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					                                                                                                         ANALYTICAL
                                                                                                           PROFILE
           2646 SW Mapp Road, Suite 303, Palm City, FL 34990


                                                                                                              Paul Silver, 772-219-7525
                                                                                                                      December 13, 2006

                                                                                                       Initial Report
                                                                                 12/13/06 Initiation Price                    $0.48
                                                                                 Current Discounted Value-Low                 $1.90
                                                                                 Current Discounted Value-High                $4.98
TDON:OTC                                                                         Current Discounted Value Avg.                $3.44
Industry: Technology-Diversified Electronics
Risk Level: Speculative

                      Statistics
12/12/06 Closing Price                  $0.48
Coverage Initiation Price               $0.48
52 Week High                            $2.275
52 Week Low                             $0.40
Market Capitalization                   $13.18M
Enterprise Value                        $13.03M
Shares Outstanding
-Primary (9/30/06)                      27.464M
-Fully Diluted (9/30/06)                27.464M
-Float (approximate)                    7.0M
-10 Day Average Volume                  39,449
Balance Sheet Data (12/31/05)
-Current Assets                         $670,752             Source: BigCharts.com
-Current Liabilities                    $112,990            Fiscal Year-end Dec.         Estimated     Estimated       Estimated       Estimated
-Total Assets                           $959,110                                            2006          2007            2008           2009
-Total Liabilities                      $127,232           Revenue                          $0M           $0M           $27.2M          $68.4M
Forward Fiscal 2007 P/E                 N/A                Net Income (Loss)              -$2.4M        -$2.4M           $3.0M          $11.3M
Price to Sales 2007E                    N/A                EPS – basic                     -$0.09        -$0.08          $0.08           $0.30
Price to Book                           N/A                EPS – fully diluted             -$0.09        -$0.08          $0.08           $0.30

Investment Highlights:
• Third-Order Nanotechnologies, Inc. is a developmental stage company focused on revolutionary research
    and development of electro-optic polymers, material systems and components.
• Following fifteen years of development, the Company’s patent pending solutions appear to have solved the
    industry-wide thermal stability issue surrounding electro-optic polymers, which opens up the door to
    plastic-based optical products. Apart from its demonstrated molecular stability and high performance, the
    Company’s technology is also highly scalable and less expensive to manufacture than competitive
    technologies.
• Scientists at the University of Arizona have confirmed that under identical laboratory conditions, one of
    the Company’s recent molecular designs outperformed one of the industry's highest performance electro-
    optic systems by a factor as high as 650%.
• Third-Order Nanotechnologies was named as the recipient of the prestigious Frost & Sullivan 2006 North
    American Electro-Optic Materials Technology Innovation of the Year Award.
The information contained herein is based on sources deemed to be reliable, but is neither all-inclusive nor guaranteed by our firm. Opinions
reflect our judgment at this time and are subject to change without notice. This publication contains forward looking statements which are based
on expectations, estimates and projections at the time the statements are made that involve a number of risks and uncertainties which could cause
actual results or events to differ materially from those presently anticipated. Wall Street Resources, Inc. is a financial publisher and NOT a
Registered Investment Advisor or Broker Dealer. This document should be viewed as an advertisement for the company and should NOT be used
to make buy or sell decision. Principals, employees or the author of this reports may own positions both long or short in this security, and may
make purchases and/or sales of them in the open market. These reports often contain partial information which may rapidly change as a result of
additional information or analysis. Please refer to important disclosures at the end of this report. Additional information on the securities
discussed herein is available upon request. Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.
Third-Order Nanotechnologies


                                                        Table of Contents

                                                                                                                           Page

I.         Overview
                   Summary                                                                                                  3
                   History                                                                                                  3
                   Opportunity                                                                                              3


II.        Products & Services
                   Overview                                                                                                 5
                   Third-Order’s Technology                                                                                 5
                   Basics of Optical Modulation                                                                             7
                   Commercial Applications                                                                                  8
                   Industries                                                                                               10

III.       Corporate Strategy
                  Overview                                                                                                  12
                  Intellectual Property Estate                                                                              13
                  Partnerships                                                                                              14

IV.        Industry Analysis
                   Overview                                                                                                 16
                   Competition                                                                                              19

V.         Financial Projections and Valuation
                   Balance Sheet                                                                                            21
                   Income Statement                                                                                         22
                   Statement of Cash Flows                                                                                  23
                   Financial Projections                                                                                    24
                   Comparisons                                                                                              25
                   Valuation Metrics                                                                                        26

VI.        Risks
                      Competition Risk                                                                                      28
                      Execution Risk                                                                                        28
                      Financial Risk                                                                                        28
                      Key Management Risk                                                                                   28
                      Micro-Capital Investment Risk                                                                         29
                      Non-Specific Market Risk                                                                              29
                      Intellectual Property Risk                                                                            29
                      Risk Categories                                                                                       29

VII.       Management (Officers & Directors)                                                                                30

VIII.      Corporate Offices
                  Corporate Offices, Legal and Auditors                                                                     32


Important Note: This report contains forward-looking statements, particularly as related to pro forma financial statements, earnings estimates and
business expectations, within the meaning of Section 27A of the Securities Act of 1933 and Sections 21E of the Securities Exchange Act of 1934,
and are subject to the safe harbor created by these sections. Any statements that express or involve discussions with respect to predictions,
expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical fact and
may be "forward looking statements." Forward looking statements are based on expectations, estimates and projections at the time the statements
are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently
anticipated. These forward-looking statements are only made as of the date of their release and Wall Street Resources and the featured Company
in this report do not undertake any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

                                         Please refer to important disclosures at the end of this report.
                                      Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.

                                                                        2
Third-Order Nanotechnologies


                                               I. OVERVIEW
Summary

Third-Order Nanotechnologies, Inc. (“Third-Order” or “the Company”) is a developmental stage
company focused on revolutionary research and development of electro-optic polymers, material systems
and components. Third-Order management expects that their revolutionary proprietary EO polymer
could define the 21st century in much the same way silicon defined the 20th century. Its proprietary
architectures provide a faster, more cost-effective alternative to the traditional materials used in fiber-
optic ground, wireless and satellite communication networks. Third-Order Nanotechnologies was
recently named as the recipient of the prestigious Frost & Sullivan 2006 North American Electro-Optic
Materials Technology Innovation of the Year Award.

Third-Order Nanotechnologies is on the verge of initial commercialization and will be focused initially on
the 40Gb – 100Gb modulator market and military/intelligence-based hardware. The Company’s shares
trades on the OTC exchange under the ticker symbol TDON.

History

Inspired by Dr. Frederick Goetz and his scientific discoveries from over more than a quarter of a century
of development, Third-Order Nanotechnologies was officially established in Upland, PA in 1991 and
incorporated in 1994. It began with a small grant from the Ben Franklin Institute in Philadelphia, PA, and
a firm belief that the Company's end product - electro-optic (EO) polymers - could revolutionize the
telecommunications industry.

As a developmental stage company, Third-Order Nanotechnologies began working with the Department
of Defense in 1998, and was invited to move its operations to laboratory space provided by the U.S. Army
on the Aberdeen Proving Grounds. The Company’s important advancements in the field of
telecommunications were clearly recognized as it entered into contracts and/or advisory relationships with
the National Reconnaissance Office (NRO), the Defense Advanced Research Project Agency (DARPA),
the Air Force Research Laboratory (AFRL), the Naval Air Warfare Center (NAVAIR), the Army Missile
Command (MICOM) and the Army Research Laboratory (ARL).

Today, the Company is located in Wilmington, DE. It operates a fully functional organic synthesis and
thin-films laboratory that contains state-of-the-art equipment to produce next-generation fiber-optic
organic materials.      The Company recently changed its name from PSI-TEC to Third-Order
Nanotechnologies. The name “Third-Order” represents the Company’s focus on the technological
evolution into optical processing, or “beyond next generation” electro-optic materials and products.

Opportunity

Polymers have been around for over 20 years as the “state-of-the-art” technology that enabled
communication and computation via photons, not electrons. Because polymers are smaller, faster (wider
bandwidth), cheaper, and have lower power requirements (drive voltages) than electro-optic crystals, they
represented a potential paradigm shift in the market attracting industry players ranging from the smallest
start-up to mature “blue-chip” international conglomerates. In fact, during the 1980’s and 1990’s,
companies including Lockheed-Martin, Bell Laboratories, Corning, Siemens, DuPont and Hoechst-
Celanese all had major electro-optic polymer development programs in place to capitalize on the
seemingly unlimited number of commercial applications.

                               Please refer to important disclosures at the end of this report.
                            Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.

                                                             3
Third-Order Nanotechnologies


Despite the huge market potential and the billions of dollars spent on research and development over the
years, the industry was never able to solve the problem of stability. Simply put, as polymers became
more powerful, their stability decreased. Therefore, it became a delicate balancing act between having
polymers with high performance versus polymers with sufficient stability.

