Phase 1 | Feasibility, Concept and Costing

A Proposal for QITNetworks

UHF RFID Tag for EPAL Wooden Pallets

6 Weeks

USD 8,000

Scope & Fee Firm

Confidential. Prepared under NNN between Shield Works / C2W Group and QITNetworks.

01 — Background

Background

QITNetworks is a Polish technology company working across European logistics, with a long-standing relationship of around 15 years with the EPAL pallet ecosystem. The company is developing an RFID solution to bring track and trace, repair visibility, counterfeit prevention and process speed to the open-pool wooden pallet model. The commercial agreement sits between QITNetworks and EPAL International and is intended to cover Europe first, with scope to extend to EPAL operations in China and the United States.

The market context is significant. EPAL produces in the order of 100 million pallets per year, against an in-market pool estimated at 600 to 700 million pallets. The long-term target discussed is that from around 2029 all newly manufactured pallets could leave production with an RFID tag fitted. Counterfeit pallets are a specific driver, with market volumes understood to exceed licensed production, which places unique and reliable tag identity at the centre of the requirement.

The product is not a standard RFID label in a plastic case. It is a custom UHF disc tag, approximately 47mm in diameter and no more than 4mm thick, designed to be fixed into the pallet, to work with RFID gates and handheld readers, and to support the client's digital platform where pallet data is written, locked and used across the pallet lifecycle. QITNetworks has the platform and infrastructure largely in place and requires the tag to be developed from scratch. Only the external envelope exists today.

QITNetworks has approached C2W and Shield Works to take the concept from requirement to a manufacturable, high-volume product at a viable unit cost. This proposal covers the first phase of that program, Phase 1, Feasibility, Concept and Costing, following the technical alignment call held on 20 July 2026.

This proposal is marked provisional in that the development figures in Section 5 are indicative and firm up through Phase 1. The Phase 1 scope and fee set out below are firm. The first session, the Engineering Kickoff Workshop in Deliverable 1, aligns the work against the real priorities, principally survival through the pallet heat-treatment process and the make versus buy decision, before engineering work begins.

02 — Our Preliminary Read

Our Preliminary Read on the Product

Ahead of Phase 1, our team has reviewed the enquiry, the intake form, the project summary, the call notes and the technical alignment discussion. The 14-page requirement presentation has been received and will be reconciled into the Phase 1 work. The following is not the full Phase 1 output. It is the position from which our engineering work will start.

2.1 The central technical question: survival through heat treatment

The single most important item in Phase 1 is whether the RFID electronics survive the pallet heat-treatment process. Pallets are placed in drying and heat-treatment chambers, with roughly 5,000 pallets processed at a time. The brief sets 80 degrees C nominal exposure with a 90 degrees C qualification target, and the call indicated the drying stage can run up to 72 hours in high humidity as water evaporates from the wood. The tag is fitted before this process.

This matters because standard UHF inlay adhesives and chip bonding often begin to fail well below the top of that range, and prolonged wet heat is more demanding than a short thermal spike. A housing that survives is of no value if the inlay inside it does not. Phase 1 carries this as the priority engineering question. We establish the real thermal and moisture load the electronics must withstand, and we do not commit a construction, a material or a unit cost against an assumption.

2.2 The core commercial question: make versus buy

The requirement is for a custom industrial disc, and that is what we will deliver. The disc itself is bespoke either way, because no off-the-shelf product is a 47mm sealed, welded, tamper-evident disc with a central nail hole. The commercial choice sits inside the disc, in the RFID engine. Either we design the antenna and inlay from scratch, or we integrate a proven existing UHF inlay and antenna into the custom disc and tune it to the requirement. The second route, where the RF performance holds up, is the more direct path to the target unit cost because it does not reinvent the antenna. The client's enquiry framed this as a China research and supplier feasibility study, and Phase 1 answers which route is right with real engineering and supplier data. We confirm the preferred direction with QITNetworks at the Engineering Kickoff Workshop before work begins, and QITNetworks is free to direct a bespoke antenna from the outset if preferred.

