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Advance Nanotech, Inc. – ‘10QSB/A’ for 3/31/05

On:  Wednesday, 8/24/05, at 3:33pm ET   ·   For:  3/31/05   ·   Accession #:  1144204-5-26923   ·   File #:  0-10065

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 8/24/05  Advance Nanotech, Inc.            10QSB/A     3/31/05    4:90K                                    Vintage/FA

Amendment to Quarterly Report — Small Business   —   Form 10-QSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10QSB/A     Amendment to Quarterly Report -- Small Business       21    123K 
 2: EX-31.1     Certification per Sarbanes-Oxley Act (Section 302)     2±     8K 
 3: EX-31.2     Certification per Sarbanes-Oxley Act (Section 302)     2±     8K 
 4: EX-32       Certification per Sarbanes-Oxley Act (Section 906)     1      6K 

10QSB/A   —   Amendment to Quarterly Report — Small Business
Document Table of Contents

Page (sequential) | (alphabetic) Top
11st Page   -   Filing Submission
2Item 1. Financial Statements 1-7
"Item 2. Management's Discussion and Analysis or Plan of Operation 7-10
3Item 1. Financial Statements
9Item 2. Management's Discussion and Analysis or Plan of Operations
19Item 3. Controls and Procedures
20Item 1. Legal Proceedings
"Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
"Item 3. Defaults Upon Senior Securities
"Item 4. Submission of Matters to a Vote of Security Holders
"Item 5. Other Information
"Item 6. Exhibits and Reports on form 8-K
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB/A QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED MARCH 31, 2005 Commission File No. 011-15499 ADVANCE NANOTECH, INC. (Exact name of registrant as specified in its charter) Colorado 82-0379959 ------------------------------- ---------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 600 Lexington Avenue, 29th Floor, New York, NY, 10022 ----------------------------------------------------- (Address of principal executive offices) Issuer's telephone number, including area code: (212)583 0080 --------------- (ARTWORK AND BEYOND, INC) ------------------------------------------------------------------------------- (Former Name) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |_| No |X| Number of shares of Common Stock outstanding as of May 17, 2005: 33,278,928
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ADVANCE NANOTECH, INC TABLE OF CONTENTS Page PART 1 - FINANCIAL INFORMATION Item 1 Financial Statements 1-7 Item 2 Management's Discussion and Analysis or Plan of Operation 7-10 Item 3 Controls and Procedures 10 PART II - OTHER INFORMATION Item 1 Legal Proceedings 10 Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 10 Item 3 Defaults Upon Senior Securities 10 Item 4 Submission of Matters to a Vote of Security Holders 10 Item 5 Other Information 10 Item 6 Exhibits and Reports on form 8-K 10 Signatures 11
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PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ADVANCE NANOTECH, INC. (A DEVELOPMENT STAGE COMPANY) (FORMERLY ARTWORK AND BEYOND, INC.) CONSOLIDATED BALANCE SHEET (Unaudited) March 31, 2005 ASSETS Current assets Cash and cash equivalents $ 14,423,335 Prepaid licensing fees 783,778 Prepaids 300,949 Loans receivable from related parties 356,187 Other current assets 1,175,454 ------------ Total current assets 17,039,702 Office equipment, net 197,295 ------------ $ 17,236,997 ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 723,456 Accrued expenses 397,498 Advances from related party 7,516 Credit facility with related party - Jano Holdings -- ------------ Total liabilities 1,128,470 ------------ Stockholders' equity Common stock; $0.001 par value; shares authorized 100,000,000; issued and outstanding 32,831,428 32,833 Additional paid in capital (2,035,300) Warrant Valuation 23,883,077 Accumulated other comprehensive income 10,615 Deficit accumulated during development stage (5,782,699) Total stockholders' equity ------------ 16,108,526 ------------ $ 17,236,997 ============ The accompanying notes are an integral part of these financial statements. 1
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ADVANCE NANOTECH, INC. (A DEVELOPMENT STAGE COMPANY) (FORMERLY ARTWORK AND BEYOND, INC.) CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) [Enlarge/Download Table] From inception Three months (August 17, 2004) ending to March 31, 2005 March 31, 2005 -------------- -------------- Costs and expenses Research and development $ 2,934,606 $ 3,670,014 General and administrative 1,281,687 2,133,618 ----------- ----------- Loss from operations (4,216,293) (5,803,632) Interest income 19,453 20,933 ----------- ----------- Net loss $(4,196,840) $(5,782,699) Foreign currency translation adjustment (9,213) 10,615 ----------- ----------- Comprehensive loss $(4,205,053) $(5,772,084) =========== =========== Net loss per share- basic and diluted $ (.16) -- =========== =========== Weighted average shares outstanding - basic and diluted 26,998,353 -- =========== =========== The accompanying notes are an integral part of these financial statements. 2
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ADVANCE NANOTECH, INC (A DEVELOPMENT STAGE COMPANY) (FORMERLY ARTWORK AND BEYOND,INC.) CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND FOR THE PERIOD FROM INCEPTION (AUGUST 17, 2004) TO MARCH 31, 2005 (Unaudited) [Enlarge/Download Table] Deficit Accumulated Additional Accumulated Other Total Common Stock Paid in Warrant Warrant During Comprehensive Stockholders' Shares Amount Capital Shares Valuation Development Income Equity Initial capitalization 200,000 200 -200 0 0 0 Acquisition shares, net of 19,352,778 19,354 -444,354 0 0 -425,000 financing costs Shares issued at $1/sh 1,500,000 1,500 1,498,500 0 0 1,500,000 Shares issued for cash 112,500 113 224,887 0 0 225,000 Net loss to Dec 31,2004 0 0 0 -1,585,859 0 -1,585,859 Foreign currency transaltion 0 0 0 0 19,828 19,828 0 Balance, Dec 31, 2004 21,165,278 21,167 1,278,833 0 0 -1,585,859 19,828 -266,032 Shares issued for cash 11,666,150 11,666 20,568,944 20,580,610 Common Stock Warrants -19,626,913 5,889,326 19,626,913 0 Placement Agent Warrants -4,256,164 984,866 4,256,164 0 Net loss for 3 months ended -4,196,840 -4,196,840 March 31, 2005 Foreign currency transaltion -9,213 -9,213 Balance as at March, 31, 2005 32,831,428 32,833 -2,035,300 6,874,192 23,883,077 -5,782,699 10,615 16,108,526 (1) All shares issued reflect a 100 to 1 reverse split effective October 5, 2004. The accompanying notes are an integral part of these financial statements 3
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ADVANCE NANOTECH, INC. (A DEVELOPMENT STAGE COMPANY) (FORMERLY ARTWORK AND BEYOND, INC.) CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) [Enlarge/Download Table] From inception Three months (August 17, 2004) ending to March 31, 2005 March 31, 2005 -------------- ------------ Cash flows from operating activities Net loss $ (4,196,711) $ (5,782,570) Adjustments to reconcile net loss to cash flows used in operating activities Depreciation 12,430 18,920 Changes in operating assets and liabilities Decrease (increase) in prepaid licensing fees 71,769 (783,778) Increase in prepaids (300,949) (300,949) Increase in other assets (1,109,166) (1,175,454) Increase in loans receivable from related parties (356,187) (356,187) Increase in accounts payable 538,604 723,451 (Decrease) increase in accrued expenses (1,753) 397,498 ------------ ------------ Net cash used in operating activities (5,341,963) (7,259,069) ------------ ------------ ------------ ------------ Cash flows from investing activities - equipment acquisition (158,932) (216,215) ------------ ------------ Cash flows from financing activities Proceeds from related party credit facility - Jano Holdings -- 4,332,379 Payments on related party credit facility - Jano Holdings (1,653,395) (2,832,379) Proceeds from issuance of common stock and warrant 20,580,488 20,805,488 Financing fees on merger shares issued -- (425,000) Advances to related party -Electronic Game Card -- 110,596 Repayments to related party - Electronic Game card (3,080) (103,080) ------------ ------------ Net cash from financing activities 18,924,013 21,888,004 ------------ ------------ ------------ ------------ Effect of exchange rates on cash and equivalents (9,213) 10,615 ------------ ------------ ------------ ------------ Net increase in cash and equivalents 13,413,905 14,423,335 ------------ ------------ Cash and equivalents Beginning of period 1,009,430 -- ------------ ------------ End of period $ 14,423,335 $ 14,423,335 ============ ============ Supplemental disclosure of cash activities Cash paid for interest and income taxes $ -- $ -- ============ ============ Conversion of amounts due on related party credit facility to common stock $ -- $ 1,500,000 ============ ============ Supplemental cash flow information - no interest or income taxes were paid in the period. The accompanying notes are an integral part of these financial statements 4
