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Feb. 22, 2006 — SUSS MicroTec, a supplier of precision manufacturing equipment for the semiconductor and emerging markets, announced the new installation of an additional wafer bonding system at Innovative Micro Technology (IMT) in Santa Barbara, Calif.

IMT required additional wafer bonding capacity as part of its ramp up to volume production on several new MEMS products. These include novel patented IR emitters as well as MEMS switch products, both of which are now in production at IMT’s wafer fab.

Feb. 21, 2006 – Texas-based Nano-Proprietary Inc. announced that its subsidiary, Applied Nanotech Inc., has developed a “gated” metal oxide sensor for carbon monoxide detection and measurement. The gated approach allows the sensor to operate without heating, as compared with most sensors which require heating the sensor to greater than 250 degrees Celsius.

The company said the sensor is specific to carbon monoxide with no cross sensitivity to other gases and elements and that it can operate in extreme environments ranging from negative sixty degrees Celsius to one hundred and sixty degrees Celsius. The sensor also operates at low power, is easily portable, highly sensitive, and has a fast response/recovery time with instant-on operation.

Feb. 21, 2006 – The University of Pittsburgh announced Monday that it received a $5 million gift from alumnus John Petersen and his wife, Gertrude, to create an endowment supporting research at Pitt’s Institute of NanoScience and Engineering. The institute was renamed the Gertrude E. and John M. Petersen Institute of NanoScience and Engineering.

John Petersen, the retired president and chief executive officer of the Erie Insurance Group in Erie, Pa., earned a degree in business administration at Pitt in 1951.

The institute was founded in 2002. Within the last three years, Pitt-developed nanotechnology has been licensed to three startup companies and one corporation. Fall 2006 will mark the opening of Pitt’s 4,000-square-foot nanoscale fabrication and characterization facility.

Feb. 20, 2006 – IBM researchers announced they have found a way to extend a key chip-manufacturing process to generate smaller chip circuits.

IBM scientists said they have created small, high-quality line patterns using deep-ultraviolet optical lithography.

The distinct and uniformly spaced ridges are only 29.9 nanometers wide, less than one-third the size of the 90-nanometer features now in mass production and below the 32 nanometers that industry consensus held as the limit for optical lithography techniques.

The company says its new result indicates that a “high-index immersion” variant of deep-ultraviolet lithography may provide a path for extending Moore’s Law further, thus buying the industry time.

“Our goal is to push optical lithography as far as we can so the industry does not have to move to any expensive alternatives until absolutely necessary,” said Robert Allen, manager of lithography materials at IBM’s Almaden Research Center, in a prepared statement.

The pattern of well-defined and equally-spaced 29.9-nanometer lines and spaces was created on a lithography test apparatus designed and built at IBM Almaden, using new materials developed by its collaborator, JSR Micro of Sunnyvale, Calif.

Feb. 17, 2006 — Integral Vision Inc. of Wixom, Mich., announced that it has received two additional orders for MEMS display inspection systems.

One of the orders is from a repeat customer and the other order is from a new customer. Integral Vision’s products provide for detection of display defects to assure quality in the manufacturing process.

The company now has four companies that manufacture MEMS displays using its SharpEye inspection system, according to a prepared statement by Charles Drake, chairman and chief executive officer, who added that the customers represent potential production volumes of displays that will be used in televisions, projectors, telephones, and cameras.

Feb. 16, 2006 – Ener1 Inc., a Ft. Lauderdale, Fla., company developing renewable energy technologies, announced that its EnerFuel subsidiary has relocated its headquarters to a larger and more equipped fuel cell facility in West Palm Beach, Fla.

The 7,600 square-foot facility, formerly occupied by another fuel cell company, includes a laboratory for developing experimental materials and fuel cell testing stations — two key components necessary to help EnerFuel develop fuel cells that it believes will be more cost effective, smaller and less complex than other products in the current fuel cell market.

Most of EnerFuel’s team of 16 engineers and technicians who have experience in fuel cell stack development will be located in the new headquarters. EnerFuel will continue to retain a laboratory and business presence in its facility located in Fort Lauderdale.

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Feb. 16, 2006 – The NanoBusiness Alliance (NBA), a U.S.-based nanotechnology trade association, announced that two days of meetings between members of the nanotechnology business community and government officials commenced this morning. Attendees include CEOs, scientists, chief technologists, financial professionals and consultants from the nanotech sector, according to an NBA news release.

“The U.S. currently leads the world in nanotech development, but has several strong international competitors that threaten our leadership position,” said Sean Murdock, executive director of the NBA, in a prepared statement. He added that uncertainty over environmental, health and safety issues also represent barriers toward commercialization and that it is therefore important for the business community to engage in a dialogue with government leaders.

The two days, officially dubbed the NanoBusiness Alliance Public Policy Tour, began this morning with a Senate Nanocaucus meeting and joint press conference being held by U.S. Senators George Allen (R-VA) and Ron Wyden (D-OR).

Meetings slated to follow include other members of Congress and members of the NBA. Additional briefings are scheduled through Friday, at which NBA members will present their key objectives and proposals, including a tax credit intended to spur investment, the creation of a reference materials library, and an increase in the budget devoted to researching the health and environmental implications of nanotechnology.

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February 15, 2006

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Feb. 15, 2006 — Little Falls, N.J.-based mPhase Technologies Inc. (OTC: XDSL) has named its lead nanotechnology researcher Victor Lifton to the position of chief scientist. He will have a larger responsibility for the company’s emphasis on “small” technology, including its “smart” nanostructured battery and ultra-sensitive uncooled magnetometer.