2.3 Where quality, cost and timeline are won or lost

Unit cost against the licence anchor. Pallet producers already pay a licence-related cost of around USD 0.12 to 0.13 per pallet. The tag has to stay close to that. A material increase, for example around USD 0.23 (EUR 0.20) per pallet, would risk making the project commercially unviable. For context, bare UHF inlays run roughly USD 0.05 to 0.15 at volume, while existing rugged and sealed hard tags typically run from around USD 0.50 upward. The sealed, tamper-evident construction, not the RFID electronics, is where the cost pressure sits, and closing that gap is why the make versus buy and sourcing work sits at the centre of Phase 1.
RF performance on wood, with a metal fixing. The tag reads on wood, often moist wood, at gates and on handhelds, with a central metal nail sitting in the antenna zone. The nail and the wood both affect tuning and read range. Phase 1 sets the antenna and chip concept and the read strategy; full RF simulation and lab read-range testing follow in the next stage.
Sealing within a 4mm envelope. A near-hermetic seal that protects the electronics through wet heat, inside a disc no more than 4mm thick that also carries a central nail hole, is a demanding mechanical problem. Phase 1 sets the construction and sealing concept, including whether a two-part ultrasonic weld or an alternative such as overmoulding is the better route.
Anti-tamper. The tag must show or resist tampering, so a tag cannot simply be moved between pallets. Phase 1 develops the anti-tamper concept, including the client's internal groove and breakaway idea and any stronger route we identify.
Quality at scale and counterfeit control. Uniqueness of the factory-locked TID underpins counterfeit detection and is business-critical to QITNetworks. Phase 1 sets the QC strategy for the product against the client's quality requirements, built on our layered process of incoming, in-process and end-of-line control.

03 — Volume, Cost & Timeline

Volume, Cost and Timeline Targets

The following reflects current working assumptions from the intake form, the summaries and the alignment call. The figures are reconciled and validated through Phase 1.

Sample Quantity	Approximately 100 to 500 units
Prototype Quantity	Approximately 1,000 to 5,000 units
Pilot Series	Approximately 50,000 to 500,000 units
Serial Production	10 million+ units, ramping toward approximately 100 million tags per year by 2030-2031, then growing 1 to 3 percent per year
Market Context	EPAL pool of approximately 600 to 700 million pallets; about 100 million new pallets per year; target of all new pallets tagged from around 2029
Target Unit Cost	Close to the existing pallet licence cost of approximately USD 0.12 to 0.13 per pallet; a material increase would not be viable. Validated through the Phase 1 indicative costing
Target Timeline	Prototypes achievable within months; the production-ready timeline is an output of Phase 1 after full analysis, indicatively in the region of 9 to 12 months
Capacity	Scalable to the full annual volume within Shield Works and our coordinated supply chain, with quality governed centrally
Funding Status	Secured for development

04 — Phase 1

Phase 1: Feasibility, Concept and Costing

Phase 1 is the first paid engagement in the program. The work is engineering-led and answers the two questions above: can the requirement be met as specified, and is the right route to source and adapt or to design from scratch. It produces an indicative product cost at approximately 80 to 90 percent accuracy, a concept design layout, and a detailed development and production roadmap through to mass production.

Duration: approximately 6 working weeks from confirmation.

Phase 1 consists of the following deliverables.

Engineering Kickoff Workshop.

A working technical session with our Head of R&D and the Shield Works engineering team, not an introductory call. We walk through the full requirement set including the 14-page requirement presentation, the commercial goals and the priority questions, and we agree the engineering workstreams and the make versus buy decision criteria before work begins.

Feasibility Assessment and Requirement Review.

A structured review of the requirement against the hard constraints: the 47mm by 4mm envelope and the internal inlay stack, survival through heat treatment at 80 degrees C nominal with a 90 degrees C qualification target and up to 72 hours in high moisture, the metal nail in the antenna zone, and the anti-tamper requirement. Establishes what holds as specified and what must flex, with electronics survival through heat treatment carried as the priority.

RF and Antenna Concept Direction.

The antenna approach for the 47mm envelope with an RF-free central zone around the nail, the chip and inlay strategy, and band coverage (865 to 868 MHz confirmed, global 860 to 960 MHz assessed). Establishes whether the route is a custom antenna or an existing and modified inlay. Full RF simulation and lab read-range testing sit in the next stage.

Housing, Sealing and Anti-Tamper Concept.

The construction concept for the sealed disc body, comparing a two-part ultrasonic weld against alternatives such as overmoulding or potting, the near-hermetic sealing strategy for heat and moisture protection, and the anti-tamper mechanism. Includes a material evaluation across PBT, PA66 and PPS for temperature, moisture, durability, manufacturability and cost.

