue came from just two customers.

Its revenue last year would have been higher, Impinj said, had it not experienced a 9-month shortage of wafer supplies and production problems in manufacturing its chips.

The company has never been profitable. Excluding interest due to its preferred stockholders, it had a net loss of $9.9 million in 2009, $11.4 million in 2010 and $1.8 million in the first three months of this year, according to its financial statements. Those preferred stockholders are owed more than $40 million in unpaid interest.

Impinj chalks up much of those losses to having spent more than $32 million on research and development over the past three years.

The company employs 142 people and has its main office in Fremont. Its engineering offices are in California's Rancho Cordova and Newport Beach.

Impinj relies on third-party foundries and subcontractors to manufacture its chips and contract manufacturers to assemble its tag readers.

It said it holds 90 U.S. patents and has 77 pending applications as of April 15.

Impinj competes with two other leading chip-makers — California-based Alien Technology and Netherlands-based NXP Semiconductors.

Impinj had about $11.8 million in cash at the end of March, and is due to repay preferred stockholders $6 million on June 30. Venture capital firms, including Seattle-based Madrona, own just over half of Impinj. Intel Corp. owns 6.6 percent of the company.

Such backers have poured $160 million into the company since its inception.

The UHF RFID tag industry is on a sharp growth curve, with global sales expected to double both this year and next, said Justin Patton, managing director of the RFID Research Center at the University of Arkansas.

More than 40 companies, including Impinj, provide equipment and participate in the center's research, which evaluates applications of RFID technology in different industries.

Impinj's chief technology officer, Chris Diorio, has led the way in developing the global UHF Gen 2 standard, Patton said.

"They're very well known, and a lot of the tags you see out there today have their chips in them," he said.

Sanjay Bhatt: 206-464-3103 or sbhatt@seattletimes.com

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