Lifton joined mPhase Technologies in June, 2004 from Kulite Semiconductor Products Inc., where he was manager of semiconductor processing. Previously he was with Lucent Technologies/Bell Labs, where he was a member of technical staff in the MEMS Fabrication Research Lab.

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Feb. 15, 2006 – Private funding works a certain way. Entrepreneurs bootstrap their moonlight tinkerings into small startups. They raise early financing from friends, family and angel investors. They go to venture capitalists. But a couple of companies actively funding nanotech are not so certain that’s the best way after all.

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Instead, they are breaking the rules and raising money on public markets to sponsor university-level research in hopes of spinning out nano startups. These early stakes, they claim, will help them and their investors profit the most if they strike pay dirt.

However, they also share a set of challenges: holding the long-term attention of investors seeking quarterly results, justifying a stock price without a revenue stream, and rolling nascent technologies into revenue-producing companies fast enough to avoid having to give away lots of equity or pour money into years of expensive product development.

The basic business models of both Arrowhead Research (Nasdaq: ARWR) and Advance Nanotech (OTC.BB: AVNA) are strikingly similar. Both companies are sponsoring research at the university level in exchange for rights to commercialize the intellectual property that results. When the technologies are ready to leave the lab, say the executives in charge of the firms, they will form operating subsidiaries or spin off startups and then provide additional financing and support services and, if necessary, organize a broader investor syndicate for a follow-on round.

“A lot of corporations used to do their own research,” said Bruce Stewart, chairman and chief executive officer of Pasadena, Calif.-based Arrowhead. “What they’re doing now is saying, ‘Let the entrepreneurs do it.’ … The real research today is in universities.”

Stewart said he can secure exclusive rights to leading-edge university research for between $200,000 and $250,000 per year — a price he considers a bargain. Arrowhead has three operating subsidiary companies and three sponsored research efforts. The company is also building a firm, NanoPolaris, that is attempting to aggregate intellectual property in the field of carbon nanotubes.

Magnus Gittins, president and CEO of New York-based Advance Nanotech, sees the opportunity similarly: In his company’s case, he said it costs about $300,000 per year. One Advance Nanotech subsidiary, Cambridge, England-based Owlstone Nanotech, recently emerged and Gittins said two others are being prepared to be unveiled over the next year. Advance Nanotech claims 15 separate technology partnerships with University of Cambridge and Imperial College London as well as a minority interest in Singular ID Pte. of Singapore.

Arrowhead’s Stewart recently hired Virginia Dadey, a former investment bank sales executive, as vice president of investor relations in order to address the first problem: Shore up an institutional base to better maintain investor interest over the long haul.

Dadey said Arrowhead is being proactive about presenting at industry conferences and is trying to communicate the company’s message to the stock analyst community. And, of course, she is speaking with the institutional investors, hedge funds and other funds that she wants to recruit as investors in the firm.

By December, the company had managed to attract 11 institutional investors, accounting for 10.8 percent of the outstanding shares, according to the Nasdaq market. However, most of that — 9.2 percent — was held by one company. By contrast, the stock of Harris & Harris Corp. (Nasdaq: TINY), a publicly traded venture capital firm that specializes in nanotechnology, MEMS and microsystems, had 58 institutional investors in early December, more than 26 percent of its outstanding shares and a much more stable base of investors.

“It’s not for everybody,” Dadey acknowledged, but said she expects the initial resistance to give way as nanotech companies make more quantifiable achievements. Meanwhile, Stewart said he is beginning to receive inquiries from hedge funds and other large investors.

Advance Nanotech has been slower out of the gate. By early December it had no institutional investors, according to the Nasdaq. CEO Gittins said he spends upwards of two days per week with investment firms. “I believe we have been able to craft a quite unique message,” he said.

He agreed with Dadey that communication is a crucial part of the necessary strategy. “When you’re listed on a junior exchange and you’re a micro cap company you have to really get out and tell the story,” Gittins said. In the last year, he added, “there is more of an appetite for listening to stories about disruptive technologies that will enable new markets.”

And he thinks the job will be easier once portfolio companies prove their mettle. “Once we monetize the Owlstone asset it will provide credibility to me and my management team,” he said.

And, by reference, the stock. Without revenues, profits or other quarterly metrics by which to measure their progress, it will be difficult for investors to justify a certain price, and likewise a challenge for analysts who might be interested in following the companies to set price targets.

However, both Stewart and Gittins acknowledge that moving technologies out of the lab and into product companies will likely be their biggest challenge. What began as a bargain becomes an expensive proposition once they create and staff companies around the technologies, they said.

Already, Arrowhead faced such a situation. After realizing that one of its initial subsidiaries, Nanotechnica, was going to take longer to develop its technology than originally anticipated, Arrowhead shut it down last summer rather than pony up the $16 million it had contemplated investing.

“We pulled Nanotechnica out of the lab and into the market prematurely,” Stewart said. “Now we leave (the technology) in the university for as long as we can.”

In response, Dadey said Arrowhead has tweaked its model to fund only what she characterized as “late stage investments” — that is, university technologies that are almost at a prototype stage. She said that might mean 12 to 24 months to develop a research product and another year for a commercial one.

Gittins said his company also intends to keep technologies in the university setting as long as possible to keep costs down. And, he has hired a trio of industry experts with real-world experience commercializing products in the materials, electronics and life science sectors.

Doubtless such expertise will help. And if they are successful in getting past the so-called valley of death between prototypes and revenues it will be that much more of an accomplishment — because it’s not just any old rule that these companies are breaking, but rather one of the cardinal rules of private equity: Don’t fund science projects.