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ADVANCE NANOTECH, INC (A DEVELOPMENT STAGE COMPANY) (FORMERLY ARTWORK AND BEYOND,INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2005 (Unaudited) NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION AND NATURE OF BUSINESS Advance Nanotech Inc. ("ANI"), a Delaware corporation formed on August 17, 2004, merged with Artwork and Beyond, Inc. ("Artwork") effective October 1, 2004 in a transaction accounted for as a reverse merger, which resulted in the operations of ANI continuing in the capital structure of Artwork and the operations of Artwork being transferred to its previous owners. ANI's shareholders exchanged all their 20,000,000 shares of common stock outstanding for 70,000,000 shares of newly issued Artwork common stock and a further 1,910,000,000, shares. Immediately prior to the merger, Artwork had 17,344,568 shares of its common stock outstanding; accordingly, after the merger, there were 87,344,568 shares of common stock outstanding owned 80% by ANI's shareholders and 20% by Artwork's shareholders. On October 5, 2004, the new Board of Directors approved (1) the issuance of 1,910,000 shares of common stock to ANI's shareholders (2) the change of the issuer's name to Advance Nanotech, Inc. and (3) a one for 100 reverse stock split that resulted in an aggregate of 19,552,778 post split shares outstanding, owned 99% by ANI's previous shareholders and 1% by Artwork's previous shareholders. The acquisition resulted in ANI's management and Board of Directors assuming operational control of the Company. ANI owns all the issued and outstanding shares of Advance Nanotech Limited ("ANL"), a UK company, which in turn owns 60% of the outstanding shares of Owlstone Limited ("Owlstone"), a research and development company, 55% of Bio-Nano Sensium Technologies, Ltd (formerly Imperial Nanotech Ltd), 75% of Nano Solutions Limited, and all the outstanding shares of the following inactive UK companies: Nano Devices Limited, Intelligent Materials Limited, Biostorage Limited, Nano Electronics Limited, Nanolabs Limited, Nano Biosystems Limited, Cambridge Nanotechnology Limited, Nano Photonics Limited, NanoFED Limited, Inovus Materials Limited, Advance Proteomics Limited, Nano Diagnostics Limited, Exiguus Technologies Limited, Visus Nanotech Limited, Intelligent Biosensors Limited, Econanotech Limited, Nanocomposites Limited, Nanovindex Limited, NanoOptics Limited. The Company specializes in the research and development of nanotechnology through acquisitions of and collaborations with others. Nanotechnology is science, at the atomic or molecular level that is expected to make most products lighter, stronger, less expensive and more precise. The Company's interests are focused in three nanotechnology areas, namely: electronics, biopharma and materials. The Company's development network creates an opportunity to advance the development of University research-programs. The Company's business strategy is to develop its existing nanotechnology product candidates, acquire additional early-mid stage product candidates in the electronics, biopharma, and materials sectors, selectively license its technology and establish strategic collaborations to advance its product pipeline. BASIS OF PRESENTATION The accompanying consolidated financial statements were prepared by the Company without audit pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In management's opinion, all necessary adjustments, which consist primarily of normal recurring adjustments, to the financial statements have been made to present fairly the financial position and results of operations and cash flows. The results of operations for the three months ended March 31, 2005 are not necessarily indicative of the results that may be expected for the fiscal period ending December 31, 2005. The Company has previously filed with the SEC an annual report on Form 10-KSB which included audited financial statements as of December 31, 2004. It is suggested that the financial statements contained in this filing be read in conjunction with the statements and notes thereto contained in the Company's 10-KSB filing. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of ANI and all its subsidiaries (the "Company"). Minority shareholders of Owlstone (40%), Nano Solutions (25%) and Bio-Nano Sensium (45%) are not required to fund losses; accordingly no losses have been allocated to them. All significant inter-company accounts and transactions have been eliminated. GOING CONCERN The accompanying consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assume that the Company will continue in operation for at least one year and will be able to realize its assets and discharge its liabilities in the normal course of operations. 5
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DEPRECIATION Fixed assets are stated at cost. Depreciation is provided at the following annual rates in order to write off each asset over the estimated useful lives, generally 3 years, as follows: Asset Rate ----------------------------- ---------------------------- Plant and Machinery Equipment 25 % reducing balance method Office Equipment 25 % reducing balance method Computers 25 % reducing balance method Maintenance and repairs are charged to operations; betterments are capitalized. Depreciation expense for the three months ended March 31, 2005 is $12,430. FOREIGN CURRENCY TRANSLATION The Company's primary functional currency is the British Pound. Assets and liabilities are translated using the exchange rates in effect at the balance sheet date. Expenses are translated at the average exchange rates in effect during the year. Translation gains and losses not reflected in earnings are reported in accumulated other comprehensive losses in stockholders' deficit. NOTE 2 - OTHER CURRENT ASSETS As at March 31, 2005, other current assets consist primarily of a deposit amounting to approximately $1,057,000 being held in escrow as required by the collaboration agreement with Imperial College. NOTE 3 - COMMITMENTS The Company signed a new five year lease on May 12, 2005 for its office facilities from Hines in New York for an aggregate monthly rent of approximately $15,168. The lease expires in September 2010. The company also has leased offices in Cambridge (UK) and Newcastle University (UK) with the leases expiring on 31 May 2006 and 15 August 2005, with monthly rents of approximately $2,700 and $475 respectively. Rents incurred through March 31, 2005 approximated $85,180. Advance Nanotech Limited agreed to provide Owlstone $2 million over two years for the development of a chemical sensor. On November 2, 2004, the Company announced a research collaboration agreement between Nano Solutions Limited and Imperial College, London, to provide $6.25 million for the development of bio-nanotechnologies, predominantly in the healthcare devices sector. Payments of approximately $900,000 are due quarterly through October 2007. On December 13, 2004, NanoFED Limited entered into a $2 million development contract with the University of Bristol, to further develop the existing technologies the University has generated in the field of field emission displays. Payments are due quarterly through December 2006. On December 24, 2004, Cambridge Nanotechnology, a wholly-owned subsidiary of the Company entered into a Collaboration agreement with the University of Cambridge to provide $5.25 million dollars for the development of nanotechnologies, predominantly in the optical sector. Payments are due quarterly through December 2008. On December 28, 2004, Nano Electronics Limited, a wholly-owned subsidiary of the Company entered into a $3.96 million research collaboration and license agreement with Laboratory Services Limited for the development of three technologies in the fields of DNA-based sensing, a DNA-based storage technology and a project based on functional oxide nano tubes for micro fluidics and data storage. Payments are due quarterly through December 2007. On January 14, 2005, the Company signed a strategic partnership with the new Centre for Advanced Photonics and Electronics (CAPE) at the University of Cambridge. The Company joined Alps Electric Company Limited, Dow Corning Corporation and Marconi Corporation plc with researchers in the Electrical Engineering Division of the Department of Engineering at the University of Cambridge. CAPE is intended to house the Electrical Division of the engineering department at the University, comprising over 22 academics, 70 post-doctoral researchers and over 170 researchers. Construction of the new building is underway and scheduled for completion in early 2006. The Company, as a Strategic Partner to CAPE, will provide additional and innovative commercialization opportunities for the technologies developed in the centre, with a particular emphasis on nanotechnology. In addition, the Strategic Partners, together with the University of Cambridge, nominate representatives to the Steering Committee which is responsible for the overall research objectives of CAPE, its areas of technical focus and arising intellectual property arrangements. The Company has committed $4.95 million over five years for the funding of specific projects within CAPE, which may include jointly-funded collaborations with the other Strategic Partners. Payments are due each quarter through ending October 2009. 6
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On January 24, 2005, the Company's subsidiary, Bio-Nano Sensium Technologies Limited, entered into a collaboration agreement with Toumaz Technologies Limited. Under the terms of the agreement Bio-Nano Sensium Technologies Limited is to fund the development of an implantable blood-glucose sensor over 21 months with a total funding commitment of $3.96 million, made in quarterly payments. Additionally, the Company transferred 45% ownership of Bio-Nano Sensium Technologies Limited to Toumaz Technologies Limited and its owner, Professor Toumaz. Bio-Nano Sensium Technologies Limited has the exclusive world-wide rights to Toumaz Technologies Limited portfolio of background patents and patent applications for the devices operating within the bio-nano world - for example, medical sensing devices, plus all arising intellectual property. NOTE - 4 RELATED PARTY TRANSACTIONS Electronic Game Card (EGC). Two directors of the Company are also directors of EGC. The balance due from EGC is due on demand and is non interest bearing. At March 31, 2005, the balance receivable from EGC totals $119,665. Bioaccelerate Holdings, Inc. (Bioaccelerate) Two directors of the Company are also directors of Bioaccelerate. As at March 31, there is a balance due to Bioaccelerate of $7,516 which is due on demand and is non interest bearing. Jano Holdings. (Jano). A shareholder of the Company, JMSCL Limited, is a subsidiary of Jano. At March 31, 2005, the Company has no amounts outstanding under its $20 million line of credit facility agreement with Jano. The Company is due $236,521 from Jano, as we repaid more funds to Jano during the quarter ending March 31. The balance as at March 31 due from Jano is due on demand and non interest bearing. If the facility is used by the Company it bears interest at an Annual Rate equal to the Applicable Federal Base Rate (as defined in Section 1274(d) of the Internal Revenue Code of 1986) and is repayable in the event that the Company raises $25 million dollars in equity funding. In conjunction with the facility, the Company issued Jano warrants for 6,666,666 shares of common stock at an exercise price equal to the price of stock offered in the first equity fund raising by the Company. The warrants expire 5 