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Aug. 26, 2002 — Say what you will about the down-on-its-luck “Internet economy,” but that’s where California Molecular Electronics Corp. (CALMEC), one of the first incorporated startups in molecular electronics technology, raised its operating capital.
In February 2000, CALMEC began selling shares directly to the public over its Web site. A year later, when the offering closed, CALMEC had sold 120,239 shares of its common stock for a total of $721,434.
“Phenomenal to raise that kind of money” with a direct public offering, said Tom Stewart-Gordon, publisher of the SCOR Report, a Dallas-based newsletter that tracks small corporate offerings. According to SCOR Report data, 297 DPOs were filed in the United States in 2001. CALMEC is the only nanotechnology-based company Stewart-Gordon has known to have registered for a DPO, also called a self-underwritten initial public offering.
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“We weren’t looking to raise a large amount of money so making the offering through an underwriter didn’t make good economic sense,” said James J. Marek, CALMEC’s president and chief executive officer.
CALMEC, founded in 1997 to produce and sell products and services related to molecular electronics, had 338 shareholders of record as of Dec. 31, 2001, according to SEC documents.
Research is under the direction of Robert Schumaker, executive vice president and co-founder. Schumaker works in leased lab space at San Jose State University in California. Marek has his office in Huntsville, Ala. Jon Leonard, CALMEC’s chairman and co-founder, is based in Tucson, Ariz.
CALMEC’s products are intellectual property and technical services. It owns several patents related to molecular electronics. Its real prize is ownership of the Chiropticene single-molecule optical switching technology.
The most attractive candidates for commercialization in the near term are memory, optical router and display applications, said Marek. A 2-D memory unit based on the Chiropticene switch could be complete in less than two years, he added, given appropriate funding and the right strategic partner.
“The chiroptical switch idea is very clever,” said Josef Michl. “Research work on it is proceeding at a steady clip. It still remains to be seen whether the sensitivity of the device will be sufficient for practical applications, so more work is needed.” Michl, a professor in the department of chemistry and biochemistry at the University of Colorado, Boulder, is a member of CALMEC ‘s technical advisory board.
In 1999, Technology Review, a journal from the Massachusetts Institute of Technology, published a list called “The Nanotech Nine.” It featured U.S. companies pursuing commercial payoffs in nanotech. CALMEC led the list, followed by IBM, Motorola, Raytheon Systems and Hewlett-Packard.
A member of CALMEC’s technical advisory committee at the time, Mark Reed, was quoted extensively in an article accompanying the list. However, Reed, an engineering and applied physics professor at Yale, and James Tour, a professor at Rice University’s Center for Nanoscale Science and Technology, later resigned from CALMEC’s technical advisory committee. Tour and Reed were among founders of a privately held company with a similar name — Molecular Electronics Corp. (MEC).
All the companies face substantial barriers. For instance, a single-molecule switch doesn’t mean every device needs only one molecule, said Linley Gwennap, a microprocessor industry analyst with the Linley Group of Mountain View, Calif.
Comparing chemical bottom-up fabrication to the way silicon chips are made today, Gwennap pointed out that a transistor is a switch. “There are tens of millions of transistors on a Pentium 4 chip,” he said.
One of the problems of nanoelectronics is getting all the molecules to work in unison. That leads to one of the biggest barriers facing the emerging technology. “It’s one thing for IBM to drag single molecules around,” Gwennap said. In the end, however, the molecules have to be packaged into electronics devices that, as Gwennap put it “can be manufacturable.”
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Company file: California Molecular Electronics
(last updated Aug. 26, 2002)
Company
California Molecular Electronics (CALMEC)
Location
Headquarters:
50 Airport Pkwy.
San Jose, Calif., 95110-1011
Alabama office:
1080 Grande View Blvd, #828
Huntsville, Ala., 35824
Arizona office:
1500 E. Pusch Wilderness Dr., #5202
Tucson, Ariz. 85737-6033
History
Incorporated in March, 1997
Industry
Molecular electronics
Small tech-related products and services
CALMEC maintains the IP rights for Chiropticene, a one-molecule switching process. The company also offers its technical services for R&D or product development.
Management
Jon N. Leonard: chairman and co-founder
James J. Marek Jr.: president and chief executive officer
Robert R. Schumaker: executive vice president of R&D and co-founder
Employees
Four full-time, two part-time
Investment history
In February 2001, CALMEC completed a direct Internet-based stock offering of over 120,000 shares, bringing in $721,434 for the company. CALMEC has also received an SBIR Phase I NSF grant, and closed a private placement offering in October 2001. The company has raised a total of $2 million, according to CEO James J. Marek.
Selected strategic partners and customers
CALMEC’s business strategy is geared to licensing its IP to partners. Potential targets include: data storage providers, supercomputer developers, makers of photographic-related products and optics firms.
Competitors
Goals
“Develop the Chiropticene-based prototype devices and establish the necessary strategic financial and industrial partnerships,” Marek said. “Generate long-term returns for our investors by capturing a significant portion of the emerging molecular electronics industry.”
Why they’re in small tech?
“We believe in the principle that individual molecules can be engineered to perform the functions of electronic devices,” Marek said. “We believe these molecular-based devices can be developed into near-term commercial applications. We believe in the predicted inability of current technologies to continue to support the technological and economic growth needed for the future. And we believe that molecular-based devices will be the answer.”
What keeps them up at night?
“Seeing to the success of the company,” Marek said. “We have some great investors in the company that share our vision of the future and enthusiasm in the feasibility and inevitability of molecular electronics. They deserve and receive no less than our maximum effort
Selected relevant patents
The Chiropticene patent
Supramolecular Opto-Electronic Architecture
Contact
URL: www.calmec.com
Phone: 408-451-8404
Fax: 408-437-7777
E-mail: [email protected]
Recent news
CALMEC presents at 5th ISTC seminar in St. Petersburg, Russia
NSF sponsors CALMEC exhibit at “Small Wonders” symposium
— Research by Gretchen McNeely