November 7, 2006 7:36 AM PST
Waterproof-paper company to go public
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Ecology Coatings, based in Akron, Ohio, recently acquired OCIS, a "shell" company that is traded over-the-counter and does not have any current operations.
By subsuming OCIS, Ecology Coatings can essentially go public and raise capital through the public markets, said Rich Stromback, the former CEO who is now chairman.
Several nanotechnology start-ups in recent years have found themselves in a financing dilemma. These companies generally specialize in coming up with new chemical compounds and materials for old-time industry players such as paint makers, fuel refineries, plastics manufacturers. Ecology Coatings, for example, has devised an industrial coating that functions like paint but dries far more rapidly, increasing production time and reducing hazardous fumes.
It also, by accident, came up with a coating that makes ordinary paper impervious to water and mold.
Unlike Web 2.0 companies, nanotech companies need large capital budgets to build factories and laboratories. The payoff can take several years rather than just a few months. Venture capitalists once enthused about the possibility of nanotech have thus migrated to Internet companies and energy start-ups. Only a few nanotech companies have held initial public offerings, and none have caused much of a ripple in the public markets.
"This is where the old (venture) financing models broke down," Stromback said. Nanotech is "great, new technology, but it is addressing old markets."
Ecology Coatings also announced on Tuesday that Tom Krotine, a chemical-industry veteran, has joined the company as president and CEO.
The company is small. It has five employees and will have about $100,000 in revenue this year. Nonetheless, large companies have approached it regarding acquisition. Ecology Coatings also licenses intellectual property.
Other small companies in the industry, such as Altair Nanotechnologies, which has developed a lithium ion battery for cars, have also undergone reverse mergers.