years from the date of issue. No value has been attached to these warrants. NOTE 5 - STOCK TRANSACTIONS On February 2, 2005 the Company completed a final closing of the sale of an aggregate 9,960,250 shares of its common stock to investors in a private placement of securities. The Company sold the shares at a gross price of $2.00 per Share, or $19,920,500 in the aggregate. The Company also issued one warrant to purchase one share of common stock to each investor for every two shares of common stock purchased in the private placement, resulting in an aggregate of 4,980,125 warrants being issued to investors at an exercise price of $3.00 per share. The shares and the warrants were sold by the Company to the investors on the terms and conditions set forth in the Securities Purchase Agreement filed as Exhibit 10.5 in a Current Report on Form 8-K filed on January 26, 2005, which is specifically incorporated herein by reference. In connection with the closing of the sale of shares, the Company paid a cash fee to placement agents in the aggregate amount of $2,232,835, and the Company issued to placement agents warrants to purchase, in the aggregate, 895,775 shares of common stock at $2.00 per share. On March 24, 2005 the Company completed a final closing of the sale of, in aggregate, 1,818,400 shares of its common stock to investors in a private placement of securities. The Company sold the shares at a gross price of $2.00 per Share, or $3,636,800 in the aggregate. The Company also issued one warrant to purchase one share of the common stock to each investor for every two shares of common stock purchased in the private placement resulting in an aggregate of 909,200 warrants being issued to investors at an exercise price of $3.00 per share. The shares and the warrants were sold by the Company to the investors on the terms and conditions set forth in the Securities Purchase Agreement filed as Exhibit 10.10 in a Current Report on Form 8-K filed on March 4, 2005, which is specifically incorporated herein by reference. In connection with the closing of the sale of shares, the Company paid a cash fee to placement agents in the amount of $417,134, and the Company issued to placement agents warrants to purchase, in aggregate, 89,090 shares of common stock at $2.00 per share. The aggregate fair value of the Investor Warrants issued in both private placements was estimated at $19,626,913 using the Black-Scholes option pricing model with the following assumptions: no dividend, risk-free interest rate of 3.5%, the contractual life of 3 Years and volatility of 30%. The aggregate fair value of the Agent Warrants issued in both private placements was estimated at $4,256,164 using the Black-Scholes option pricing model with the following assumptions: no dividend, risk-free interest rate of 3.5%, the contractual life of 5 years and volatility of 30%. The fair value of the Agent warrants was considered to be additional placement fees and has been offset against additional paid in capital ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS FORWARD LOOKING STATEMENTS: NO ASSURANCES INTENDED This Form 10-QSB contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. This filing includes statements regarding our plans, goals, strategies, intent, beliefs or current expectations. These statements are expressed in good faith and based upon a reasonable basis when made, but there can be no assurance that these expectations will be achieved or accomplished. Sentences in this document containing verbs such as "believe," "plan," "intend," "anticipate," "target," "estimate," "expect," and the like, and/or future-tense or conditional constructions ("will," "may," "could," "should," etc.) constitute forward-looking statements that involve risks and uncertainties. Items contemplating, or making assumptions about, actual or potential future sales, market size, collaborations, trends or operating results also constitute such forward-looking statements. 7
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Although forward-looking statements in this Report on Form 10-QSB reflect the good faith judgment of management, such statements can only be based on facts and factors currently known by management. Consequently, forward-looking statements are inherently subject to risks and uncertainties, and actual results and outcomes may differ materially from the results and outcomes discussed in, or anticipated by, the forward-looking statements. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Report. The following discussion should be read along with the unaudited financial information for the current period. OVERVIEW The Company specializes in the acquisition and commercialization of nanotechnology. The Company's interests are focused in three nanotechnology areas, namely: electronics, biopharma and materials. The Company provides investment to bridge patented innovation with the capital markets. The Company's development network creates economic and time efficiencies which can advance the development of University research-programs to marketable product lines in high-value markets. Leading Universities across the world are generating pioneering research in the nanotechnology area. This research is typically funded by government grants or under contract by large industrial businesses. There are many research projects which offer the potential for commercialization, in valuable markets, and yet are under resourced due to a lack of funding. The Company has identified an opportunity to fund multiple, early-stage nanotechnology research programs within leading Universities, as the first and crucial step in developing and commercializing new products. This commitment to invest, bridges the gap between leading, patented innovation and the capital markets. SUBSIDIARIES The Company currently has a wholly owned subsidiary Advance Nanotech Ltd (ANL). ANL owns 60% Owlstone Limited, 75% of Nano Solutions Limited, 55% of Bio-Nano Sensium Technologies Limited, and 100% of Nano Devices Limited, Intelligent Materials Limited, Biostorage Limited, Nano Electronics Limited, Nanolabs Limited, Nano Biosystems Limited, Cambridge Nanotechnology Limited, Nano Photonics Limited, NanoFED Limited, Inovus Materials Limited, Advance Proteomics Limited, Nano Diagnostics Limited, Exiguus Technologies Limited, Visus Nanotech Limited, Intelligent Biosensors Limited, Econanotech Limited, Nanocomposites Limited, Nanovindex Limited, NanoOptics Limited, all of which are incorporated under the laws of England. ADVANCE NANOTECH LIMITED ("ANL") ANL identifies nanotechnology products and technologies for acquisition and subsequent commercialization. Bio-Nano Sensium Technologies Limited Sensium Technologies is a joint venture company established by Advance Nanotech and Toumaz Technology Limited, a leading developer of silicon devices that operate at power levels up to one hundred times less than other state-of-the-art components. Originally formed in 2000 as a spinout from Imperial College, London, by Professor Chris Toumazou and Keith Errey, Toumaz is located in Oxfordshire, UK and employs over 20 researchers. The Sensium is an enabling technology which provides an ultralow power sensor and information processor. The Sensium is an ideal platform for the next generation of implantable bio monitors which use nanotechnology and wireless communications to monitor and report on medical conditions, such as vital signs, on a continuous basis from within the body itself. Such monitors will take healthcare to the next level of preventative medicine, where systems diagnose and treat medical conditions This joint venture company has the exclusive rights to exploit the Sensium in all bio-nano markets and for every company within the Advance Nanotech portfolio. Not only does the Sensium offer immediate competitive advantage to Advance Nanotech companies as a valuable differentiator, but it provides a platform technology which will enable safe bio-nanostructured devices such as cardiac monitoring within an overall sensing market projected to be worth $50.6 billion in 2008. Technology The Sensium is a generic wireless sensor and information processor combining a programmable sensor interface with local intelligence using the proprietary ultra-low power nano-CMOS based systems technology of Toumaz Technology Ltd. The Sensium has an ultra-low power transceiver platform that can be programmed to operate in different frequency bands and under various standard wireless platforms. The Sensium offers a nano-powered computing and, communication device, sensor, and power source in a single silicon package. This technology is ideal for integration with bio-nanosystems, where final product devices must be small, low power, possess on-board processing capability and incorporate wireless communications. Digital processing devices and architectures are widespread and are used throughout the communications and computing industries. However, the computational complexity and low power consumption demanded by many proposed new products, such as hand held computers (PDA's), ultra low power radio devices, body worn or implanted monitors and so on, cannot be achieved by simply making bigger and faster digital chips. In contrast, analogue processing can achieve high levels of computational complexity at significantly reduced power levels. However, the multi-dimensional nature and perceived difficulty of analogue integrated circuit design has generally inhibited the development of analogue processors and architectures. Toumaz Technology is focussed on the development and exploitation of advanced mixed signal' (AMxTM) semiconductors that use digital elements to dynamically reconfigure, control, monitor and calibrate functional analogue processing blocks. This structure allows these processing blocks to be re-useable design elements or IP blocks in signal processing and low power radio systems. The wider use of analogue processing techniques has been hindered by the lack of such building blocks. 8
