> `DESTRON-FEARING Electronic ID Background`

> Most people are familiar with the laser scanning of bar codes in supermarkets to identify goods at the check-out line, and bar codes used by the postal service to automatically identify packages and letters. Destron-Fearing's electronic identification system provides essentially the same capability for the identification of animals, where an ID system using labels is not practical.

> There are two basic differences between electronic identification and bar code technology: how the ID number is read and how it is stored. Electronic identification uses a common low-power radio signal to read an ID number stored in a tiny electronic circuit rather than laser light to read a label. Electronic ID based on these radio signals is also referred to as radio frequency identification, or RFID. These low-frequency radio waves, unlike light, can penetrate all solid objects except those made of metal. Therefore, use of electronic ID allows the number to be stored inside the animal, where it is permanent and is not subject to being lost or altered, or becoming worn and unreadable like an external dog tag.

> The tiny electronic device used to store the electronic ID number is called a transponder. Destron-Fearing's transponders come in three sizes (see Figure 1), the smallest of which is about the size of an uncooked grain of rice. All of the transponders are easily injected into an animal, similar to the delivery of ordinary vaccines. The device then remains with the animal for life, where it provides the animal's unique ID number any time it is scanned by a compatible electronic ID reading system.

> Most Destron-Fearing reading systems, or scanners, send a signal using a frequency of 125 kHz, much lower than the frequencies used in AM medium-wave broadcasting. The power of the radio signal sent by the scanner is less than one one-thousandth of a waft (one milliwatt), which is far less than the power transmitted by a child's two-way radio (walkie-talkie). Destron-Fearing scanners are approved by the FCC in the US. and by similar organizations in other countries (PTT's) to operate as low-power radio- frequency devices not requiring site licensing.

> Destron-Fearing's transponders are passive devices, meaning that the transponder carries no battery and remains inactive most of the time. The transponder's tiny electronic circuit is energized by the low-power radio beam sent by a compatible reading device. The transponder sends the ID number as a radio signal back to the scanner, which then decodes the number and displays it on a small screen similar to that on an electronic calculator. Since the transponder contains no battery there is nothing to wear out.

> The transponders are cylindrical, with the smallest measuring 11 mm in length and 2.1 mm in diameter. Inside are only three components. The first is a computer microchip (custom integrated circuit) which is shown in Figure 2 on a human finger. This microchip contains the unique ID number assigned to the transponder, and all of the electronic circuitry necessary to send the number to the scanner when it receives the scanner radio signal.

> The second component of the transponder is a coil of copper wire wound around a ferrite (iron) core. This functions as a tiny radio antenna to pick up the signal from the scanner, and to send the encoded ID number from the microchip back to the scanner. The third component is a capacitor used for tuning. The internal structure of the transponder is shown in Figure 3.

> Each transponders unique ID number is encoded into it during the manufacturing process. A laser etches this code onto the surface of the microchip prior to transponder assembly and encapsulation in glass. Once the number is encoded it is impossible to after. Encoding of the number itself uses 35 bits of information which allows 34 billion possible ID numbers.

> The outside of the transponder is a soda lime glass which has been specially selected for known biocompatibility. During manufacture, this glass is hermetically sealed so it is not possible for any moisture from the host animal's body fluids to reach the electronics inside.

> While glass is biochemically inert it is also very smooth, which, in rare instances could allow the transponder to move around in the animal's body once injected.

> Therefore, small transponders are available with one end sheathed in a polypropylene shell as shown in Figure 4. This coating offers a surface with which fibrous connective tissue begins to bond within 24 hours of the injection. Destron recommends this configuration of the transponder whenever migration is a concern or with subcutaneous (under-the-skin) injections, such as those done in dogs and cats.

> In dogs and cats, the transponder is injected in a standard site which is in the scruff of the neck between the shoulder blades (scapula). In horses, the standard injection site is on the left side of the animal in the middle third of the neck, just below the long hairs of the mane. For these injections, each transponder comes pre-packed inside a needle, and this assembly is packaged in a pre- sterilized plastic envelope. Each needle is discarded after one-time use. This prevents the spread of infection, and insures that the needle is factory sharp so as to cause minimum discomfort to the animal.

> Numerous studies have been performed on a wide variety of animal species to demonstrate the safety of the transponder. These studies have involved mammals, birds, fish, and reptiles which have shown no adverse reactions to the transponder, either biological or behavioral. Many of these studies have been documented in published papers.

> While Destron pioneered injectable transponders for animals in 1985, electronic identification technology in general was already well established before that time. Applications included external electronic ID for animals (ear tags, electronic collars, etc.), identification of people for access to buildings or restricted areas and identification of manufactured goods, machine tools, and other items in a factory environment.

> Destron-Fearing RFID systems are sold worldwide through distributors to the livestock, companion animal, laboratory animal, and fish and wildlife markets. More than three million animals have been injected with transponders manufactured by Destron-Fearing. The Company's worldwide headquarters are in S. St. Paul, MN. Destron-Fearing is publicly traded on the NASDAQ under DFCO.

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