Chip and Component Selection.

A chip recommendation, NXP UCODE 9 against equivalent options, assessed on the mandatory RFID requirements: writable and permanently lockable EPC, factory-locked unique TID, minimum 96-bit EPC memory, operating frequency, and EPC Class 1 Gen 2 and ISO 18000-63 compatibility, together with the inlay strategy.

RFID Engine Sourcing and Make-vs-Buy Feasibility.

An investigation across our China supply chain and wider network for proven UHF inlays and antennas that meet or can be tuned to the requirement for integration into the custom disc. Assesses whether integrating a proven inlay meets performance and the target cost and reduces development and tooling investment, against designing the antenna from scratch, and delivers a clear make versus buy recommendation on the RFID engine. This is the primary lever on the target unit cost.

Indicative Product Costing and Concept Design Layout.

An indicative unit cost at approximately 80 to 90 percent accuracy, presented as a price ladder at 100k, 1M, 10M and 100M units per year, benchmarked against shortlisted suppliers, with a direct read on whether the target near USD 0.12 to 0.13 is reachable and by which route. Delivered with a concept design layout of the recommended disc, and with tooling cost, MOQ, lead time and capacity direction.

Development and Production Roadmap.

The consolidating document that carries the Phase 1 output through to qualified mass production: phased deliverables and timelines, phase management costs, the tooling strategy, the QC strategy built on our incoming, in-process and end-of-line control and testing against agreed parameters, the single or multiple supplier strategy, and a risk register. Branched into the proven-inlay route and the bespoke-antenna route per the make versus buy recommendation.

Fee: USD 8,000, payable in full on project confirmation.

Note: Phase 1 is the first phase of the program. Later development, testing, tooling and production work is scoped and costed within the Development Roadmap for QITNetworks' approval before any execution begins.

05 — Development Envelope

Indicative Development Envelope Preview

The ranges below are built bottom-up for this product from current market data for UHF inlays, custom antenna design, multi-cavity injection tooling and RFID qualification, together with our own tooling and engineering actuals. They are shared so the shape of the investment is clear, and are locked against specific supplier quotes in the Phase 1 output. Two routes are shown, and both deliver a custom industrial disc. They differ only in the RFID engine inside it. The proven-inlay route integrates an existing, qualified UHF inlay and antenna into the custom disc, and is the lower-cost path we expect to steer toward where the RF performance holds up. The bespoke-antenna route designs the antenna from scratch and is shown as an upper bound, for the case where no existing inlay meets the requirement. Phase 1 recommends one.

Proven-inlay route (custom disc, existing UHF inlay integrated and tuned) — expected route

Stage	Scope	Timeline	Indicative Fee
Sourcing, sample procurement and benchmarking	Identify and procure candidate rugged UHF tags and inlays, benchmark against the requirement	2 to 3 weeks	$3,000 to $6,000
Adaptation engineering and prototyping	Adapt and seal the selected tag to the requirement, functional prototypes	3 to 5 weeks	$5,000 to $11,000
RF and environmental qualification	Read-range, heat-treatment and tamper testing of the adapted tag	3 to 5 weeks	$5,000 to $10,000
Light tooling or sealing fixture (if required)	Modest fixture or housing modification where the sourced tag needs it	4 to 8 weeks	$2,000 to $12,000
Pilot validation batch	Off-tool validation batch, QC gate	3 to 4 weeks	Per Phase 1 unit cost
Development total (before mass production)	Indicative envelope, proven-inlay route	approx. 2 to 4 months	$15,000 to $39,000