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While there is no assertion that this new low power mixed signal technology will replace digital processing in general, it will be applicable to a wide range of situations wherever low power is an essential design concern. Target markets include portable or autonomous battery operated devices. Example products include mobile communications devices, multi-standard wireless transceivers, MP3 players, security tags, smart cards and sensors and monitoring devices, particularly those used for medical/health and military/aerospace applications. Sensium Technologies is integrating the ultra-low power AMx(TM) processing with low power wireless systems for bionanotechnology products. Low power AMx baseband solutions will enable Sensium Technologies to offer complete chip sets to customers with unprecedented low power consumption while maintaining consumer level pricing. The integration of Toumaz nanopower-low power wireless, ultra-low power signal processing, sensors and power source into a single silicon package will be the first true example of "ubiquitous silicon" and will play a central role in the developing concept of "ubiquitous computing". Healthcare related applications are everywhere, and the Sensium will be a vital platform technology for each one. Market Opportunity Intechno Consulting of Basle Switzerland forecasts that the worldwide non-military sensor market will be $50.6 billion in 2008 with highest demand and growth in motor vehicles, process industries and at the right price points, in consumer applications. The report then goes on to say: "Sensors based on MEMS technologies and smart sensors are at the focus of current sensor development. MEMS technologies allow to miniaturize sensors and, at the same time, to integrate their sensor elements with microelectronic functions in minimal space. Only MEMS technologies make it possible to mass produce sensors more and more cost-effectively while improving their functionality and miniaturizing them. The greatest progress in innovation will happen when MEMS technologies overlap with smart technologies. .........The main goal of smart sensor development is to improve the reliability and durability of these sensors and make them more easily adaptable to new functions and conditions during the operating phase. In addition to self-diagnostic capabilities, smart sensors can have the functions of self-calibration and self-adaptation." This is an excellent outline of the functions of the "Sensium" as a smart MEMS based, adaptable (or reconfigurable) sensor. The "Sensium" however has even greater functionality as a result of its inherent wireless connectivity. The strategy of Sensium Technologies is to apply the Sensium to the burgeoning nanotechnology market in particular to the bio-nanotechnology segment where nano-power driven electronic systems with wireless communication capability will be ultra-important. The Sensium bionano application will provide the bridge for integrating bio-nano systems with existing microsystems and other technologies for technically and commercially feasible products. The resulting applications would multiply with the expected growth of the bionanotechnology in the pharmaceutical and medical devices industries. Scientific Management Professor Chris Toumazou - Chris Toumazou, PhD, FIEEE is a Professor of Circuit Design in the Department of Electrical and Electronic Engineering, and Director of the Institute of Biomedical Engineering at Imperial College, London, U.K. His research interests include high frequency analogue integrated circuit design in bipolar, CMOS and SiGe technology for RF electronics and low-power electronics for biomedical applications. He has authored or co-authored some 300 publications in the field of analogue electronics and is a member of many professional committees. Chris has seven patents in the field of RF and low power electronics. Chris was the youngest Professor ever to be appointed at Imperial College at the age of 33. He is co-winner of the IEE 1991 Rayleigh Best Book Award for Analog IC Design: the Current-Mode Approach. He is also a recipient of the 1992 IEEE CAS Outstanding Young Author Award for his work on High Speed GaAs Op-amp Design. The IEEE is the main USA Electrical and Electronic Engineering Society. In January 2000 Chris was elected to the fellowship of the IEEE for contributions to current-mode analogue design. In 2003 Chris was invited to deliver the 2003 Royal Society Clifford Patterson Prize Lecture entitled "The Bionic man" for which he received a 2003 Royal Society Medal. Owlstone Limited ("Owlstone") ANL provided Owlstone with a $2million secured facility and entered into an agreement with Messrs. Paul Boyle, Andrew Koehl and David Ruiz-Alonso ("the founders") under which the founders assigned their intellectual property concerning the Owlstone technology to Owlstone and were issued shares totaling 40% of the issued and outstanding shares capital of Owlstone. The facility was provided to continue technological development of Owlstone's sensing product. Owlstone was founded to commercialize miniaturized chemical detection technology developed at the University of Cambridge. Using micro and nanotechnology Owlstone will bring about a paradigm shift in the way chemical and explosive threats are detected both at home and abroad. The technology will drive down the cost and size of point detection systems and improve performance. Owlstone's vision is to have detection systems in every train, financial institution, government building, airport, stadium and any target at risk from chemical or explosive attack. 9
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Technology Owlstone is shrinking the full functionality of chemical warfare agent detectors using emerging nanofabrication techniques. Owlstone has adapted and extended these techniques to overcome the theoretical limitations and practical considerations that prevent conventional chemical detection products from being made smaller. By first quarter 2006, Owlstone anticipate that they will be generating production level volumes of miniature chemical sensors that can quickly and accurately carry out trace analysis of chemical warfare agents. The device is the size of a dime and costs 100 times less than the current commercially successful products. It is a `black box' system that can be directly embedded into current systems to extend their range of capabilities. It is small and inexpensive enough to be used in entirely new deployment scenarios. It has the capability to be flexibly updated with emerging chemical threats. Its generic detection capability will allow it to be used in a wide range of additional detection applications such as a diagnostic breath analyser or an exhaust emissions controller. Market Opportunity Homeland security is a major focus for governments across the globe. Recent atrocities have highlighted a critical need to protect government and business infrastructures, physical assets and the lives of millions against increasingly unconventional acts of terrorism. There is a current and growing demand for sensors to detect and hence protect against chemical and explosive threats. With systems costing upwards of several thousand dollars each, it is not viable to secure every government building and every train carriage. Nanotechnology is the enabling technology that will allow us to drive down the cost and size of integrated detection systems for widespread deployment. The chemical detection market is large and diverse both in terms of applications and competitors. Revenue forecasts for chemical warfare agent detectors have been upwardly revised several times over the last few years to reflect the current geopolitical climate and the emerging threat against unconventional targets. Owlstone technology is inherently suited to the application as it builds upon the most widely deployed detection technology in use by today's fighting forces. The physical basis of operation is already embedded into commercially successful products. The innovation lies in the combination of proven technology and the exploitation of emerging nanofabrication techniques. Owlstone's devices will act to displace existing systems as new deployment capabilities are exploited. It will become possible to put an Owlstone sensor on the lapel of a soldier, in the air vent of a government building or inside the carriage of a train. In-Stat MDR and Frost and Sullivan report the market for next generation chemical and biological sensors, including non-defence applications, will rise from $2.3bn in 2002 to nearly $4bn in 2007. Smiths Detection produce threat detection systems for military and domestic security applications. They reported revenues of (pound)150m in fiscal year 2003. An analysis that assumes Smiths maintain a similar market share during the growth phase of the entire chemical detection market yields an estimated market size of $635m in point detection. This is based on the assumption that systems will be deployed in a conventional sense. Owlstone sensors greatly expand the application opportunity horizon and the associated possibilities will lead to new markets and revenues. Scientific Management Billy Boyle MEng - Billy Boyle read a Masters degree in Engineering at the University of Cambridge where he spent three years as a Research Associate in the University of Cambridge Microsystems group. He worked on a multidisciplinary project with numerous industrial organizations and academic institutes to develop Silicon-Opto Hybrids for use in next generation Telecoms networks. Dr Jack Luo- Dr. Luo finished his B.Eng. at Harbin Institute of technology in 1982, M.Sc at Electro-Communication Uni. Tokyo, in 1986, and Ph.D. at Hokkaido Uni. Sapporo in 1989. His specialty is in the area of semiconductor process/product development, and device physics covering III-V compound devices, Si high frequency MOS power devices and VLSI semiconductor devices. He has published 55 papers, has 4 patents in power devices granted and 2 patents in pending (in microsystems). His current research interests are in microsystems and their applications in communication, biomedical and chemical, and in the development of high performance power MOS devices. NanoFED Limited Field Emission Displays (FED) are new flat panel displays which offer a replacement to bulky Cathode Ray Tube (CRT) displays. They operate in a similar way to CRTs with phosphors excited by electrons travelling in a vacuum. The difference is in the electron emitters. Instead of one gun spraying electrons, FED use millions of microscopically small electron-emitting cathodes which are matrix-addressed. FED features: o high brightness o high efficiency o a wide viewing angle o fast response time for video viewing o perfect colour quality FEDs capitalise on the well-established cathode-anode-phosphor technology built into full-sized CRTs and use this in combination with the dot matrix cellular construction of LCDs. Instead of using a single bulky tube, FEDs use tiny "mini tubes" for each pixel. This allows to be approximately the same size as an LCD screen. Since FEDs produce light only from the "on" pixels, power consumption is dependent on the display content. This is an improvement over LCDs, where all light is created by a backlight which is always on, regardless of the actual image on the screen. The LCD's backlight itself is a problem the FED doesn't have. Light from the backlight of an LCD passes through to the front of the display, through the liquid crystal matrix. It's transmissive, and the distance of the backlight to the front contributes to the narrow viewing angle. By contrast, an FED generates light from the front of the pixel, so the viewing angle is excellent, 160 degrees both vertically and horizontally. 10