Third-Order Nanotechnologies undertook a radical departure from conventional Bond Length Alternation
(BLA) polymer science, and in-so doing, appears to have solved the stability issue surrounding EO
polymer. BLA theories were the traditional, industry accepted method to create EO active polymers. An
EO active polymer is “stretched” (π-bridge conduction) increasing its performance. Frederick J. Goetz,
the founder of Third-Order Nanotechnologies took a novel approach to this challenge, and instead of
taking an EO active polymer and trying to make it stable, Mr. Goetz took a fundamentally stable polymer
and made it EO active.

Besides from its demonstrated molecular stability, Third-Order Nanotechnologies’ molecular design
outperforms one of the industry's highest performance electro-optic systems by a factor as high as 650%.
The Company’s technology is also highly scalable and is significantly less expensive to manufacture than
competing technologies. Potential applications include Broadband (fiber-optic) communications, high
speed computing (optical interconnect technologies), biomedical imaging/diagnostics, and
security/defense.

Independent market analysts have estimated that the 40Gb optical modulator business will grow from
almost nothing to $500 million by 2011. Due to Third-Order Nanotechnologies’ superior operating
performance, size, and cost characteristics of its proprietary electro-optical polymers relative to leading
competitive technologies, conservatively management expects to capture at least 50% of this specific
market niche, resulting in a current discounted valuation of $3.44 per share. This figure is exclusively
based on the 40Gb optical modulator market, and does not include any revenue assumptions from circuit
board applications, chip-to-chip interconnects, 100Gb data modulators, transceivers, or transponders. If
the Company is able to capitalize on any of these other applications or capture greater than a 50% share of
the 40Gb modulator market, then there would be significant upside to our current discounted target value.




                               Please refer to important disclosures at the end of this report.
                            Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.

                                                             4
Third-Order Nanotechnologies


                                 II. PRODUCTS and SERVICES

Overview

In various studies, as in the application of electro-optic (EO) polymers to fiber-optic systems, a trade-off
is often observed in performance (active molecular concentration) and thermal stability. To solve this
issue, the Company creates EO polymeric materials at the molecular level (commonly known as
nanotechnology) within a patented holistic framework internally known as TIME (Totally Integrated
Material Engineering). TIME is a strategic pathway for the vertical integration of effective, highly stable,
extremely high performance EO polymeric materials.

Management believes that their unique, patented material integration technologies will remove the final
obstacles of material integration currently slowing the proliferation of EO polymers for multiple
applications throughout the industry.

Third-Order’s Technology

Bond Length Alternation (BLA) Theories were the traditional, industry accepted method to create EO
active polymers. An EO active polymer is “stretched” (π-bridge conduction) increasing its performance.
The scientific community believed that this was the only way to get a chemical dye to be electrically and
optically active. The problem was that the more you tried to lengthen or “stretch” the chain and increase
the performance of the polymer electro-optically, the more unstable it became.

Frederick J. Goetz, the founder of Third-Order Nanotechnologies took a novel approach to this challenge,
and instead of taking an EO active polymer and trying to make it stable, Mr. Goetz took a fundamentally
stable polymer and made it EO active. The result is called Cyclic Surface Conduction 1 (CSC) theory and
has enabled Third-Order Nanotechnologies to demonstrate stable polymers performing 650% better
performance than the best competitive BLA materials (e.g. CLD, FTC). This unique revolutionary
material exhibits tremendous stability coupled with high performance, representing a quantum leap in
technology.

As shown on page six, Lumera’s CLD/FTC type molecule’s longer chain is inherently unstable, and
requires bulky packaging due to its high susceptibility to light, temperature, and moisture. Alternatively,
Third-Order Nanotechnologies proprietary PERKINAMINE™ molecule is inherently stable and thus is
designed to more readily withstand light, temperature, and moisture without expensive packaging.




1
 CSC theory is a new theory put forth by Third-Order Nanotechnologies as a model for explaining the “aromatic
gain” phenomenon occurring in the Company’s unique and patent pending molecular structure.
                                Please refer to important disclosures at the end of this report.
                             Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.

                                                              5
Third-Order Nanotechnologies

Stability

The Perkinamine™ molecule is inherently stable thermally, environmentally, and optically. In addition,
Third-Order’s material platform exhibits superior characteristics at high processing temperatures.
Thermo-Gravimetric Analysis (TGA) testing confirmed the thermal stability of its Perkinamine™ electro-
optic materials. These tests demonstrated the Company’s EO polymer material can withstand
temperatures as high as 350°C (with a minimal ten percent material degradation) and demonstrates no
degradation at temperatures up to 327°C. The unprecedented temperature stability of the Company’s
materials eliminates a major obstacle to vertical integration of EO polymers into standard microelectronic
manufacturing processes (e.g. wave/vapor-phase soldering) where thermal stability of at least 300°C is
required. CLD-1, another high performance electro-optic material, exhibits thermal degradation in the
range of 250° - 275°C.

Industry Recognitions and Third Party Confirmation

The world is beginning to take notice of the Company’s revolutionary EO polymers. In September 2006,
Third-Order Nanotechnologies received the prestigious 2006 Frost & Sullivan North American Electro-
Optic Materials Technology Innovation of the Year Award. Frost & Sullivan's Technology Innovation of
the Year Award is bestowed upon candidates whose original research has resulted in innovations that
have, or are expected to bring, significant contributions to multiple industries in terms of adoption,
change, and competitive posture.

In addition to this industry recognition, scientists at the University of Arizona have confirmed that under
identical laboratory conditions at low molecular loadings, one of Third-Order Nanotechnologies’ recent
molecular designs outperformed one of the industry's highest performance electro-optic systems by a
factor as high as 650%.

Led by Dr. Robert Norwood, the University of Arizona’s College of Optical Sciences is one of the most
respected, highly renowned and fastest growing optical sciences departments in the world. Dr. Norwood
has spent his professional and academic careers developing and managing electro-optic programs. Prior
to his position at the University of Arizona, Dr. Norwood worked in senior positions for over ten years at
Hoechst Celanese and AlliedSignal, early frontrunners in the field of electro-optics. He is a reviewer for
Applied Optics, Applied Physics Letters, IEEE Journal of Quantum Electronics, Optics Letters, Journal of
Applied Physics, Journal of the Optical Society of America B, Journal of Physical Chemistry, Nonlinear
Optics, among many others. Dr. Norwood holds twenty patents in the field and over two dozen
publications and book chapters.




                               Please refer to important disclosures at the end of this report.
                            Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.

                                                             6
Third-Order Nanotechnologies

Cost Advantages

As discussed in the previous sections, Third-Order’s proprietary EO polymers have demonstrated greater
stability and higher performance than leading competitive technologies, but they are also much less
expensive to produce. The leading competitive material for telecommunications is lithium niobate, which
was the catalyst behind the telecom and Internet boom of the late 1990’s.

Lithium niobate is very labor intensive and expensive to produce. It is a single crystal material that is
difficult to make into anything that has larger than a three or four inch diameter, as opposed to Silicon,
that is much less constraining. Even before the fabrication process, the wafers cost several hundred
dollars. According to management, from the fabrication process, through the yield process, and finally
singulating the material into individual slivers or dyes, the fully allocated chip cost for lithium niobate is
between $800 and $1,000 excluding packaging costs.                  As way of comparison, Third-Order
Nanotechnologies’ materials are plastics, with no unique or special ingredients. As a result, the
Company’s completed chip dye, with greater functionality, is expected to have a fully allocated cost of
approximately $100.

Packaging for the lithium niobate tends to be the biggest cost driver of the finished product. The
packaging is so expensive because the crystal is very susceptible to moisture and a variety of
environmental conditions. In addition to being both hydrophoric and hydrophobic, it is chemically
reactive and builds excess static electricity which is difficult to discharge. As such, the crystal must be
put in a very stable package which is made out of Kovar, a special type of stainless steel. It is gold-plated
for conductivity with very expensive radio frequency RF inputs (four are generally required), along with
special types of fiber that go in and out, and it has to be hermetically sealed. Finally, the lid must be
laser-welded onto the package and then rechecked for hermeticity. The packaging alone is likely to cost
between $1,000 and $2,000 depending on the application. When you take into account the $800 to
$1,000 cost of the chip, the average unit cost is approximately $2,500 equating to a $5,000 price tag
(assuming a 50% gross margin). As way of comparison, Third-Order Nanotechnologies’ material is
significantly smaller and virtually impervious to moisture/environmental effects, resulting in less than
$100 packaging cost, for a total production cost of less than $200 per unit. These economics offer the
opportunity to displace competitive components at lower price points and still generate substantial profit.

Basics of Optical Modulation

Modulation refers to the technique of turning an optical source on or off in a manner that corresponds to a
stream of digital values (“0” or “1” being most often represented by the absence or presence of light). At
slower speeds (2.5Gb/s or less) the optical source, typically a semiconductor laser, is able to be turned on
or off directly through laser control circuitry. This technique is called Direct Modulation.

