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Annual Report 2004 Release date:04/19/2005 Boston—January 26, 2005— NanoLab, Incorporate today reported its financial results for fiscal 2004. Net sales for the fiscal year 2004 rose 44% to $974,590 over fiscal year 2003, where net sales were $673,123. This is our fourth year of >40% growth in net sales, as we reported a gain in Net Sales of over 40% in 2003 over the basis of fiscal year 2002, $480,165. See earlier annual reports for historical information. Gross profit increased by 65% to $503,763 for the fiscal year 2004, over a gross profit in 2003 of $304,132. The net profit for the corporation also increased from fiscal year 2003 to fiscal year 2004, from $57,376 to $137,412, a multiple of 2.4X. On a generally accepted accounting principles (GAAP) basis, the net profit of $137,412 equates to $1.37 per share, compared with a per share profit of $0.57 per share for the previous year. ----------------------------------------------------------------------------------------------------------------------- Commenting on the results, David Carnahan, Chief Executive Officer, said, "The operating results we announced today are in-line with our expectations for corporate growth. I am encouraged that our products including carbon nanotubes and other nanoparticles are remaining competitive in the marketplace, even in the face of low cost entrants from developing nations. This is a tribute to the sophistication of our customers who recognize the value of a domestic source for the highest quality nanomaterials. In the coming year, we will expand our production capacity greatly, to meet the needs for low cost nanotubes for a variety of applications." NanoLab® reports its financial results in accordance with GAAP and additionally on a non-GAAP basis referred to as pro forma. These pro forma measures are not in accordance with, nor are they a substitute for, GAAP measures and may not be consistent with the presentation used by other companies. NanoLab uses the pro forma financial measures to evaluate and manage the Company’s operations. NanoLab® is providing this information to investors to allow for the performance of additional financial analysis and because it is consistent with the financial models and estimates published by analysts who follow the Company. The pro forma results exclude the following items which are required by GAAP: restructuring costs, amortization and impairments of purchased intangibles, excess inventory benefit, acquired in-process research and development charges, stock-based compensation charges related to acquired companies, litigation settlement costs, real estate gains, realized gains and losses on strategic equity investments, and payroll tax effects of stock option exercises. Income taxes are adjusted to an estimated pro forma effective tax rate. See the attached reconciliation of the GAAP net loss to the pro forma net income or loss, which quantifies the amounts excluded from pro forma basis results. Overview NanoLab® provides the essential building blocks for applications of nanotechnology, from raw materials to designed components, including composites and nanoscale electronics. The company applies its processing and manufacturing expertise to nanotechnology based products, to create structures, devices and technologies for the developers of advanced composites, nano-electronics, nano-biological systems, and sensors. ---------------------------------------------------------------------------------------------------------------------- NanoLab’s corporate headquarters are located in Newton, MA. Additional sales offices are located at E&T Corporation in Japan. For further information regarding NanoLab, please visit our web site at http://www.nano-lab.com This news release contains forward-looking statements, including, but not limited to, statements regarding the company’s expectations of future profitability. These forward looking statements are only predictions based on current information and expectations and are subject to certain risks and uncertainties, including, but not limited to, customer demand for the Company’s products, the businesses of the Company’s major customers, reductions, rescheduling or cancellation of orders by the Company’s customers, successful and timely development of products, market acceptance of new products, integration of acquired businesses, manufacturing capacity and execution, and general economic conditions.