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Technology Next generation semiconductor devices will become increasingly dependent upon nanoparticle systems, in addition to new methods for their fabrication that depart from conventional foundry-based waferstyle and thin film processing. Techniques such as electrodeposition, inkjet printing and fluidic assembly have already been identified as tools for assembling nanostructured materials. The advantages of nanoparticle-based device structures as compared with existing semiconductors are not only the reduced material and fabrication costs but also the ability to assemble them onto a much wider range of substrate materials. Single crystal diamond materials are now available commercially as nano-powders and are used extensively as abrasives and to reinforce polymers. However, these materials have not hitherto been considered as a possible starting material for forming semiconducting diamond thin films for use in FEDs. NanoFED is producing an FED containing n-type nanodiamond. The lower fabrication cost and greatly increased performance of these devices will have a very significant impact upon the cost and performance of the next generation of electronic and opto electronic devices.. Market Opportunity Low voltage flat panel displays have a very wide range of potential applications including displays in cars and mobile phones, to high resolution computer and television screens for medical and military uses. The device applicatory of the displays providing potential access to high volume/low margin consumer and low volume/high margin market segments. Furthermore, improved backlighting for LCD (which do not otherwise emit light) based upon field emission display technology would significantly increase the performance of existing devices, opening up further market opportunities. The market size for flat-screen displays is projected to rise from $55bn in 2004 to $145bn in 2012 Scientific Management Dr Neil Fox - Dr. Fox holds a Senior Research Fellowship in Physics and Chemistry at the University of Bristol. He participated in a succession of research and development projects on new display technologies at Smiths Aerospace during the period 1991-2003. He was seconded to University of Bristol as an Industrial Fellow of the 1851 Royal Commission during 1995-8, and has since maintained this association - bringing particular research expertise in the area of electron field emitter structures and their fabrication. He is currently leading a three year (pound)2m DTI- OSDA project AEROFED (involving, at its outset, the Universities of Bristol, and Bath, Brimar Ltd and Smiths Industries Aerospace), with the goal of producing a field emission device incorporating novel materials for the athode technology, such as conducting zinc oxide and nanodiamond. Nano Electronics Limited Nano Electronics is applying its leading expertise in the production of functional oxide nano tubes to develop new approaches to emerging market technologies such as Ferroelectric Random Access Memory (FeRAM), for use in cellular phones and mobile devices, and micro-fluidics for such applications as drug delivery and ink jet printing heads. FeRAM represents a new paradigm in memory technologies. Using ferroelectric materials, FeRAM combines the high-speed and endurance of widely used dynamic and static random access memories with the ability to store information in the absence of power. The advantages of FeRAM compared to NOR- flash memory devices include SRAM like fast read and program response times, low power consumption and an immense number of non-volatile read and write cycles. This makes the technology well-suited for use in applications as diverse as game consoles, cellular phones, mobile products and IC cards. Technology Nano Electronics has developed a method of manufacturing fully ordered arrays of functional oxide nano tubes either embedded in semiconductor grade Si or as a free-standing array of discreet nano tubes. Tube dimensions are typically 400 nm to several microns in diameter, 100 microns in length, and have a wall thickness of less than 100 nm. Unlike other nano tubes, e.g. carbon or polymer nano tubes, these materials are electrically insulating oxides which display a number of useful properties including ferro-, piezo- and pyro-electricity. This makes them suitable for a number of micro-electronic and microelectromechanical-machine (MEM) applications, particularly data memory and micro-fluidics. BioStorage Limited Over the last few decades, the demand for data-storage has risen exponentially, mainly owing to increases in scientific and socio-economic data collection, and more recently the advent of the Internet and an explosion in consumer multimedia technology. So far, this dramatic increase in datastorage requirements has been met mostly by improvements of the existing technologies, i.e. by enhancing data storage densities, access times and data rates. Currently, improvements in these conventional storage media can keep track with the increased storage needs, but will hit fundamental limits to further expansion in the near future. There is considerable interest in alternative storage media with ultra-high storage densities, but no practical solution has yet been found. 11
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Technology BioStorage is developing a novel, highdensity data-storage device. The technology is based on the concept of storing data in intensity levels of fluorophores. The read/write mechanisms are optical, allowing established visible-laser diodes to be used, but the fundamental density limit intrinsic to visible light based read/write mechanisms owing to diffraction is by-passed. Biostorage aims to fabricate datastorage devices with larger densities in excess of conventional optical and magnetic devices. One of the biggest limitations of current technologies is their restriction in storing information in only two dimensions. BioStorage's technology will potentially offer the great advantage of extending into the vertical third dimension. Cambridge Nanotechnology Limited Flexible displays promise to enable new markets for the display industry. Such a display could, for example, be used to create a fully updatable newspaper which could rolled up into a coat pocket. Flexible displays could also be used to create new cellular phones and other easily collapsible consume devices. The technical challenge thus far has been to translate the quality of picture experienced with liquid crystal displays into a flexible environment. Indium Tin Oxide (ITO) is the best available transparent conducting oxide (TCO). ITO on glass is a key material in the display industry and results in the rigid and inflexible displays common to most devices. There is a strong push towards flexible displays using polymer substrates. This requires a flexible transparent conductor. ITO fails this because it is brittle above 2% strain, whereas polymer substrates can be bent over. Developing such a composite is the only remaining barrier to the wide-spread commercialization of flexible displays. Technology Cambridge Nanotechnology is developing a flexible, transparent conducting composite. The Cambridge Nanotechnology composite will have a surface conductance of 30 ohm/sq and 90% transmission, making the composite similar in performance to Indium Tin Oxide, the industry standard commonly used in flat, fixed displays such as liquid crystal and organic light emitting diode displays. NanoOptics Limited Optical switching plays a major role in modern fiber-optic telecommunications systems. They are essential in optical add/drop, cross connect, and ring protection applications. Fiber-optic networks have dramatically accelerated the transmission of data on the Internet. But transmitting information from one high-speed network to another involves passing through slower, electronic switches and routers. Electronics do not afford the same speed of information conveyance that optics (light) do, and that gives rise to what has become referred to as the electronics bottleneck on the Internet. NanoOptics is using carbon nano tubes to make devices where light can switch with light, eliminating the need to go back and forth between light and electrons. You are always in the optical mode of the network. While today's electronic switches can perform ten billion operations per second, future optic switches may be able to relay a trillion operations per second. Technology NanoOptics is developing a fast optical switch, for use in optical fibers and in silicon-based optoelectronics, such as telecommunications equipment. It is intended that the NanoOptics optical switch/modulator will offer far superior performance to existing products. NanoOptics aim for their devices to offer sub ~1 ps switching capabilities. NanoLabs Limited Today's diagnostic tools for medical or sensing applications, for example genotyping or detection of harmful substances, are increasingly dominated by array-based tools. The feature size of these array based tools has been shrinking over the last decade to allow for smaller sample volumes to be tested, as well as for doing more tests