Once data speeds exceed about 2.5Gb/s, the laser is not capable of being turned on or off fast enough. In
these cases, the laser is on all the time (continuous wave or CW) and the flow of that light into an optical
fiber is controlled by an external modulator device that essentially acts as a high speed light valve or
shutter. See the figure on the following page.




                               Please refer to important disclosures at the end of this report.
                            Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.

                                                             7
Third-Order Nanotechnologies




In certain instances, this function can be integrated on the same chip as the laser by creating a multi-stage
chip, typically employing a structure called an Electro-Absorption modulator (EA). Producing multi-stage
devices in commercial volumes, however, is often problematic and prohibitively expensive because of
cumulative yield issues involved in multi-stage devices. The solution most commonly embraced is
utilizing a discrete or external modulator device.

Commercial Applications

Third-Order Nanotechnologies develops high-activity, high-stability electro-optic (EO) polymers for
application in a broad spectrum of future industrial and government systems. These applications include,
but are not limited to the following products 2 :

40Gb Telecom Modulators

The purpose of the discrete modulator device is to transfer an electrical signal into an optical signal by
operating like an ultra-fast valve or shutter device. For purposes of this report, we will focus on high
speed digital data signals comprised of “0’s” and “1’s”. The modulator is known as an electro-optic
device because it operates in both realms (electrical and optical) using what is called the “electro-optic”
effect or more precisely, the “second-order nonlinear optic” effect. An optical (laser generated) signal
passes through the modulator device in a structure called a waveguide (a light pipe) while the electrical
data signal is conducted just above the waveguide. When the data signal conducted across electrical
pathway represents a digital “1”, the modulator reacts by opening its optical shutter, allowing the laser
light to pass straight through it. When the data signal conducted across electrical pathway represents a
digital “0”, the modulator reacts by closing its optical valve, preventing the laser light from passing. In a
typical telecommunications system, the modulator effectively launches the optical signal (usually laser
light operating around the 1550 nanometer (nm) fr
equency) into the telecom fiber optic network.

Today’s telecom systems operate at 10Gb/s requiring the modulator to accurately turn the light signal on
and off at more than 10 billion times per second. The “next generation” telecom network speed will likely
increase by the well established industry “economic rule of thumb” wherein speed (capacity) increases by
a factor of 4 (to 40Gb/s) while the cost increases no more than a factor of 2.5. The introduction of Third-
Order’s stable, high speed polymer (plastic) materials appear uniquely positioned to support both the
speed and economic requisites to enable telecom network’s upgrade to 40Gb/s.




2
 See the Product Development Roadmap diagram in Section III for more detail and anticipated timing regarding
product development
                                Please refer to important disclosures at the end of this report.
                             Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.

                                                              8
Third-Order Nanotechnologies

100Gb Datacom Modulators

The purpose of the modulator device in data communications systems is identical to that of
telecommunications systems. The key differences between telecom and datacom applications is the
distance the optical signal must travel (telecom typically requires 10’s of kilometers while datacom
typically requires only 10’s of meters) and the cost of the optical interface devices (telecom typically
expects to pay on the order of a few thousand dollars for the optical transmission function while datacom
typically requires pricing in the hundred dollar range). Also, the volume of optical components required
to support datacom applications is orders of magnitude greater than that required to support telecom
applications. Because datacom signals travel far shorter distances, consequently requiring far lower
optical power levels, the data speed can be increased to 100Gb/s without incurring the signal degradation
effects seen in higher power, longer distance telecom networks.

Today’s datacom systems operate at 10Gb/s and often employ an information movement and
management protocol called Ethernet and is often expressed as 10GbE. The “next generation” datacom
network speed will likely increase to 100Gb/s. Third-Order’s stable, high speed polymer materials appear
to be uniquely positioned to support the speed, economic, and mass-commercialization scale-up requisites
to enable datacom network’s upgrade to 100Gb/s (& 100GbE).

Optical Interconnects

As data speeds increase, dimensions of electronic circuitry features generally shrink to enable the
increased functionality in roughly the same physical space. Trouble is often encountered when
dimensions of electrical wires shrink while their density and speed of the signals they carry increases.
This is because electrical wires become miniature antennae, radiating energy from the high speed signals
they carry. These signals are picked up by neighboring wires and cause interference (often called cross-
talk). This problem occurs within an integrated circuit chip, among integrated circuit chips in a module,
and across circuit boards. The point will be reached very soon where higher speeds will be become
physically and/or economically unattainable with traditional metallic interconnections and bus structures.
Optical signals are impervious to electrical interference and represent the solution to increasing speeds
and packing densities. Third-Order’s stable, high speed polymer materials appear uniquely positioned to
support the speed, economic, and mass-commercialization scale-up requisites to enable high speed optical
interconnection within an IC, from chip-to-chip, or across a circuit board.

All-Optical Transistors

In the future, all-optical signal processing will become possible when one frequency of light controls the
flow of another frequency of light (light switching light instead of electricity switching light). The ability
of a material to support light controlling light is referred to as the “third-order” effect and is a primary
potential application of Third-Order’s polymer material platform (hence the background for the
company’s name).

Just as the electrical transistor became the building block for the integrated circuit and microprocessor
industries, the all-optical transistor is expected to form the basis of the future’s all-optic device
applications. All-optical devices convert data in the form of input light signals to a secondary light data
stream. Some experts anticipate that all-optical transistors will replace traditional transistors used today in
microprocessors, resulting in an entirely new, super high-speed generation of inexpensive, “plastic”
computers operating largely on light instead of electricity. Pioneering work on leading edge analog
optical computers by Essex Corporation has resulted in processor speeds 50,000 times faster than today’s
best digital electrical machines.

                                Please refer to important disclosures at the end of this report.
                             Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.

                                                              9
Third-Order Nanotechnologies


Optical Transceiver

A dual function electro-optic module that converts an electrical input signal to an optical output signal as
well as converting an optical input signal into an electrical signal output.

Optical Transponder

A full function electro-optic module that contains all the functions of a transceiver as well as a serializer
and de-serializer (SERDES) which multiplexes (combines) data streams from a number of channels
before converting them to optical transmission and also de-multiplexes (separates) data streams into
individual channels when optical signals are received. In addition, the transponder contains a
microprocessor that controls a variety of module functions and interacts with network system software to
assure proper operation and/or issue alarms to alert the system that some parameter is out of control.

Industries

Telecommunications

With more than 16 million advanced cable service lines connecting
homes and business, and more than 183 million telephone lines in
the U.S. alone, fiber-optic networks require the most sophisticated
technology. Service providers continually strive to meet growing
customer demands for faster, more reliable service, and expanded
coverage, while maintaining competitive pricing.

Currently, high-speed fiber-optic telecom transmitters are
fabricated from electro-optic (EO) crystals such as lithium niobate
or gallium arsenide. These crystals are extremely expensive to
produce and difficult to integrate into devices. For over twenty
years, the industry has anticipated the development of EO plastics
to replace these crystals. These plastic-based devices are expected
to be faster, cheaper and significantly easier to manufacture.

Third-Order Nanotechnologies is working with several leading companies to capture a piece of this
lucrative market by leveraging the power of plastics. These novel materials have already demonstrated
the ability, under laboratory conditions, to perform at highly accelerated speeds with significantly lower
power requirements (drive voltages).

Medical Imaging

The region of the electromagnetic spectrum defined variably from 0.1 to 10 terahertz (THz) is commonly
referred to as the "terahertz gap." Lower frequencies (microwaves) may be produced using oscillating
circuits and higher frequencies (visible spectrum) may be achieved through the application of semi-
conductor lasers. However, frequencies within the terahertz gap represent a "no-man's land" where the
electronic and photonic spectrums merge. For this reason they have been far more elusive to effectively
and efficiently produce.

This frequency range has been highly sought for its myriad applications in medical, biological and bio-
molecular imaging and diagnosis. Unlike X-rays, terahertz radiation is non-ionizing and thus represents a

                               Please refer to important disclosures at the end of this report.
                            Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.

                                                            10
Third-Order Nanotechnologies

non-hazard for biological organisms, providing for non-destructive imaging of biological tissues. Since
terahertz frequencies correspond to energy levels of molecular rotations/vibrations of DNA and proteins,
these frequencies provide characteristic fingerprints to differentiate biological tissues in a region of the
spectrum not previously explored.

The unique terahertz advantage of shallow surface penetration and attenuation to water content provides
for significant applications in the imaging of skin, teeth and tissue hydration. Terahertz frequencies have
also been used in the imaging of basal cell carcinoma ex vivo, the most common form of skin cancer, and
the characterization of protein-bound retinal molecules.

Government

Third-Order Nanotechnologies has worked with
various government agencies over the years to
develop the next-generation electro-optic systems.
However, since the events of September 11, 2001,
homeland security issues have been brought to the
forefront. Organizations such as the National
Reconnaissance Office (NRO), a member of the
Intelligence Community that operates all "spy"
satellite systems for the U.S. Government, require
the fastest (widest bandwidth) telecommunication
systems to acquire immediate images with the
highest-resolution possible.

