SI Diamond Technology  (SIDT)
By: Randy Lewis, CFA

June 10, 2002. SI Diamond Technology (OTCBB: SIDT) announced last week that its board of directors has approved the exploration of strategies which, according to the Company, "should ultimately increase shareholder value." These strategies include:

· Partial sale, and/or spin-off of Electronic Billboard Technology (EBT);
· Partial sale, and/or spin-off of Applied Nanotech Inc. (ANI); or
· A combination of both

Management expects to select and close one or more of these proposed alternatives in the near term.

In our initial report, we stated that we felt it makes sense for the Company to spin-off EBT because of its stand-alone business model and potential for growth. In fact, we looked to the execution of the EBT business model as the primary reason for a future rating upgrade. It is clear to us that ANI and EBT are now exhibiting differing cash flow needs -- and really have always had different customer bases, sales and distribution channels, cost structures, and overall long-term strategies. Of course, enhancement of shareholder value has no foresight. That is, we will not know if shareholder value is truly increased until such time as it actually happens. It is management's responsibility to maximize the probability of enhancing value for shareholders, and we feel the separation of the two entities is a step in that direction.

Current and prospective shareholders should be aware that any transaction may result in the creation of two publicly held companies, or one publicly traded company with a minority ownership in the remaining privately held company. We maintain our Buy rating

J.M.Dutton & Associates, LLC. John M. Dutton, President and Supervisory Analyst, 1129 Manning Drive, Suite 310, El Dorado Hills, CA 95762 Phone (916) 941-4985, Fax (978) 418-6422 Email: [email protected] Web site: www.JMDutton.com

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