concurrently owing to the greater feature density. However, current technologies will hit fundamental limitations in both their fabrication as well as their readout process in the near future, and thus alternative technologies for array-based diagnostics and sensing tools have generated considerable interest. To date no practical solution has yet been found. Genetic screening, when deployed carefully, offers the potential to detect diseases before they become manifest and so offers a greater chance of treatment successful. Not only does this result in improved patient health, but the associated treatment costs are reduced. Genetic screening offers diagnosis capabilities throughout the lifecycle. As a greater proportion of the U.S. population lives beyond 85 years of age, interest in genetic testing for end-of-life conditions such as Alzheimer Disease (AD) continues to grow. Technology The Nanolabs sensor will be similar to a computer chip but imbedded with DNA molecules instead of electronic circuitry. It is designed to probe a biological sample for genetic information that indicates whether the person has a genetic predisposition for certain diseases or conditions. In addition the Nanolabs sensor is suitable for medical diagnostics, and advanced biosensing. Core to the Nanolabs sensor is a high-density functionalized DNA array with integrated readout technology. Nanolabs is also developing a new method of fabrication. The fabrication of existing arrays is based on either jet-print technology or optical lithography. Both technologies are limited to feature sizes of several um; 20 um for lithography and 130 um for printing. Nanolabs technology is based on its patented concept of electrochemically controlling the array pattering, with a spatial resolution of better than 25nm. This technology enables the fabrication of arrays with feature densities of at least two orders of magnitude higher than current technologies. Higher feature density, thus smaller features, has the advantage of more probing points per unit area and also substantially reduces the amount of sample required, which is of importance, especially when sample volume is limited. 12
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Advanced Proteomics Limited Genes do not actually do anything themselves. They hold instructions for making proteins, and it's the proteins that actually perform functions in our bodies. Proteomics is the study of proteins, particularly their structures and functions. This term was coined to make an analogy with genomics, and is often viewed as the "next step". However proteomics is much more complicated than genomics. While the genome is a rather constant entity, the proteome is changing through its biochemical interactions with the genome. One organism will have radically different protein expression in different parts of its body and in different stages of its life cycle. Understanding proteins could lead to new advances in medicine and, theoretically, ways to enhance the bodies we are born with. With completion of a rough draft of the human genome, many researchers are now looking at how genes and proteins interact to form other proteins. A surprising finding of the Human Genome Project is that there are far fewer genes that code for proteins in the human genome than there are proteins in the human proteome (~33,000 genes vs ~200,000 proteins). Technology Following the so-called `genomics revolution' it has become clear that a similar approach to measuring all of the proteins in a cell, along with their functional state, localization and time dependent changes will yield considerable insight into biological processes. Advanced Proteomics is developing a `toolkit' of nanoparticles based reagents that can be used in proteomics. Proteomics is an enabling science for drug discovery, diagnostics markets and life sciences research. The worldwide proteomics market is projected to grow to more than $2.5bn by 2008 with a compound annual growth rate (CAGR) of more than 14% for the next five years, with some areas showing substantially greater growth rates (Select Biosciences report, October 2003). The Advanced Proteomics `toolkit' will offer opportunities across the spectrum of the proteomics market, closing crucial gaps where existing methods are insufficient. It will provide a powerful technology for the development of future applications in this market. Intelligent BioSenors Limited There are many aspects of brain activity that can be monitored using electrodes on the scalp, and is a technique that is performed routinely for a variety of conditions such as epilepsy. There is an immense improvement in signal quality if the electrodes are placed subdurally and directly on the cortex of the brain, which is normally carried out during surgery. However, there are some immediate improvements that can be made to the external scalp and the internal subdural electrodes. It is common practice to have 32 or more external electrodes in the scalp EEG, requiring bulky wires and connection boxes. This causes difficulties and distress for the patient who would typically have to wear the system for 24 hours. Technology Intelligent BioSensors is investigating the development of low-power arrays for next-generation EEG (electroencelography) monitoring of epilepsy, using expertise in nano-powered electronic systems. These new systems may pave the way for greater mobility of the patient undergoing EEG monitoring using scalp electrodes, better detection of EEG signals from the brain cortex, and allow fully-implantable systems to help prevent seizures while patients go about their daily lives away from the hospital environment. The electronic interface being developed could be used for other brain implants and for the treatment of other neurological disorders. NanoVindex Limited Nanotechnologies have already begun to change the scale and methods of drug delivery and hold huge potential for future developments in this area. Nanotechnology can provide new formulations and routes for drug delivery that broaden their therapeutic potential enormously by allowing the delivery of new types of medicine to previously inaccessible sites in the body. Novel composites incorporating nanoparticles are particularly exciting for these applications. A key to gaining competitiveness within the market is to develop next generation composites which are extremely sensitive to a variety of environmental stimuli. NanoVindex aims to achieve this by utilising expertise in rational peptide design to incorporate specific pH, enzymes and temperature triggers within the composites enabling a new level of control over the release of encapsulated drugs. Technology NanoVindex is seeking to develop a platform technology of nanoparticle-hydrogel composites for tailored drug delivery applications. The development shall leverage the research of Imperial College London in rational design of self-assembling peptide systems, control over the nanoscale organic/inorganic interface, and physiologically responsive bio-nano materials. Revenues to drug delivery companies were $1.3bn in 2002 and projected to increase to $6.7bn by 2012. With the focus evermore on emerging nanotechnologies and the improvements these may offer over more conventional systems, the market for new nanotechnologies in drug delivery is poised to be a multi-billion dollar arena. These technologies have the potential to revolutionise the pharmaceutical industry. 13
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Nano Diagnostics Limited Strokes are the third leading cause of death in most developed countries, as well as a leading cause of long term disability. Healthcare providers are recognising the critical nature of the first few hours after the onset of a strokes. Thrombolytic therapy can be beneficial to patients suffering from ischaemic strokes but may have catastrophic consequences for patients with haemorrhagic stroke. There is therefore a need to differentiate between ischaemic and haemorrhagic stroke at the earliest possible time. Currently X-ray CT or magnetic resonance imaging is used for diagnosis but require the patient to reach a hospital facility delaying the imperative diagnosis. Technology Nano Diagnostics is developing a portable, low cost microwave system for detecting haemorrhagic events within the brain. The final system will include microwave hardware and algorithms that will detect the presence of intracranial haemorrhage. The technology will also incorporate wireless transmission technology so that paramedic staff may transmit diagnostic information to the hospital where the clinical decision regarding the administration of thrombolytic drugs could be made at the earliest opportunity. Visus Nanotech Limited The United Nations estimates the global aggregated costs of blindness to the world economy at $25billion with approximately 28 million individuals suffering from blindness. Visus Nanotech is developing a device that will offer a new paradigm approach for treating blind people worldwide - people who currently have no hope to see. Technology In many forms of blindness there is a pathogical loss of the specialized light sensitive photoreceptors, however even in very advanced cases the output neurones that project to the visual areas of the brain remain intact and functional. We are endeavouring to develop a proprietary technology for retinal prostheses, combining expertise in ultra-low power imaging systems and molecular medicine. Our research is investigating the possibility of using optically active nanospheres to stimulate electrical responses in nerve cells. Unlike other prosthetic retina proposals, this device will make use of the intelligent circuitry that exists in the human retina. Visus Nanotech's production of an optically coupled retinal prosthetic device could represent a paradigm shift in the potential restoration of functional vision in a large population of the blind. Econanotech Limited The composites industry (suppliers, original equipment manufacturers (OEM) as well as end users) is confronted with a major challenge in the coming years: How to deal with production and end-of-life waste? So far, end-of-life composite waste has generally been regarded as nonrecyclable. Landfill, that at present disposes of 98% of composite waste, will be banned (or become cost