The U.S. Air Force, Navy and NAVAIR require the world's most advanced gyroscopic (electro-optic
based) navigation systems for integration in both high-precision "smart" missiles and on-board jet fighter
hardware systems. In the interest of advancing these and other technologies, government organizations
such as the Army Research Laboratory (ARL), the Air Force Research Laboratory (AFRL) and the
Defense Advanced Research Project Agency (DARPA) were formed to support novel and promising
technologies for application in military equipment. These organizations have provided material, financial
and/or advisory support to Third-Order Nanotechnologies over the past six years in the pursuit of high-
speed electro-optic materials.




                               Please refer to important disclosures at the end of this report.
                            Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.

                                                            11
Third-Order Nanotechnologies



                                   III. CORPORATE STRATEGY
Overview




As indicated in the chart above, Third-Order Nanotechnologies is on the verge of initial
commercialization which will include circuit board applications and chip-to-chip interconnects. Third-
Order’s primary advantage in this market is that its proprietary material is the only material that can
operate at over 327°C without degrading.

Following this initial stage, the Company will then focus on the 40Gb – 100Gb modulator market. A
modulator is an ultra-fast shutter that goes on and off billions of times per second to either allow or block
light from a laser into the fiber, creating a digital signal. 3 Third-Order has price, size, and power
advantages over contemporary competitive technologies. Specifically, lithium niobate technologies are at
least ten times more expensive to produce, several orders of magnitude larger in size, and have much
higher power requirements (drive voltages).

3
  This digital signal is coded either as having light (1) or having the absence of light (0) in a binary format which is
then converted to an electronic signal. At 40Gb as compared to today’s 10Gb modulators, both complexity and
expense become significantly higher.
                                  Please refer to important disclosures at the end of this report.
                               Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.

                                                               12
Third-Order Nanotechnologies


According to a Triple Play Communications market survey, the 40Gb optical modulator market may grow
to $440 million by 2011. Industry experts speculate that the 100Gb data modulator market may exceed
$500 million in revenues by 2011. In the future, Third-Order Nanotechnologies will get involved with
transceivers/transponders and optical switches. According to a Triple Play Communications’ market
survey, the OC-768 (40Gb) transponder sales are projected to grow from $16 million in 2006 to $80
million in 2009. As a conservative approach, we have based our preliminary financial forecast
exclusively on the Company’s projected share of the 40Gb optical modulator market, and have excluded
all estimates related to both 100Gb modulators, transponders, and all other potential applications.

Third-Order Nanotechnologies is proceeding with joint development negotiations with several high
profile industry leaders. Additionally, the Company continues to search for new strategic partners and
licensing agreements with component and device manufacturers.

Intellectual Property Estate

Third-Order Nanotechnologies holds one patent and has four other patents pending in the field of electro-
optic (EO) polymer design 4 . Rather than covering a small selection of specific molecular structures, these
patents describe broad, highly unique techniques for entirely novel paradigms in molecular design.

Two of these patents cover heterocyclical anti-aromatic electronic conductive pathways which are the
heart of the Company’s high-performance, high-stability molecular designs. The completely
heterocyclical nature of Third-Order Nanotechnologies’ molecular designs "lock" conjugative atomic
orbitals into a planar configuration, providing for improved electronic conduction, and are significantly
less reactive to environmental threats (e.g. thermal, chemical, photochemical, etc.) than the current bond
alternating (BA) design paradigm employed by all competitive electro-optic polymers (e.g. CLD, FTC,
etc.). The anti-aromatic nature of these structures dramatically improves the zwitterionic-aromatic push-
pull of the systems, providing for low energy charge transfer. Low energy (long electronic wavelength)
charge transfer is extremely important for the production of high electro-optic (nonlinear optic) character.

One of these patents describes a unique nitrogenous heterocyclical structure for the integration of steric
hindering groups which are necessary for the nanoscale material integration (i.e. nanotechnology). Due to
the pi-orbital configuration of the nitrogen bridge, this structure has been demonstrated not to interfere
with the conjugative nature of the electronic conductive pathway and thus is non-disruptive to electro-
optic character of the core molecular construction. The quantum mechanical design of the system assures
complete molecular planarity for optimal performance.

Another patent covers revolutionary material integration structures under a design strategy known as
TIME (Totally Integrated Material Engineering). These integration structures provide for the "wrapping"
of the core molecule in sterically hindering groups that maximally protect the molecule from
environmental threats and maximally protect it from microscopic aggregation (which is a major cause of
performance degradation and optical loss) within a minimal molecular volume. These structures also
provide for the integration of polymerizable groups for integration of materials into a highly stable cross
linked material matrix.


4 Management has stated that although the Company had been supported years ago by various government
agencies, all such financial support ended well prior to Third-Order Nanotechnologies attaining the technological
and intellectual property breakthroughs it now possesses. Therefore, the government is not entitled to any of the
Third-Order Nanotechnologies’ intellectual property.


                                Please refer to important disclosures at the end of this report.
                             Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.

                                                             13
Third-Order Nanotechnologies


An independent third party analysis as to the value of the Company’s patents related to the 40Gb optical
modulator niche was requested as part of a due diligence process associated with a potential debt
financing transaction. According to this study the Company’s intellectual property estate was valued at
approximately $78.6 million. The study calculated this figure by examining only the potential 40Gb
modulator market and then assuming only a 35% market share.

In the near future, the Company plans to conduct a “Freedom to Operate” study based on its patents
pending, which will likely cost $20,000 to $25,000. However, the Company’s attorneys believe that
Third-Order Nanotechnologies’ intellectual property estate is adequately protected as it currently stands.

Partnerships

Because of the Company’s size and resources, management is looking for strategic alliances and licensing
agreements with major component and device manufacturers in the telecommunications industry, defense
industry, and government sector in order to expeditiously deploy its technology in a wide variety of
industries.

To date, the Company has announced a strategic partnership with Photon-X Corporation, one of the top
technology solutions providers for polymer waveguides working in conjunction with various government
agencies. As part of the partnership agreement, Third-Order Nanotechnologies will provide Photon-X
with its unique polymeric material to be tested and used on certain niche devices for anticipated military
and commercial applications. Assuming the testing goes successfully, management believes that this
partnership will serve to simultaneously lead its commercialization as well as publicly validate its
scientific findings, creating a new standard in EO polymers. In addition to this partnership with
Photon-X, Third-Order has development agreements with Triple Play Communications, other leading
companies, and is in discussion with other potential partners. We have not included any revenue
assumptions from these potentially lucrative partnerships in our financial projections.

The following is a partial list and description of the various government and private entities that have
provided advisory, financial or material support to Third-Order Nanotechnologies in the pursuit of high-
speed electro-optic materials. While Third-Order Nanotechnologies had been supported years ago by
various government agencies, all such financial support ended well prior to the Company attaining the
technological and intellectual property breakthroughs it now possesses. In essence, the government is not
entitled to any of Third-Order Nanotechnologies intellectual property.

National Reconnaissance Office (NRO)

Third-Order Nanotechnologies has worked with the National Reconnaissance Office (NRO) to advance
the development of high performance electro-optic polymers under a non-classified Director's Innovation
Initiative (DII) program. The NRO plays a primary role in achieving information superiority for the U.S.
Government and Armed Forces. The group designs, builds, and operates reconnaissance satellites that can
warn of potential trouble spots around the world, help in the preparation of military operations, and
monitors the environment. NRO products are paramount to national security and are provided to an
expanding list of customers including the Central Intelligence Agency (CIA) and the Department of
Defense (DoD).

Defense Advance Research Project Agency (DARPA)

DARPA provided Third-Order Nanotechnologies with funding for the advancement of its technologies

                              Please refer to important disclosures at the end of this report.
                           Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.

                                                           14
Third-Order Nanotechnologies

and bridging them to the public market. Under the auspices of DARPA initiatives, the MORPH
(Molecular Photonics) and C2OI (Chip-to-Chip Optical Interconnects) programs, the Company’s
advanced technologies were reviewed by the Naval Air Warfare Center Weapons Division (NAVAIR)
and the Air Force Research Laboratory (AFRL).

DARPA works to maintain the technological superiority of the U.S. military and to prevent technological
surprise from harming U.S. national security by sponsoring revolutionary, high-payoff research that
bridges the gap between fundamental discoveries and their military use. This member of the Intelligence
Community can be credited with the origination of the Internet, originally known as the ARPA Net.

Naval Air Warfare Center Weapons Division (NAVAIR)

Scientists at the Naval Air Warfare Center Weapons Division (NAVAIR located in China Lake, CA)
independently reviewed Third-Order’s electro-optic molecular design paradigms.           This unique,
proprietary technology was demonstrated through detailed computer calculations to dramatically improve
existing approaches in the production of ultra fast frequencies (wide bandwidths).

