UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      DC 20549





**FORM
      10-KSB**





(Mark
      One)


x
            Annual
                Report under Section 13 or 15 (d) of The Securities Exchange Act
                of 1934


For
      the
      fiscal year ended December 31, 2005 or





o
            Transition
                Report under Section 14 or 15 (d) of The Securities Exchange Act
                of
                1934


For
      the
      transition period from _________ to __________.





**NaturalNano,
      Inc.**


(Exact
      name of registrant as specified in its charter)





**Nevada**
            
            **000-49901**
            
            **87-0646435**(State
                or other jurisdiction
            
            (Commission
                File No.)
            
            (I.R.S.
                Employerof
                incorporation)
            
            
            
            Identification
                No.)





**150
      Lucius Gordon Drive, Suite 115**


**West
      Henrietta, New York 14586**


(Address
      of principal executive offices) ****


**(585) 214-8005**


(Registrant’s
      telephone number, including area code)






Securities
      registered under Section 12 (b) of the Exchange Act: None





Securities
      registered under Section 12 (g) of the Exchange Act: Common Stock, $0.001 par
      value.





Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act:  _____





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15 (d) of the Exchange Act during the past twelve months (or for such shorter
      period that the registrant was required to file such reports), and (2) has
      been
      subject to such filing requirements for the past 90 days


Yes
x
      No o





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B is not contained in this form, and no disclosure will be
      contained, to the best of registrant’s knowledge, in definitive proxy or
      information statements incorporated by reference in Part III of the Form 10-KSB
      or any amendment to this Form 10-KSB. x





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act.)


Yes
o
      No x





State
      issuer’s revenues for its most recent fiscal year: $500





The
      aggregate market value of the voting and non-common voting equity held by
      non-affiliates computed by reference to the average bid and asked price of
      such
      common equity, as of February 15, 2006 was $186,455,100.





The
      number of outstanding shares of the registrant’s Common Stock, $0.001 par value,
      as of February 15, 2006 was 121,074,740 shares.





DOCUMENTS
      INCORPORATED BY REFERENCE


Not
      applicable





Transitional
      Small Business Disclosure Format: Yes o No x










**TABLE
      OF CONTENTS**




Page**PART
                I**Item
                1.
            Description
                of Business
            1Item
                2.
            Description
                of Property
            8Item
                3.
            Legal
                Proceedings
            8Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            8**PART
                II**Item
                5.
            Market
                for Common Equity, Related Stockholder Matters and Small
                BusinessIssuer
                Purchases of Equity Securities
            8Item
                6.
            Plan
                of Operation
            9Item
                7.
            Financial
                Statements
            11Item
                8.
            Changes
                in and Disagreements with Accountants on Accounting andFinancial
                Disclosure
            12Item
                8A.
            Controls
                and Procedures
            12Item
                8B.
            Other
                Information
            12**PART
                III**Item
                9.
            Directors,
                Executive Officers, Promoters and Control Persons;Compliance
                with Section 16(a) of the Exchange Act
            12Item
                10.
            Executive
                Compensation
            18Item
                11.
            Security
                Ownership of Certain Beneficial Owners and Managementand
                Related Stockholder Matters
            20Item
                12.
            Certain
                Relationships and Related Transactions
            21Item
                13.
            Exhibits
            22Item
                14.
            Principal
                Accountant Fees and Services
            24**SIGNATURES**
            25