Bespoke-antenna route (custom disc, antenna designed from scratch) — upper bound

Stage	Scope	Timeline	Indicative Fee
RF antenna design and simulation	Custom ring antenna for the 47mm envelope, RF-free nail zone, tuning for moist wood and the metal nail, HFSS/CST simulation	4 to 6 weeks	$6,000 to $12,000
Mechanical design, sealing and anti-tamper	Two-part 4mm housing from scratch, sealing strategy, anti-tamper mechanism, material selection and DFM, supplier drawings	4 to 6 weeks	$8,000 to $13,000
Prototype build and RF lab testing	Functional prototypes, read-range plots, minimum power, nail and wood effect analysis	4 to 6 weeks	$8,000 to $14,000
Environmental and tamper qualification	Heat-treatment cycling (80 C nominal, 90 C qualification, one to two 72 h cycles, moisture), impact, tamper testing, read performance before and after	3 to 5 weeks	$5,000 to $10,000
Prototype iteration (likely)	Second iteration on antenna, seal and any DFM-driven changes	3 to 4 weeks	$4,000 to $8,000
Injection tooling and ultrasonic weld fixtures	Multi-cavity two-part housing tool in hardened steel for high-volume shot life, plus ultrasonic sealing fixtures	8 to 12 weeks	$16,000 to $34,000
Pilot validation batch	Off-tool validation batch, real unit economics baseline, QC gate	3 to 4 weeks	Per Phase 1 unit cost
Development total (before mass production)	Indicative envelope, bespoke-antenna route, single prototype iteration	approx. 5 to 8 months	$47,000 to $91,000

The RF antenna design line carries the most execution risk of the development stages. A custom antenna that must stay tuned around a metal nail and on wood that shifts between dry and moist is specialist, iteration-heavy work. The figure reflects our in-house China engineering rates.

Both envelopes exclude the Phase 1 fee, the pilot production quantity, sample shipping, and any third-party testing or certification fees. They also exclude the full production tooling and line scale-out for very high annual volumes, which is a separate investment sized in the roadmap. The make versus buy recommendation in Phase 1 determines which path is developed.

5.1 Preliminary risk register

Indicative unit pricing is not included at this stage. The material and construction decisions and the make versus buy outcome materially affect per-unit cost and are not locked until the Phase 1 work is complete. Unit pricing at the target volume tiers is delivered in the Phase 1 indicative costing.

Risk	Likelihood	Impact	Primary Mitigation
RFID electronics do not survive the wet heat-treatment process (80 C nominal, 90 C qualification, up to 72 hours)	High	High	Priority feasibility workstream in Phase 1; inlay and construction locked against the real thermal and moisture load; qualification testing in the next stage
A sealed two-part housing does not fit the inlay stack within the 4mm envelope	Medium	High	Housing and sealing concept in Phase 1; overmould and alternative constructions evaluated in parallel
Metal nail detunes the antenna and read range is not met	Medium	High	RF and antenna concept in Phase 1 with an RF-free nail zone; full simulation and lab testing in the next stage; non-metallic fixing assessed
Target unit cost near USD 0.12 to 0.13 not achievable for a rugged sealed disc	Medium	High	Make versus buy and inlay sourcing in Phase 1 establish the real cost and the cheapest viable route before any tooling is committed
No existing inlay meets the requirement, forcing the more expensive bespoke-antenna route	Medium	Medium	Phase 1 inlay sourcing establishes viability early, before any antenna design or tooling is committed

06 — Exclusions

Exclusions

The Phase 1 fee covers all eight deliverables in Section 4. The following are excluded and are scoped and costed within the Development Roadmap, or addressed through external partners coordinated by Shield Works.

Full DFM execution, engineering drawing release and supplier qualification testing.
Antenna RF simulation, prototyping, sampling and physical testing, including read-range and thermal qualification testing.
Tooling and mould costs, and ultrasonic weld or sealing fixtures.
Certification and accredited test lab fees. A specific IP rating is not mandatory at this stage; any radio, RoHS or market-entry requirements are scoped in the roadmap and routed through external partners, quoted separately.
Shipping costs for physical samples or prototypes between China and Poland.
Production unit costs for the pilot batch and beyond.

07 — Payment Terms

Payment Terms

Engagement Fee

USD 8,000

payable in full on project confirmation

Engagement	Fee	Payment Trigger
Phase 1, Feasibility, Concept and Costing	USD 8,000	Payable in full on project confirmation

08 — Safeguards

Safeguards and Clarifications

Provisional status and priorities.

The Phase 1 scope and fee are firm. The development figures in Section 5 are indicative and firm up through Phase 1. The Engineering Kickoff Workshop aligns the work against the real priorities, principally heat-treatment survival and the make versus buy decision, before engineering work begins.

Heat-treatment survival.

Phase 1 treats survival of the RFID electronics through heat treatment as the priority deliverable. No construction, material or unit cost is committed until the real thermal and moisture load is established. This is why engineering work must precede any binding production price.