These calculations regarding the Company’s preliminary, first-stage next-generation molecular
architectures indicate an improvement of hyperpolarizability (electro-optic character) of several times
existing state-of-the-art molecular designs. Third-Order's unique nanoscale material integration
technologies are specifically designed for high thermal and environmental stability (and high internal
molecular alignment). NAVAIR's calculations have recently been confirmed by experimental data.

Army Research Laboratory (ARL)

The Process and Properties Branch of the Army Research Laboratory (ARL) on the Aberdeen Proving
Grounds (Aberdeen, MD) provided strong support to Third-Order Nanotechnologies during the early
years of its electro-optic materials development. Most importantly, ARL provided the Company with
access to its highly advanced organic chemical development laboratories and state-of-the-art analytic
equipment from 1998 through 2000. Third-Order operated out of more than five laboratories at ARL.

This effort was in cooperation with other government agencies and included the advisory support of the
Army Missile Command (MICOM) that provided the Company’s engineers with instruction on the latest
advancements of the military's R&D in the area of polymeric materials and device fabrication.

Air Force Research laboratory (AFRL)

In cooperation with the Defense Advance Research Project Agency, Third-Order Nanotechnologies’
molecular design technologies were thoroughly reviewed by top-level and senior engineers and scientists
at the Air Force Research Laboratory (AFRL) at Wright-Patterson Air Force Base (Dayton, OH).

An AFRL senior scientist and engineer reported that the Company’s molecular designs show promise of a
five to ten times improvement over existing commercial polymeric architectures. Additionally, the
scientist concluded that the Company’s approach to materials synthesis has the potential for realizing high
nonlinearity (i.e., high electro-optic performance), which in turn, could result in five to ten times lower
drive voltages for devices. Recently, these predictions have been confirmed by experiments performed
independently by the University of Arizona Photonics Department, which indicate an approximate seven
time improvement over existing polymeric architectures.

In regards to potential applications of the Company’s unique technology, a senior AFRL scientist
concluded that highly active NLO (electro-optic) polymer materials represent the key for the realization
of next generation electro-optic devices and render high application potential for high-speed fiber-optic
telecommunication (i.e., internet, HDTV), satellite reconnaissance, and navigation and guidance systems.

                               Please refer to important disclosures at the end of this report.
                            Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.

                                                            15
Third-Order Nanotechnologies



                                      IV.        INDUSTRY ANALYSIS
Overview

Despite a tumultuous past, industry experts anticipate that the fiber-optic communications industry alone
will grow to a $1.8 trillion by 2009. During 2001, while carriers were dramatically slowing their capital
spending, end user demand for bandwidth continued to grow. Carriers met that bandwidth demand by
using up existing spare capacity in their networks. Due to regulatory changes, local carriers now have the
incentive to begin reinvesting, which will likely spur growth in the optical equipment market.

Faster (wider bandwidth) telecommunication devices and systems will allow worldwide telephone,
Internet and cable service providers significant room to grow, while providing a substantial cost
advantage over traditional materials. Third-Order's next-generation EO polymers may be directly
integrated into the commercial market by partnering with companies that are already working toward the
production of commercial modulators using legacy plastics. The Company’s unique and proprietary
materials will offer the strength and price advantages telecom providers desperately need. Management
anticipates that its fiber-optic polymers will become the industry standard worldwide.

Third-Order Nanotechnologies’ scientists have worked with the Defense Advance Research Projects
Agency, the Army Research Laboratory and other government agencies vital to homeland security and
military operations. Management believes that their plastics will greatly improve the clarity and
reliability of vital national defense technologies, including real-time satellite reconnaissance.

Third-Order Nanotechnologies applications may also extend to the medical field, where the Company’s
unique polymer designs can provide a pathway for safer alternatives to X-ray procedures for skin cancer
and dental patients. According to the American Cancer Society, more than one million new cases of skin
cancer will be diagnosed in the United States each year.

Increasing Demand for Wider Bandwidth

Currently, there is over 300,000,000 km of
installed fiber-optic cable in the United States.
Additionally FTTH (fiber-to-the-home) cable is
being mass deployed to meet the rapid growth of
video on demand, HDTV, and data storage. As
the chart on the following page demonstrates, the
backbone volume/demand for bandwidth grows
by an order of magnitude approximately every
three years driving the need for higher data rates.
At present, the World Wide Web is operating at a
terabit per second.

Despite the high demand for greater bandwidth, the migration from 10Gb to 40Gb has not yet been
implemented on a large scale due to excessive cost at 40Gb 5 . According to JDS Uniphase, the current
state of 40Gb vs. 10Gb is at a similar market inflection point as when 10Gb was introduced vs. 2.5Gb.
Support exists for a new generation of IP backbone routers and switches needed to relieve high capacity

5
 According to Triple Play Communications market assessment, current 40Gb cost is dominated by optics, and
deployment of 40Gb systems at the carrier level will help to accelerate the cost reduction and increase volumes.
                                 Please refer to important disclosures at the end of this report.
                              Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.

                                                              16
Third-Order Nanotechnologies

network bottlenecks, but excessive costs make the migration unattractive. Current short-term solutions
may include the adoption of parallel implementations until pricing adjusts.

At present, bandwidth demand is increasing 50% to 100% per year, while bandwidth costs are only falling
25% to 40% per year. Because bandwidth cost savings are not keeping up with demand growth, an
opportunity exists for a technological innovation. Many telecom service providers are currently buying
40Gb solutions from companies like Mintera or StrataLight and are paying a significant premium for it.
This represents a significant opportunity for the Company’s revolutionary materials.




Migration from 10Gb to 40Gb driven by demand for speed

According to industry experts, the telecom market is expected to grow from $62 billion in 2005 to $121
billion by 2010, resulting primarily from broadband and demand for high speed backbones. This strong
growth of broadband and core infrastructure will translate into demand for components to support much
higher speeds. According to several leading market research firms, 40Gb telecom applications will grow
exponentially over the next five years. During 2006 and 2007, forecast revenues are only $3 million and
$10 million respectively as these products are just starting to filter in to the market. The real big ramp-up
year is forecast to be in 2008. By 2011, forecast revenues for the 40Gb optical modulator market are
expected to reach $500 million, and by 2014, estimated revenues approach $1.1 billion, representing
almost 41% of global demand for all speeds of optical modulators. Although these forecasts may seem
aggressive to those unfamiliar with the potential market for 40Gb optical modulators, Third-Order CEO
Ron Genova, was directly involved with establishing the 10Gb lithium niobate modulator program at Bell
Labs/Lucent, and oversaw its growth from basically nothing to $1.2 billion in revenues in just three years.


                               Please refer to important disclosures at the end of this report.
                            Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.

                                                            17
Third-Order Nanotechnologies

According to a Triple Play
Communications market survey,
                                                      40Gb Telecom Market Forecast
reliability must be demonstrated
for polymer modulators to be            550
                                                        Source: Triple Play Communication and leading market research groups


considered for use in practical                                                                                                   $500
                                        500
communication systems and other
                                        450
application. Potential customers
                                6
want to see accelerated testing of      400




                                                 in Millions of Dollars
the basic polymer modulator to          350
determine       the     modulator’s     300                                                                                  $275
stability at high temperatures and      250
humidity over their lifetime.           200
                                                                                                                 $150
Management believes that its            150
proven high stability EO polymer        100
designs coupled with lower cost                                                              $55
                                         50                                $10
than competing technologies will                $0      $3
                                          0
separate them from leading
                                               2005    2006               2007              2008                 2009        2010 2011
competitors      in    the    40Gb
modulator market. Management
believes that it can capture between 65% and 80% of the 40Gb optical modulator market by 2011,
representing approximately $286 million ($286 million to $320 million) in top-line revenues. Our
financial projections for the Company only assume a 50% share of the 40Gb optical modulator market.

Management believes that there will be only one competitive technology at 40Gb. Companies such as
Sumitomo and Apogee produce Electro-Absorption (EA) modulators that have demonstrated the potential
to get to 40Gb. However, in comparison to Third-Order’s EO unique polymers, the cost of making these
EA packages is still very high with very low corresponding yield.

Ethernet Demands Migration to 100Gb

According to a market survey by Triple Play
Communications, Bell Labs believes that 100Gb
applications may be more widespread than 40Gb
applications. Many areas are currently experiencing
bandwidth requirements doubling every 12 months, driven
by the growth of multimedia content and web application.
New companies, such as Google, YouTube and Netflix,
are driving rapid traffic growth which is moving to video
delivery over the Internet, requiring massive bandwidth
capacity.

With the Ethernet revolution, there is significant interest in seeing a migration up to 100Gb. The Institute
of Electrical and Electronic Engineers (IEEE) Ethernet standards working group formed the Higher Speed
Study Group (HSSG) to evaluate the requirements for the next generation of Ethernet technology
(100Gb). It was observed that a cost effective polymer based modulator suitable for 100Gb Datacom
could easily eclipse telecom’s $500 million market opportunities within five years. Verizon has stated
publicly it will need to implement 100Gb in its networks by 2009 to satisfy demand for video distribution.
This migration represents another huge opportunity for the market participant that can provide the market

6
    This testing is expected to take approximately 4 months to complete and will likely commence in August 2007.
                                      Please refer to important disclosures at the end of this report.
                                   Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.