-i-





**CAUTIONARY
      STATEMENT REGARDING**


**FORWARD-LOOKING
      STATEMENTS**





This
      annual report on Form 10-KSB and other reports that we file with the SEC contain
      statements that are considered forward-looking statements. Forward-looking
      statements give the Company’s current expectations, plans, objectives,
      assumptions or forecasts of future events. All statements other than statements
      of current or historical fact contained in this annual report, including
      statements regarding the Company’s future financial position, business strategy,
      budgets, projected costs and plans and objectives of management for future
      operations, are forward-looking statements. In some cases, you can identify
      forward -looking statements by terminology such as “anticipate,” “estimate,”
“plans,” “potential,” “projects,” “ongoing,” “expects,” “management believes,”
“we believe,” “we intend,” and similar expressions. These statements are based
      on the Company’s current plans and are subject to risks and uncertainties, and
      as such the Company’s actual future activities and results of operations may be
      materially different from those set forth in the forward looking statements.
      Any
      or all of the forward-looking statements in this annual report may turn out
      to
      be inaccurate and as such, you should not place undue reliance on these
      forward-looking statements. The Company has based these forward-looking
      statements largely on its current expectations and projections about future
      events and financial trends that it believes may affect its financial condition,
      results of operations, business strategy and financial needs. The
      forward-looking statements can be affected by inaccurate assumptions or by
      known
      or unknown risks, uncertainties and assumptions due to a number of factors,
      including:




·
            continued
                development of our technology;


·
            dependence
                on key personnel;


·
            competitive
                factors;


·
            the
                operation of our business; and


·
            general
                economic conditions.





These
      forward-looking statements speak only as of the date on which they are made,
      and
      except to the extent required by federal securities laws, we undertake no
      obligation to update any forward-looking statements to reflect events or
      circumstances after the date on which the statement is made or to reflect the
      occurrence of unanticipated events. In addition, we cannot assess the impact
      of
      each factor on our business or the extent to which any factor, or combination
      of
      factors, may cause actual results to differ materially from those contained
      in
      any forward-looking statements. All subsequent written and oral forward-looking
      statements attributable to the Company or persons acting on its behalf are
      expressly qualified in their entirety by the cautionary statements contained
      in
      this annual report.





**ITEM
      1. DESCRIPTION OF BUSINESS**





**Company
      Business**





The
      Company is a development stage company and is expected to remain so for at
      least
      the next twelve months. Our primary mission is to develop and exploit
      technologies in the area of nanotechnology, specifically focusing on naturally
      occurring nanoscale materials. Our strategy is to patent these processes and
      application technologies and license the associated patents to relevant
      industries including: polymers, plastics and composites, cosmetics and personal
      care products and medical and pharmaceutical device additives and coatings.





Our
      researchers have identified more than 200 applications within these industries
      as potential development opportunities which are subject to pending patents
      and
      issued patents under licensing agreements. The Company’s near term goal is
      focused on core technology development and application processes utilizing
      halloysite nanotubes. We expect to identify and develop other naturally
      occurring nanoscale materials in future research programs.




1





The
      Company’s current focus is directed toward research, development, production and
      marketing of material and proprietary technologies in the following
      fields:





1.
            Developing
                an intellectual property portfolio with state-of-the-art, proprietary
                processes for extracting andseparating
                halloysite nanotubes from halloysite
                clay.




2.
            Developing
                commercial applications for halloysite nanotubes, specifically for
                the
                following application areas:




·
            Material
                additives for polymers, plastics and
                composites,


·
            Radio
                frequency shielding and control,


·
            Cosmetics
                and odor masking,


·
            Absorbent
                materials,


·
            Electronics,


·
            Agricultural,
                and


·
            Drug
                delivery.




3.
            Engaging
                in business alliances with other organizations to bring our nanoscale
                materials to market.





**Projected
      Milestones for the Period through December 2006**





The
      Company will focus on the following operational objectives and milestones during
      the next twelve months:





1.
            **Intellectual
                Property Asset Development**


a.
            Continue
                patent applications for separation and application technologies for
                naturally occurring nanomaterials


b.
            License-in
                complementary technologies from third
                parties





2.
            **Halloysite
                nanotube processing
                technology**


a.
            Continue
                evaluation of processing alternatives for commercial
                scale


b.
            Create
                designs for pilot processing system





3.
            **Sample
                material availability**


a.
            Ship
                samples to third parties for evaluation and for research
                purposes





4.
            **Engage
                with research organizations to reduce patent-pending and licensed
                IP to
                practice in the following categories**:


a.
            Separation
                and classification of halloysite
                nanotubes


b.
            Additives
                for composite plastics and polymers


c.
            Cosmeceutical
                applications


d.
            Electronics
                applications





5.
            **Establish
                strategic partners and enter into joint development relationships
                with the
                intent to license our
                technology.**





