"Nanotechnology Industry Approaches Massive Growth Phase," says NanoClarity publisher in speech to investors.

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Alan Shalleck, publisher of NanoClarity,(http://www.nanoclarity.com ) the monthly newsletter and commentary on nanotechnologyÂ?s current state, value and worth, said in a speech today before private investors that, Â?because of the huge government and private investment worldwide during the last 18 months, nanotechnology was not only healthy but was entering a massive growth phase and that next year, 2005, should be a good year for nanotechnology IPOÂ?s.Â? His speech is attached.

Alan Shalleck, publisher of NanoClarity,(http://www.nanoclarity.com ) the monthly newsletter and commentary on nanotechnology’s current state, value and worth, said in a speech today before private investors that, “because of the huge government and private investment worldwide during the last 18 months, nanotechnology was not only healthy but was entering a massive growth phase and that next year, 2005, should be a good year for nanotechnology IPO’s.” His entire speech is attached.

A Quick View of the Health of the Nanotech Industry on Sept 1, 2004

As we approach the fall of 2004, let’s stop for a moment to assess the health and momentum of the nanotech industry and its state of maturity. As an emerging business arena, nanotechnology seems very healthy. Every day, new application possibilities are surfacing, more people are entering nanotechnology as a profession and discoveries are building on previously unique work. All momentum is positive and commercialization is accelerating. If this year is any model, next year should be amazingly productive and exciting. Many surprising developments will occur and progress in solving key application issues will be dramatic. Nanotechnology certainly is not mature - but it is entering its teenage years - those years characterized by ungainly and massive growth, increasing productivity and the beginnings of wisdom.

The pulling of the Nanosys, Inc. IPO this summer was, both short term and long term, a good thing for nanotechnology. The marketplace (not only Wall Street) showed that in our industry, having only prospects and intellectual property without current products and sales (god forbid profits) is not going to be accepted and highly valued. It also showed that a few early VC’s and investment funds cannot foist their folly on the public, prematurely, at mystical multiples. Prematurely is the operative word because, eventually, a growing and solid nanotech company should enter the public market and be highly valued. There is time for that. A second lesson from the Nanosys non-IPO is that low multiple early investors in germinal nanotech ventures will need to stay with their investments much longer and to add more funding until these “ventures” develop “real value,” i.e. a modicum of maturity and presence in their markets, to justify those higher “public” multiples. These are good lessons to learn.

Nanotechnology is not the second coming of the dot.com era . My sense is that reality will dominate in nanotechnology assessment - at least in the short term. The nanotech industry has real technology creating real products with real sales in real markets, with a high cost of entry and true intellectual property protection. These are wonderfully positive assets. . . “Vaporware” may not be able to crystallize in nanotech and that bodes well for the non-Nanosys companies that aren’t so hyped, giving them opportunity to prove through actual products and sales that they too should be highly valued ... but we are still early in the industry’s growth and Wall Street’s acceptance cycle.

What is so apparent in the fall of 2004 is that the billions of dollars of government funds and corporate investment efforts worldwide - I emphasize worldwide (with two thirds of all investment outside the US) - are beginning to show many tangible results. Monitoring the expanding numbers of discovery announcements, every day tells us that something exciting is happening in nanotechnology. Parallel effort exists all over the world. Not only is one lab working to solve specific bottleneck problems, but also many fully funded labs and companies are racing to solve a myriad of impedimenta blocking the commercialization of nanotechnology in their specific industries ... all at the same time. This parallel competitive development environment is very positive for the industry and is rapidly leading to breakthroughs, inventive products and a race to market those products commercially.

For example, in every market, one can identify the one or two technical or manufacturing barriers slowing down nanotech’s active exploitation or commercialization. Many of these are now beginning to fall because of the massive investment and parallel efforts. A year ago, we had only one acceptable method for making useful quantities (tons) of single walled carbon nanotubes. Now, there are four. All were announced within the last six months, half from outside the United States. A year ago, liquid could not be moved across a nanoarray. Now there is a proven methodology with more methods coming. One year ago, nanobot movement was only modeled. Today, rudimentary nanobot movement has been performed using DNA segments and complements. Antibodies and proteins have been linked to nanotubes. Nanodots (quantum dots) are being manufactured in multiple locations and applied to identification and tracking uses that will shortly come to market - especially in the medical and pharmaceutical industries. Patents are being non-exclusively sub-licensed throughout the nanotech industry to spur commercialization. Progress is tangible and specific. Identifiable commercial applications of nanotechnology are in the final stages of testing for introduction as products next year. With these product introductions, private companies with “real” presence in markets will surface - making next year, potentially, a good nanotech IPO year.

A word of caution. Not all is rosy. We are still in the early development phase of the industry. We have yet to begin to create those designer molecules so often envisioned. We have yet to show physically the self-assembly of designer molecules needed to mature the industry broadly. We have yet to create new ways of implementing those major applications of nanotechnology that lead to disruptions of entire industry segments. We have yet to touch the toxicological, ethical and moral questions inherent in the application of nanotech to the world we live in. All that is yet to come. We are only in the enabler and integrator segments of market growth. There is much to accomplish.

In sum, we should all be pleased with the state of nanotech in the fall of 2004 and the speed with which developments and commercial applications are occurring. We should be even more pleased with the acceleration and momentum of the industry. The economic stakes in nanotechnology are very high - billions of dollars in market after market. All the commercial opportunities are still available. There are no clear winners in any economic segment of nanotechnology now. This is a right place to be for the future.

One a final observation - the timetables for nanotechnology implementation, except possibly for those with FDA approval requirements, are excessively long. They ignore human nature. Because of the massive amount of funding and worldwide competition, nanotechnology’s applications will occur far more rapidly and more broadly than predicted. Stake out your positions now - next year may be too late.

Alan Shalleck

Publisher of the NanoClarity newsletter

NanoClarity LLC.

http://www.nanoclarity.com

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