prohibitive) through new European waste legislation from 2005 onwards in most European Union states; options for waste incineration are limited due to the energy content of the material. The European Union (EU) end-of-life vehicles directive, applying to all passenger cars and light commercial motor vehicles, will only allow a 5% incineration quota for disused cars. These trends particularly concern composite materials, since economically feasible recycling is relatively difficult to achieve. Furthermore, simply using more environmentally friendly, natural fibres as reinforcements for polymers (including polyolefins), will not be deemed sufficient by future European legislators. Another EU legislation, the Waste Electrical and Electronic Equipment (WEEE) Directive (2002/96/EC) affects the electronics industry but also composite and polymer manufacturers. The WEEE forces the producers of electrical and electronic equipment to provide for recycling of their products. Large quantities of this waste, such as printed circuit boards (reinforced bakelite or epoxy resins), are made of polymers or polymer composites. As a result of this new legislation, both manufacturers and end-users will need to move away from traditional materials and will require new strategies for environmentally and economically viable materials. Technology econanotech is seeking to develop the first-ever renewable hierarchical nanocomposites made completely from biological sources. econanotech expects truly green composites with much improved compression strength and interfacial shear strength. The advantages of such a material are the low cost of its precursors and processing as well as lightweight and low toxicity. This technology could have a tremendous impact in the automotive, transport, home and building and consumer packaged goods markets. Nano Composites Limited There is enormous interest in nanocomposites for a wide range of functional applications ranging from automotive components, to food packaging, and biomedical implants. Recently particular attention has been paid to the potential of carbon nano tubes to enhance the properties of polymers. Although carbon nano tubes are remarkable, other, inorganic nano tubes are just beginning to attract attention. The basic properties of plastics are frequently enhanced with a wide range of inorganic fillers, such as calcium carbonate, silica, clays, carbon blacks, and titania to name a few. Such materials are used on a massive scale; for example, annual production of carbon black is around 9m tonnes, whilst $2billon worth of titania is used in the polymer industry alone. In many ways, such applications represent the earliest examples of nanotechnology, pre-dating the term itself. Recently, however, new high-tech nanocomposites have appeared, based on nanoclays and carbon nano tubes. The interest in nanocomposites has been driven by the development of new syntheses and processing techniques that produce well-defined nanoparticles. Such particles have valuable intrinsic properties as a result of their small size, and can influence the behaviour of the matrix around them due to their surface area. Individual carbon nano tubes have been shown to have axial stiffness similar to that of diamond, and the highest strength of any known material; they also provide electrical conductivity, have very high thermal conductivity, and can survive extreme distortions. Such properties have stimulated a race to create nanocomposites which incorporate carbon nano tubes. However, the recognition of carbon nano tubes suggests that other, inorganic nano tubes will provide rich possibilities. 14
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Technology We are aiming to develop synthesis and processing techniques for titanium oxide nanotube and nanorod composites. Titania nanocomposites could have excellent and unique potential, yielding major performance improvements in commercially relevant systems. The performance improvements could include lighter weight, longer life span/service life, increased resistance to corrosion, reduced need for lubricants, and increased temperature resistance. Improved nanocomposites based on titania nanotubes could have wide-ranging applications in the automotive, aerospace, construction, medical, and oil/oil servicing industries The technology will be easily translated into devices for use as, for example: All white, `nanofibre'-reinforced polymer, fibres and polymer cements for dental applications; Nanotube-reinforced, insulating polymer foams for printed circuit board applications, allowing foaming of otherwise unprocessible high temperature systems; Biocompatible/bioactive reinforcement for tissue scaffolds with potential for drug delivery; Unidirectionally oriented nano tubereinforced polymer films as UV-polarizers. Intelligent Materials Limited Separation technologies play a hidden but vital role in manufacturing. Many common products are processed using materials or chemicals that are purified with separation technologies, such as heat distillation to burn off gases, and, in recent years, membranes that function like sieves or filters. Examples of products that rely on separations include the purified solvents and feedstocks used to make semiconductor wafers and pharmaceuticals made from reactions involving purified specialty chemicals. The quality of the separation influences product purity as well as the environmental impact of the manufacturing process. Driven by global competition and pollution prevention targets, manufacturers are seeking new process technologies, including separations, as a means of enhancing product performance, reducing costs, and eliminating pollution at the source. Traditional separation methods have been optimized to the limit, yet cannot achieve the purity or efficiency levels needed to make many emerging products. The chemical process industry typically relies on distillation, which entails high energy costs and is not suitable for many specialty chemicals applications. Similarly, the biochemical process industry needs new separation methods for making ultrapure chemical intermediates, alternative fuels from renewable resources, biodegradable packaging, and other products. Breakthrough separations platforms are needed that can rapidly, reliably, and cost effectively make fine distinctions among similar molecules, thereby enabling either the separation of materials with similar physical properties or the concentration and removal of impurities from dilute industrial process streams. To achieve industry acceptance, the new technologies also need to offer significant cost savings through the elimination of waste or by-products, Technology Intelligent Materials is working to develop a molecular-selective membrane. Existing selective membranes use zeolites and similar. These have holes of desired size, but the holes are not straight. Thus the molecular diffusion rates through these sieves are slow and inefficient. Intelligent Materials is developing a structurally consistent membrane, resulting in a customisable membrane for a specific application with superior performance. Users of specialty-separation and high-volume separation methods together represent approximately $1.2trillion in product shipments. Approximately 50 U.S. companies are involved in the $2.5billion worldwide market for membrane materials and modules. There are multiple uses for membranes, in water desalination, and in petroleum refining, where 10 percent of petroleum is used to supply the energy for distillation and fractionation. New industries could be created around novel or improved products, such as food additives, specialty plastics, non-toxic antifreeze, and low-cost composites. The membrane technologies also could be exported for use in both industrial and consumer applications and the $150billion worldwide market for water-and air-pollution control technologies. Inovus Materials Limited Inovus is using carbon nanotubes for novel applications in liquid crystal displays and holography. Carbon nano tubes, long, thin cylinders of carbon, were discovered in 1991.They are large macromolecules that are unique for their size, shape, and remarkable physical properties. Nano tubes are on the order of only a few nanometres wide (one ten-thousandth the width of a human hair), and their length can be millions of times greater than their width. They can be thought of as a sheet of graphite (a hexagonal lattice of carbon) rolled into a cylinder. Just a nanometre across, the cylinder can be tens of microns long, and each end is "capped" with half of a fullerene molecule. Single-wall nano tubes can be thought of as the fundamental cylindrical structure, and these form the building blocks of both multi-wall nano tubes and the ordered arrays of singlewall nano tubes called ropes. These intriguing structures have sparked much excitement in the recent years and a large amount of research has been dedicated to their understanding. Nano tubes have a very broad range of electonic, thermal, and structural properties that change depending on the different kinds of nano tube (defined by its diameter, length, and chirality, or twist). Besides having a single cylindrical wall (SWNTs), nano tubes can have multiple walls MWNTs) - cylinders inside the other cylinders. Carbon nanotubes are an example of true nanotechnology: only a nanometer in diameter, but molecules that can be manipulated chemically and physically. They open incredible applications in materials, electronics, chemical processing and energy management. 15