                                                                          18
Third-Order Nanotechnologies

with this bandwidth assuming that the cost of this migration can be effectively managed. Despite this
huge market potential, we are not making any revenue assumptions related to the 100Gb data modulator
market in our financial projections for Third-Order.

As the demand for content “anytime, any place, any screen, any device, any network” which will increase
productivity but will require enormous amounts of additional bandwidth. Management believes that their
unique proprietary EO polymer design will be a critical part of supporting more bandwidth at lower cost,
which will drive telecommuting / teleconferencing, entertainment / lifestyle, videocasting, mobile TV,
movies & music, shared gaming.

According to the Optoelectronics Industry Development Association (OIDA), the 100Gb data modulator
market revenues may reach $210 million by 2010 (assuming a unit price of $2,500 per 100Gb data
modulator multiplied by 84,000 units). Despite this potential opportunity, we have made no revenue
assumptions related to the 100Gb data modulator market in our financial forecast for Third-Order
Nanotechnologies.

Competition

Lumera

Lumera is one of the emerging players in the field of nanotechnology. Lumera was formerly a majority
owned subsidiary of Microvision, and was spun out in 2004. In early 2004, Lumera exited the
development stage when it began commercializing its devices for potential wireless networking and
optical networking applications. Lumera develops proprietary polymer materials which are used in
bioscience products and in electro-optic devices. Since the middle of October 2006, shares of Lumera
have jumped from $1.58 to as high as $10.35 (representing a market capitalization of $175.4 million)
propelled by two major announcements:

First, on October 16th 2006, Lumera announced that it has completed successful testing of its millimeter
wave wireless bridge. Lumera said the system will allow the transmission of vast amounts of data via a
variety of high speed telecommunications networks. This single band wireless communications system
completes the first phase of its product development. In mid-November, Lumera expects to finalize the
development and testing of its multiband system.

Potential applications for the wireless bridge include enterprise campus connectivity, local area network
(LAN) extension, metropolitan area network (MAN), redundant access (network diversity), storage access
(SAN), distribution of high definition video, teleradiology. Target customers are organizations with vast
amounts of data to transmit, such as large commercial enterprises and universities. Government agencies
have also expressed an interest in such a high-data-rate wireless bridge for use in disaster recovery
applications. Lumera's wireless bridge offers high data transmission rates at low cost while avoiding the
expense of digging and laying optical fiber, in an integrated system solution.

Second, on October 31st 2006, Lumera announced that Harvard Medical School researchers are building
discovery and diagnostics methods with Lumera's Proteomic Processor biosensor. The first areas of
investigation will be probing a family of 200 kinase proteins for their interaction with and among drug
families relevant to cancer research.

Lumera has a Scientific Advisory Board staffed by a number of nanotechnology professors from major
universities. Lumera holds 26 patents/applications related to electro-optic chromophores and polymers,
devices, and fabrication processes.

                              Please refer to important disclosures at the end of this report.
                           Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.

                                                           19
Third-Order Nanotechnologies

Apogee – Electro-Absorption (EA) technologies

Apogee and other competitors are currently employing Electro-Absorption (EA) modulation. EA
modulation is a competitive technology, which is typically done using with either thallium arsonite or
indium phosphide. Although this does not have the performance that system integrators are looking for, it
is a better alternative to existing lithium niobate technologies and is therefore being looked at in the 40Gb
transponder business.

However, in comparison to Third-Order’s EO proprietary polymer technologies, the cost of making these
packages is very high with very low corresponding yield. Although they have better economies than
traditional lithium niobate technologies, it is expected that they are still going to cost twice as much for a
packaged device 7 . Third-Order Nanotechnologies’ devices would likely be priced 15% to 20% lower
than EA modulation products, with approximately the same physical size and greater performance.

Over the next few years, management believes that its EO polymer technology will supply the
transponder makers, displacing a percentage of Apogee’s 40Gb integrated units. Management believes
that this displacement will not be immediate due to the exorbitant cost of requalifying a new part for an
existing system. Therefore, they believe that their technology may supplant the competitive EA
modulation as new transponder designs come to market. Typically the product cycle is three years. We
assume no revenue from transponders in our financial projects.




7
 A packaged device in their world is a laser, a photodetector, and a modulator all into one little package and it runs
at 40Gb.
                                  Please refer to important disclosures at the end of this report.
                               Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.

                                                               20
Third-Order Nanotechnologies


                                             V. FINANCIALS

Index
  Balance Sheet
  Income Statement
  Statement of Cash Flows
  Financial Projections
  Comparisons and Valuation
Balance Sheet

                            Third-Order Nanotechnologies Consolidated Balance Sheet

        Assets                                                      December 31, 2005          December 31, 2004
          Current Assets
             Cash                                                         $150,027                  $168,392
             Deferred charges                                              445,625                    1,605
             Misc. receivables                                              75,100                    17,600
                                                                           670,752                   187,597

        Investment                                                         200,000

        Equipment-Net                                                      54,496                    39,893

        Other Assets
             Intangible Assets                                             33,862                    20,000

        Total Assets                                                       959,110                  247,490

        Liabilities and Stockholders' Equity (Deficit)
          Current Liabilities
             Loan payable - current portion                                 4,696                     4,380
             Accounts payable                                              12,290                   38,624
             Accrued expenses                                              94,536                    62,052
             Convertible notes payable                                                              499,000
             Officer loans                                                   1,468                    1,468
                                                                           112,990                  605,524
             Loan Payable - Net of current portion                          14,242                   18,938

        Total Liabilities                                                  127,232                  624,462

        Stockholders' Equity (Deficit)
           Common stock                                                    26,254                   18,425
           Additional Paid-in-capital                                    3,590,407                  342,576
           Subscription receivable                                          (6,500)
           Deferred charges                                               (318,545)
           Accumulated deficit                                             (15,827)                  (15,827)
           Accumulated deficit during the dev. Stage                     (2,443,911)                (722,146)

        Total Stockholders' Equity (Deficit)                               831,878                  (376,972)

        Total Liabilities and Stockholders' Equity (Deficit)              $959,110                  $247,490




                               Please refer to important disclosures at the end of this report.
                            Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.

                                                            21
Third-Order Nanotechnologies


Income Statement

                            Third Order 2004-2005 Income Statement

                                                          Cumulative
                                                             Since
                                                           Inception                2005          2004

        Revenue                                                                       $0           $0

        Cost and Expenses
           Research & Development                          1,080,536              816,834        263,702
           General and Administrative                      1,353,016              894,332        458,684
                                                           2,433,552             1,711,166       722,386

        Loss from Operations                              (2,433,552)          (1,711,166)      (722,386)

        Other Income (Expense)
           Interest Income                                    7,234                6,994          240
           Interest Expense                                  (20,702)             (20,702)
                                                             (13,468)             (13,708)        240

        Net Loss                                          (2,447,020)          (1,724,874)      (722,146)

        Basic and Diluted Net Loss
        Per Common Share                                                          ($0.07)        ($0.04)

        Basic and Diluted Weighted
        Avg. Common Shares
        Outstanding                                                             24,098,833      17,754,932




                           Please refer to important disclosures at the end of this report.
                        Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.

                                                        22
Third-Order Nanotechnologies


Statement of Cash Flows

                     Third-Order Nanotechnologies 2004-2005 Statement of Cash Flows

                                                                           Cumulative
                                                                              Since
                                                                            Inception                  2005        2004

   Cash Flows from Operating Activities                                    ($2,447,020)         ($1,724,874)     ($722,146)
       Net Loss
          Adjustments to reconcile net loss to net cash
          used in operating activities

          Warrants issued for services                                       518,940              518,940
          Depreciation                                                        16,615               10,222         6,393
          Issuance of common stock for services                             1,500,500            1,169,500       331,000
          (Increase) decrease in assets
              Accounts receivable                                             (5,561)              11,000         (16,561)
              Deferred charges                                               (765,341)            (766,236)         895
          Increase (decrease) in liabilities
              Accrued expenses                                                70,497                32,484        38,013
              Accrued payable                                                 (6,602)              (26,334)       19,732
       Net cash used in operating activities                                (1,117,972)           (775,298)      (342,674)

   Cash Flows from Investing Activities
       Equipment purchased                                                    (24,825)             (24,825)
       Intangibles purchased                                                  (33,862)             (13,862)       (20,000)
       Purchase of investments                                               (200,000)            (200,000)
       Net cash used in investing activities                                 (258,687)            (238,687)       (20,000)

   Cash Flows from Financing Activities
       Issuance of common stock, private placement                          1,030,000            1,000,000        30,000
       Repayment of loan payable                                              (5,705)              (4,380)        (1,325)
       Advances to stockholders                                               (3,435)                             (3,435)
       Proceeds from convertible notes                                       499,000                             499,000
      Advances from officers                                                  1,468                               1,468
      Net cash provided by financing activities                             1,521,328             995,620        525,708

   Net Increase (Decrease) in Cash                                           144,669                  (18,365)   163,034

   Cash - Beginning of Year                                                    5,358              168,392          5,358

   Cash - End of Year                                                        $150,027            $150,027        $168,392




                                 Please refer to important disclosures at the end of this report.
                              Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.