Target unit cost.

We cannot commit a unit price on an undesigned product. Phase 1 establishes the real, achievable unit cost at 80 to 90 percent accuracy and identifies the route, proven inlay or bespoke antenna, that best meets the licence-cost anchor.

Scope changes.

If requirements change materially during Phase 1, for example target volumes, market scope with associated certification, or a decision to develop both routes, we will agree the change and any adjustment to cost and timeline before proceeding.

Manufacturing routes and assembly.

Development and manufacture are delivered through Shield Works as prime contractor and single point of accountability. Final assembly and hermetic sealing are expected at Shield Works, with ultrasonic sealing carried out in-house or via a controlled subcontractor integrated into our quality system. We scale capacity to meet the full annual volume within our own operations and coordinated supply chain, with quality governed centrally, so QITNetworks can consolidate the program with a single accountable partner as it scales toward 100 million units a year.

Quality control.

QC is run as a process built around the product: incoming component verification, in-process line QC, 100 percent end-of-line QC, and full testing against mutually agreed parameters, with Shield Works final QC plus an independent built-in C2W QC layer, and agreed defect limits, yield and batch reporting. The detailed plan is developed in the roadmap.

Intellectual property.

QITNetworks retains all intellectual property in the product, including the design, the bill of materials, and any derivative work produced under this engagement. Work proceeds under an NNN agreement between our teams, extended to any third-party suppliers before they are engaged, and is carried out within our IP-secure, ISO-certified facility.

Quotation accuracy.

The indicative costing delivered in Phase 1 is subject to the level of readiness for manufacture. The envelope in Section 5 is directional. Final pricing is locked against specific supplier quotes inside the Phase 1 output and refined in later stages.

09 — Quality Control

Quality Control: A Dedicated, Customised Process

Quality is run as a process built around the product, not a generic blanket inspection. For this product it includes:

Incoming component-level verification.
In-process line QC during assembly.
100 percent end-of-line QC.
Full 100 percent testing against mutually agreed parameters.
Shield Works final quality control, plus an independent built-in third-party QC layer carried out by C2W operatives.
Agreed defect-rate limits, yield reporting and batch quality reports.

The independent C2W QC layer sits alongside our own final checks, so quality is verified by two separate teams before anything ships. The detailed plan is developed within the Development Roadmap.

10 — Why C2W & Shield Works

Why C2W and Shield Works

A development and manufacturing partner, not a one-off agency. The program is run collaboratively, with a dedicated project manager, our Head of R&D involved day to day, and the CEO on the commercial side given the critical target price.

In-house R&D, mechanical and electronics engineering, DFM and DFX, and quality control, led by a mechanical-engineer CEO with 27 years of manufacturing experience and a Head of R&D with an aerospace engineering background.

Over 21 years delivering custom, high-volume products from China, with direct experience across injection moulding, sealing and ultrasonic assembly, electronics integration and durable product design.

An IP-secure, ISO-certified manufacturing facility for assembly, sealing, quality control, packaging and warehousing.

Custom quality-control systems built around the product, including Shield Works final QC and an independent built-in C2W QC layer, so quality is checked by two separate teams before shipment.

An established China supply chain and transparent supplier selection, with QITNetworks dealing with a single accountable counterparty for the all-in supply, whether the disc uses a proven inlay or a bespoke antenna.

11 — Next Steps

Next Steps

QITNetworks reviews this proposal and confirms acceptance of the Phase 1 scope and fee. Any questions on scope or sequence can be raised by email or a short follow-up call beforehand.

QITNetworks provides any further documentation as it becomes available.

C2W issues the invoice for USD 8,000 and the NNN is finalised.

We schedule the Engineering Kickoff Workshop with the Shield Works R&D team to set the engineering priorities: heat-treatment survival, RF and antenna concept, sealing and anti-tamper, chip selection, and the make versus buy decision.

Phase 1 output, including the indicative costing, concept design layout and Development Roadmap, delivered within approximately 6 working weeks of the kickoff.

This proposal is non-binding at this stage and is intended to give QITNetworks clarity on cost, structure and what Phase 1 will produce. If you are happy with the direction, let us know and we will issue the invoice and get the Engineering Kickoff Workshop scheduled.

Warm regards,

Mark Jacobs

CEO, C2W Group / Shield Works

22 July 2026