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Technology Inovus Materials is exploiting the benefits of carbon nano tubes to greatly improve the viewing experience of liquid crystal displays and for new applications in holography. Liquid Crystal (LC) Displays act by rotating the polarisation of light by using liquid crystals. However, their contrast ratio could be improved. Inovus is using CNTs to increased the contrast and lower drive voltage to greatly improve the viewing experience of liquid crystal displays. The light-induced photorefractive coefficient is defined as the small, self-induced change in refractive index due to the electrical field of light passing through it polarising its atoms or molecules. It gives rise to an optical non-linearity. The coefficient is usually extremely small because the electrical field associated with light, except in a very intense laser beam, is very small compared to that needed to move atoms about. However, a special type of liquid crystals, orientational photo-refractive liquid crystals, have a 10,000 times higher light-induced photorefractive coefficient. This is because molecules in the LC are more susceptible to orientation. Inovus Materials is developing supranonlinearities for a range of new applications, such as holography, optical storage and image processing, as lowcost alternatives to conventional liquidcrystal spatial light modulators. These are highly promising materials for novel optically addressed spatial light modulators (OASLMs) based on photorefractive orientational effects. Exiguus Technologies Limited Electronic devices that the semiconductor industry believes it will be building in the near future are too small to be built using standard lithography techniques. Considering, for more than 30 years, the economics of the semiconductor industry has been centered around Moore's Law, the idea that the number of transistors on a chip will double every 18 months, research teams and commercial firms are driven to find betters ways of making nanodevices. Nanoelectronics encompasses both new silicon-based manufacturing processes and entirely new approaches involving nano tubes, nanowires, polymers and organic molecules. The potential revenues from new electronics manufacturing and materials processes are huge, as they must be widely adopted by the semiconductor industry if it is to continue on the same growth path. Researchers today are looking at carbon-based compounds for new and simpler ways to make integrated circuits, often called "organic" or "plastic" transistors. Research into organic transistors may lead to new uses of these promising devices. What could organic transistors be used for? Lightweight and flexible plastic chips could usher in new generations of smart cards, toys, appliances, and many other things that might not be physically or commercially viable using today's siliconbased technology. In addition to being highly flexible and lightweight, plastic transistors hold the promise of tremendously reducing production costs. Technology Exiguus is attempting to develop organic molecules to potentially overtake amorphous silicon as the basis of the display industry. Chip makers are looking for ways to make electronic devices out of cheap plastic instead of expensive silicon. Successful development could lead to a new market for flexible displays and memories capable of being printed on anything, ushering in an age of disposable computing. Microfluidics is the science of designing, manufacturing, and formulating devices and processes that deal with volumes of fluid on the order of nanoliters or picoliters. The devices themselves have dimensions ranging from millimetres down to micrometers. Microfluidics hardware requires construction and design that differs from macroscale hardware. It is not generally possible to scale conventional devices down and then expect them to work in microfluidics applications. When the dimensions of a device or system reach a certain size as the scale becomes smaller, the particles of fluid, or particles suspended in the fluid, become comparable in size with the apparatus itself. This dramatically alters system behavior. Capillary action changes the way in which fluids pass through microscale-diameter tubes, as compared with macroscale channels. Microfluidic systems have diverse and widespread potential applications. Some examples of systems and processes which could use micro fluidics include inkjet printers, blood-cell-separation equipment, biochemical assays, chemical synthesis, genetic analysis, drug screening, electrochromatography, surface micromachining, laser ablation, and mechanical micromilling. Technology For microfluidics, `lab-on-chip' applications, Exiguus is developing materials which allow the transport of liquids cleanly and without friction. Exiguus is tailoring the properties of the CNT/superhydrophobic coatings, in the production of microfluidic components such as one-way valves and muscle-vein pumps. Centre for Advanced Photonics and Electronics (University of Cambridge) On March 11, 2005 Advance Nanotech signed a strategic partnership with the new Centre for Advanced Photonics and Electronics (CAPE) at the University of Cambridge. Advance Nanotech joined Alps Electric Company Limited, Dow Corning Corporation and Marconi Corporation plc with leading researchers in the Electrical Engineering Division of the Department of Engineering at the University of Cambridge. CAPE is intended to house the Electrical Division of the engineering department at the University, comprising over 22 academics, 70 post-doctoral researchers and over 170 researchers. Members of this Division publish more than 100 papers each year and in the recent past approximately 70 patents have been filed and 10 spin-out companies have been formed. 16
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Substantial grants from the Higher Education Funding Council for England (HEFCE) through its Science Research Investment Fund (SRIF) are supporting the construction of a purpose-built CAPE building on the University's growing science and technology campus at West Cambridge. Construction of the new building is underway and scheduled for completion in early 2006. Advance Nanotech, as a Strategic Partner to CAPE, will provide additional and innovative commercialization opportunities for the technologies developed in the centre, with a particular emphasis on nanotechnology. In addition the Strategic Partners, together with the University of Cambridge, nominate representatives to the Steering Committee which is responsible for the overall research objectives of CAPE, its areas of technical focus and arising intellectual property arrangements. Advance Nanotech has committed $4.95 million over five years for the funding of specific projects within CAPE, which may include jointly-funded collaborations with the other Strategic Partners. COMPANY STATUS The Company has completed certain initial investments and has commenced developing its product portfolio. The Company is actively looking for additional opportunities and continues to assess many technologies. We have continued to incur losses as expected during this emerging stage. We anticipate that the success of our immediate product development strategy will permit us to further develop our other products and potential products currently in our portfolio. A major element of the Company's product strategy is to collaborate with Universities to research and develop new technologies as the first-step in new product commercialization. The Company believes that maintaining a limited infrastructure will enable it to develop products efficiently and cost effectively. However consideration will be given to opportunities to strengthen the resources and portfolio in certain areas that may prove viable commercially and add value to the overall business in the future. The reader should consider the likelihood of our future success to be highly speculative in light of our limited operating history, as well as the limited resources, problems, expenses, risks and complications frequently encountered by similarly situated companies. To address these risks, we must, among other things: o increase our product portfolio by acquisition or collaborations with Universities; o enter into corporate partnerships; o license additional technology; o maintain a proprietary position in our technologies and products; and o attract and retain key personnel. The Company may not be successful in addressing these risks. If we are unable to do so, our business prospects, financial condition and results of operations would be materially adversely affected. The likelihood of our success must be considered in light of the high-risk nature of technology based research and product development, and the competitive and regulatory environment in which we operate. RESULTS OF OPERATIONS During the quarter ended March 31, 2005, the Company worked to further the development of licensed product candidates and on researching further license opportunities. General and Administration expenses were incurred primarily for consulting fees for accounting, regulatory, licensing and patent advice. ITEM 3. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and the Company's Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rules 13s-15(3) and 15d-15(e) under the Securities Exchange Act of 1934, as amended.) Based on this evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective in ensuring that (i) information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission and (ii) information required to be disclosed in the reports the Company files or submits under the Securities Exchange Act of 1934, as amended is accumulated and communicated to management, including the Company's Chief Executive Officer and Chief Finanical Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING There have been no significant changes in the Company's internal controls over financial reporting that occurred during the period from inception (August 17, 2004) to March 31, 2005, that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting. 17
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PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit No. Description -------------------------------------------------------------------------------- 31.1 Certification of CFO Pursuant to Securities Exchange Act Rules 13a-14 and 15d-14, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32 Certification of CEO Pursuant to Securities Exchange Act Rules 13a-14 and 15d-14, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (b) Reports on Form 8-K 1) 2005-01-26 8-K Current report, items 1.01, 3.02, and 9.01 2) 2005-02-01 8-K Current report, items 1.01 and 3.02 3) 2005-03-04 8-K Current report, items 1.01, 3.02, and 9.01 4) 2005-03-30 8-K Current report, items 1.01 and 3.02 18
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SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned. /s/ Magnus Gittins ------------------------ Magnus Gittins Chief Executive Officer Date: August 24, 2005 19

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