                                                              23
Third-Order Nanotechnologies


Financial Projections
Below, we present our financial projections for Third Order Nanotechnologies from the period 2007
through 2011. This analysis is based exclusively on the 40Gb optical modulator market as forecasted by
Triple Play Communications, as discussed in section IV. We have performed sensitivity analysis to
forecast top-line revenues, gross margins and net earnings assuming a 30% market share, 50% market
share, and 70% market share. We are assuming net margins of 20%. Additionally, we are forecasting
corporate overhead expense to approximate $600,000 per quarter, growing by 2.5% annually.

Management believes that it will require $4 million in additional funding over the next 12-24 months, and
intends to do a $5 million offering once the Company has been upgraded to the Bulletin Board. In our
financial forecast, we assume that the Company will issue 2.5 million common shares each quarter during
2007 to meet its funding requirements, and 500,000 common shares per quarter beginning 2008 through
2011. We assume that the Company will earn no revenue in 2007.

  30% Market Share                FY2007E               FY2008E               FY2009E                 FY2010E    FY2011E

Total Revenue                        $0                 $16,320               $41,010                 $76,920    $132,270

Licensing Agreement (COGS)            0                  (4,080)              (10,253)                (19,230)   (33,068)

Gross Margin                         $0                 $12,240               $30,758                 $57,690    $99,203

Product-Specific Expenses             0                  (8,935)              (22,453)                (42,114)   (72,418)
Corporate Overhead Expenses        (2,423)               (2,484)               (2,546)                 (2,611)    (2,677)

Net Income (Loss)                  ($2,423)               $821                 $5,758                 $12,966    $24,108

Weighted Average Number of
Common Shares Outstanding          31,214                36,214                38,214                  40,214     42,214

Earnings Per Share                 ($0.08)                $0.02                 $0.15                  $0.32      $0.57




  50% Market Share                FY2007E               FY2008E               FY2009E                 FY2010E    FY2011E

Total Revenue                        $0                 $27,200               $68,350                 $128,200   $220,450

Licensing Agreement (COGS)            0                  (6,800)              (17,088)                (32,050)   (55,113)

Gross Margin                         $0                 $20,400               $51,263                 $96,150    $165,338

Product-Specific Expenses             0                  (14,892)             (37,422)                (70,190)   (120,696)
Corporate Overhead Expenses        (2,423)                (2,484)              (2,546)                 (2,611)    (2,677)

Net Income (Loss)                  ($2,423)              $3,024               $11,294                 $23,350    $41,965

Weighted Average Number of
Common Shares Outstanding          31,214                36,214                38,214                  40,214     42,214

Earnings Per Share                 ($0.08)                $0.08                 $0.30                  $0.58      $0.99




                                 Please refer to important disclosures at the end of this report.
                              Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.

                                                              24
Third-Order Nanotechnologies

  70% Market Share                FY2007E               FY2008E               FY2009E                 FY2010E     FY2011E

Total Revenue                        $0                 $38,080               $95,690                 $179,480    $308,630

Licensing Agreement (COGS)           $0                  ($9,520)             ($23,923)               ($44,870)   ($77,158)

Gross Margin                         $0                 $28,560               $71,768                 $134,610    $231,473

Product-Specific Expenses             0                  (20,849)             (52,390)                (98,265)    (168,975)
Corporate Overhead Expenses        (2,423)                (2,484)              (2,546)                 (2,611)     (2,677)

Net Income (Loss)                  ($2,423)              $5,227               $16,831                 $33,734     $59,821

Weighted Average Number of
Common Shares Outstanding          31,214                36,214                38,214                  40,214      42,214

Earnings Per Share                 ($0.08)                $0.14                 $0.44                  $0.84       $1.42



                                                     Comparisons

Lumera (LMRA) is one of the emerging players in the field of nanotechnology. Lumera was formerly a
majority owned subsidiary of Microvision, and was spun out in 2004. In early 2004, Lumera exited the
development stage when it began commercializing its devices for potential wireless networking and
optical networking applications. Similar to Third-Order Nanotechnologies, Lumera develops proprietary
polymer materials which are used in bioscience products and in electro-optic devices.

Shares of Lumera trade on the NASDAQ Exchange. As of December 12, 2006, Lumera had a market
capitalization of $111.04 million with a price/revenue multiple of 48.1x. Third-Order Nanotechnologies
has a market capitalization of $13.18 million. Lumera recently reported a net loss of $2.7 million and
$9.0 million for the quarter and nine months ending September 30th, 2006 respectively.




                                 Please refer to important disclosures at the end of this report.
                              Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.

                                                              25
Third-Order Nanotechnologies


                                                 Valuation Metrics

Based on our earnings model on the previous page, we calculate the following values assuming varying
levels of market penetration.

30% Market Share

            Estimated 40Gb
              Modulator                           Price to                                            Current
             Market Size         Earnings         Earnings                               Discount    Discounted
  Year           ($M)            Estimate        Multiple (X) Future Value                 Rate        Value
  2009           $150             $0.15              20          $3.01                     35%         $1.23
  2010           $275             $0.32              20          $6.45                     35%         $1.94
  2011           $500             $0.57              20         $11.42                     35%         $2.55
 Average                                                                                               $1.90

50% Market Share

            Estimated 40Gb
              Modulator                           Price to                                            Current
             Market Size         Earnings         Earnings                               Discount    Discounted
  Year           ($M)            Estimate        Multiple (X) Future Value                 Rate        Value
  2009           $150             $0.30              20          $5.91                     35%         $2.40
  2010           $275             $0.58              20         $11.62                     35%         $3.50
  2011           $500             $0.99              20         $19.89                     35%         $4.43
 Average                                                                                               $3.44

70% Market Share

            Estimated 40Gb
              Modulator                           Price to                                            Current
             Market Size         Earnings         Earnings                               Discount    Discounted
  Year           ($M)            Estimate        Multiple (X) Future Value                 Rate        Value
  2009           $150             $0.44              20          $8.81                     35%         $3.58
  2010           $275             $0.84              20         $16.78                     35%         $5.05
  2011           $500             $1.42              20         $28.35                     35%         $6.32
 Average                                                                                               $4.98

Third-Order Nanotechnologies’ management believes that the 40Gb optical modulator represents the
largest short-term opportunity for the Company. Third-Order does not necessarily intend to manufacture
the modulators, but will likely establish a licensing agreement with a manufacturer to build the optical
modulators. For the purpose of our financial projections, we assume that the Company will enter into a
licensing arrangement to manufacture the 40Gb modulators. Although no licensing agreements or
strategic partnerships are currently in place, we anticipate that the economics from an agreement may
involve a 20%-30% revenue split for the licensing partner(s). For the purpose of these projections, we are
assuming a 25% revenue share with the licensing partner.

Our sensitivity analysis on the previous page calculates values assuming a 30% market share, 50% market
share, and 70% market share of the 40Gb modulator market. Management believes that their market
share will likely range between 65%-80% due to vastly superior cost, stability, and performance

                                Please refer to important disclosures at the end of this report.
                             Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.

                                                             26
Third-Order Nanotechnologies

characteristic advantages vis-à-vis competitive technologies. In addition, management believes that they
will earn $0.32 for every revenue dollar for the remaining 20%-35% of the 40Gb market in licensing
agreements with its competitors for their proprietary technology.

We are basing our current discounted target value of $3.44 per share assuming a 50% market share.
Additionally, we are not taking into consideration any additional income from technology-based licensing
agreements from competitors. In terms of financial ratios, management believes that they will report
gross margins ranging from 60% to 70% due to their cost efficiencies vis-à-vis the leading competitive
technologies. For the purpose of our model, we are assuming net margins (after-tax) of 20%. Therefore,
greater than expected market penetration, incremental technology-based licensing revenues from
competitors, and higher than expected margins represents significant upside to our estimates.

We note that these forecasts only represent the Company’s exposure to the 40Gb modulator market, and
do not take into consideration the other potentially highly lucrative product applications, including circuit
board applications, chip-to-chip interconnects, 100Gb data modulators 8 , transponders, and transceivers.
Assuming that the Company is able to capitalize on these other product areas, our target price on shares of
TDON would adjust accordingly.

Comparison of our analysis to independent third party analysis of IP estate

Our current discounted target value of $3.44 per share of Third-Order Nanotechnologies represents a
value of $94.5 million (This figure represents a 15% discount to Lumera’s market capitalization as of
December 12, 2006) assuming 27.464 million fully diluted common shares. As disclosed in the
intellectual property section of this report, an independently performed study determined that the
intellectual property estate applicable only to the 40Gb optical modulator niche was $78.6 million, which
assumed only a 35% market share. We believe that these independent findings confirm the deep discount
at which the stock is trading relative to its underlying value and competitors, assuming that the Company
is able to efficiently capitalize on the lucrative market opportunities and achieve its market share goals.




8
 As mentioned earlier in the report, according to the Optoelectronics Industry Development Association, the 100Gb
modulator market 2010 revenues are forecasted to be $210 million.
                                Please refer to important disclosures at the end of this report.
                             Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.

                                                             27
Third-Order Nanotechnologies


                                                   VI. RISKS

Index

        Competition Risk
        Execution Risk
        Financial Risk
        Key Management Risk
        Micro-capital Investment Risk
        Non-Specific Market Risks (Liquidity, trading rules & BD restrictions)
        Risk Categories
Competition Risk
The market for telecommunication devices is very competitive, and the intensity of the competition may
increase as bandwidth needs increase. Many of the Company’s competitors have greater financial,
technical, research, marketing, sales, distribution, service and other resources than Third-Order
Nanotechnologies. Additionally, some competitors may offer broader product lines and have greater
name recognition, and may offer discounts as a competitive tactic, forcing intense pricing pressure.
Moreover, competitors may develop or market technologies or products that are more effective or more
commercially attractive than the Company’s future products, or that may render the Company’s
technologies or products less competitive or obsolete.

Execution Risk
As with any growing company implementing an accelerated growth plan, Third-Order Nanotechnologies
ultimate success or failure will depend on management’s ability to execute their business plan in an
efficient and timely manner. Management’s experience and solid reputation in the EO polymer industry
helps mitigate this risk.

Financial Risk

As a pre-revenue firm, Third-Order Nanotechnologies is dependent on continued financing from outside
investors due to recurring operating losses. The Company may need to raise additional capital in order to
commercialize its technology as well as to meet general working capital requirements. Capital may be
raised through further sales of equity securities; however, there is no firm commitment to invest in Third-
Order at this time. There can be no assurances that the Company will be successful in obtaining debt or
equity financing in order to achieve its financial objectives and continue as a going concern. As a result,
investors must be financially capable of losing their entire investment.

Key Management Risk

Management skill’s and experience is a key determinant of success. Third-Order Nanotechnologies, like
most small companies, is heavily dependent on key management, the loss of any of which could
seriously, adversely affect the Company.




                               Please refer to important disclosures at the end of this report.
                            Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.

                                                            28
Third-Order Nanotechnologies



Micro-capital Investment Risk

Micro-capital investing involves inherent risk and investors should carefully research any company
considered for investment. Micro-capital companies are usually early in their market cycle and
vulnerable to significant price volatility.

Non-Specific Market Risks (Liquidity, trading rules & BD restrictions)

Third-Order’s common stock is quoted on the Pink Sheets, as such, there is only a limited trading market
for its common stock. As a result, the Company’s common stock is subject to the penny stock rules by
the Securities and Exchange Commission that requires brokers to provide extensive disclosure to its
customers prior to executing trades in penny stocks, and as such there may be a reduction in the trading
activity of its common stock. As a result, investors may find it difficult to sell their Shares of the
Company’s common stock.

Intellectual Property Risk

There is no guarantee that Third-Order’s patents or pending applications will afford legal protection
against competitors or provide significant proprietary protection or competitive advantage. In addition,
the Company’s patents or pending applications could be held invalid or unenforceable by a court, or
infringed or circumvented by others, or others could obtain patents that the company would need to
license or circumvent. Further, when the Company’s patents expire, other companies could develop new
competitive products to Third-Order’s products.

Risk Categories

WSR’s investment universe revolves around undiscovered emerging growth companies that possess
higher risk profiles than established “blue chip” companies. Presently WSR maintains two risk categories
including aggressive growth and speculative with the later assigned to higher risk companies.




                              Please refer to important disclosures at the end of this report.
                           Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.

                                                           29
Third-Order Nanotechnologies


                                           VII. MANAGEMENT
Officers, Directors and Key Management

Name                                         Age                    Position

Frederick J. Goetz, Jr.                        33                   President, Director
Andrew J. Ashton                               32                   Executive Vice President, Director
Ronald R. Genova                               50                   Interim CEO (Consultant)
Dr. Frederick J. Goetz                         63                   Founder/CTO
Dr. C.C. Teng                                  52                   Senior Distinguished Member of Technical Staff


Frederick J. Goetz, Jr., President, Director

The driving force behind many of the technical advancements of Third-Order, Inc, Fred Goetz, Jr. is the
company’s expert in the coding and operation of molecular orbital (quantum mechanical) and
electrostatic simulation software for NLO materials development. Mr. Goetz has pioneered novel methods
for high yielding molecular synthesis of ring-locked, organic structures. Together with his father, he aids
in the development of novel molecular designs and quantum mechanical interpretation at the company.
Mr. Goetz, Jr. began his career at Lawrence Berkeley Laboratory and the Army Research Laboratory on
Aberdeen Proving Grounds in particle physics and sensor development.

Andrew J. Ashton, Executive Vice President, Director

He began his scientific career in 1998 at the Army Research Laboratory on the Aberdeen Proving
Grounds where he helped to design and implement computer interfaces for composite analyses. At that
time he joined Third-Order Nanotechnologies as financial manager and was responsible for day to day
administrative duties. He was instrumental in securing government funding, Third-Order’s sole financial
source, until 2003.

Ronald R. Genova, Interim CEO (consultant)

A seasoned veteran within the electro-optics industry, Ron Genova is the founder of a successful
executive consulting practice engaged in high technology industries. Mr. Genova’s consulting practice
has guided clients whose development focus ranges from optical and RF technology to precision
pharmaceutical fluidic controls. In his capacity as interim CEO, Mr. Genova provides strategic guidance
and managerial disciplines for Third-Order as it completes initial EO material development and embarks
the critical product realization and commercial introduction phases.

A former Vice President and General Manager of JDSU’s Telecom Optical Modules business unit,
Genova also brings over twenty five years of executive management and advanced optical technology
development experience from his tenure with Bell Labs/Lucent Technologies (LU), a company that has
produced some of the most important and groundbreaking research in electro-optic plastics, as well as
former president of Optical Crosslinks (formerly known as Polymer Photonics Inc.), a company
singularly focused on high performance polymer optical solutions. He is a Senior Member of IEEE and
personally holds several patents ranging from telecommunications to pharmaceutical instrumentation.




                               Please refer to important disclosures at the end of this report.
                            Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.

                                                            30
Third-Order Nanotechnologies

Dr. Frederick J. Goetz, Founder / CTO

Dr. Frederick J. Goetz has dedicated his life to the advancement of electro-optics. Throughout his lauded
career, he has led material development groups at such leading companies as American Color and
Chemical Corporation, Hooker Chemical and Plastics, Occidental Petroleum (Senior Scientist),
Occidental Chemical, DuPont Experimental Station (Research Associate), Pennwalt, and Atochem North
America, where he established a specialized electro-optics program.

An industry-wide recognized expert in polyheterocyclic organic chemistry, his highly distinguished career
began at American Aniline Products, where he served as a research project team leader. Dr. Goetz
founded Third-Order Nanotechnologies in 1991, with the belief that his vision could revolutionize
industries dependant upon EO polymers and advance the telecommunications industry.

Dr. C.C. Teng, Senior Distinguished Member of Technical Staff

Dr. Teng is a well-recognized industry expert who has spent over twenty years working with high-speed
polymer components (such as high-speed modulators) and processing technology. Dr. Teng earned his
PhD from the University of Pennsylvania in 1983 and subsequently spent fourteen years at Hoechst-
Celanese pioneering EO polymer research. His subsequent positions led him towards working with
developmental stage companies such as MicroOptics and PhotonX. In 1991, Dr. Teng completed his
development of the world’s first >40Ghz (2Vπ) polymer modulator.

Dr. Teng is the co-creator of the Teng-Man Test (r33), a benchmark for polymer testing that is recognized
industry-wide. He currently holds more than twenty patents and has published several technical papers.




                              Please refer to important disclosures at the end of this report.
                           Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.

                                                           31
Third-Order Nanotechnologies



                      VIII. CORPORATE OFFICES & ADVISORS
Third-Order Nanotechnologies

Third-Order Nanotechnologies, Inc.,
2601 Annand Drive, Suite #16,
Wilmington, Delaware 19808
(302) 998-8824 (Tel)
(302) 998-4190 (Fax)

Web Site: www.thirdordernano.com


Report Contact

Wall Street Resources, Inc.
2646 SW Mapp Road,
Suite 303
Palm City, FL 34990
(772) 219-7525 (Tel)
(772) 219-3579 (Fax)
Website: www.wallstreetresources.net




                             Please refer to important disclosures at the end of this report.
                          Copyright © 2006 by Wall Street Resources, Inc., all rights reserved.

                                                          32
Third-Order Nanotechnologies

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