**Products
      and Technology**





Halloysite
      Nanotube (“HNT”) Extraction and Classification





The
      Company has proprietary technology related to the extraction of halloysite
      nanotubes from minimally processed halloysite clay that is typically provided
      by
      a halloysite mining company, such as Atlas Mining Company. Halloysite clays
      differ in the concentration and physical characteristics of tubular material
      content. NaturalNano’s technologies are important for realizing the benefits of
      the nanotubular material. Classification of the halloysite nanotubes is
      necessary for determining the loading potential of unfilled halloysite nanotubes
      and determination of the resulting release characteristics of filled halloysite
      nanotubes. Many of the technologies related to extraction and classification
      of
      halloysite nanotubes are patent-pending and we expect to continue research
      in
      these areas which may lead to additional patent applications in the
      future.





2


Halloysite
      Nanotube Functionalization





Proprietary
      technologies include processing methods, formulations, and specific surface
      treatments that enable the halloysite nanotubes to be functionalized and used
      in
      a wide range of applications. The Company has rights to patented technologies
      as
      well as patents pending for a variety of unique processing methods, formulations
      and other surface treatment technologies. Some of these proprietary technologies
      are protected by trade secrets.





Various
      treatments can be made to the halloysite nanotubes to prepare them for use
      in a
      wide range of specific applications. Examples of these treatments include
      coating the outer surfaces of the nanotubes, metalizing outer and/or inner
      surfaces of the nanotubes, loading or filling the nanotubes with active
      ingredients for precise controlled release, and use of complementary
      technologies for further encapsulating single or multiple functionalized
      halloysite nanotubes. Each of these functionalization approaches may provide
      benefits across the multiple industries that the Company’s technologies address.
      Combining these technologies presents prospective customers with the potential
      for deriving specific application solutions from utilizing these technologies.
      The table below presents a high-level overview of the technologies and market
      segments that may benefit. Not every technology shown is applicable to every
      market, but this illustrates the overview of technologies and
      markets.





HNT
                Extraction
            HNT
                Classification
            Outer
                Surface Treatments
            Outer
                Surface Metalization
            Inner
                Surface Coatings
            Inner
                Surface Metalization
            Active
                Ingredient Loading
            Encapsulation
                of Single or Multiple Functionalized HNTsPolymers,
                Plastics, CompositesRadio
                Frequency ShieldingCosmeticsOdor
                maskingAbsorbent
                materialsElectronicsAgricultureDrug
                Delivery





The
      Company provides technologies and services for functionalizing halloysite
      nanotubes for use in a wide range of applications. Functionalization of these
      nanotubes is done by applying proprietary processes to fill or “load” the
      tubules with differing materials and compounds or to enable diffusion of the
      tubules in a given chemical mixture for
      specific purposes—such as an extended release of fragrances. The resulting
      material produced using these proprietary processes is either a fine powder
      or a
“slurry,” which is a powder suspended in a liquid. The use of powders or
      slurries depends on specific customer requirements and use in their
      manufacturing processes.





Proprietary
      technologies include processing methods, formulations, and specific surface
      treatments that enable the halloysite nanotubes to be functionalized and used
      in
      a wide range of applications. The Company has rights to patented technologies
      as
      well as patents pending for a variety of unique processing methods, formulations
      and other surface treatment technologies.





3




**Licensing
      Strategy**





Our
      strategy is to license our technologies to companies, segmented by technology
      type and market segment. In some cases, we may also offer critical components,
      functionalized materials, and/or other capabilities needed to put our
      innovations into practice.





Our
      licensing strategy is to segment the market as finely as possible to maximize
      the royalty revenue achievable by our technology. The table above reveals a
      high-level overview of the potential licensing space for our technologies.
      Our
      technologies are shown across the top of the table, and potential markets are
      indicated on the left side of the table. Each empty box in the table is a
      potential licensing space, indicating a technology/product intersection. Not
      every technology shown is pertinent for every market, but this reveals a
      high-level overview of our market segmentation strategy.





We
      believe royalty rates, which would be either a direct royalty for technologies
      utilized by the manufacturer to produce products utilizing our technologies
      or
      as premium amounts in actual materials provided to a customer, are critical
      to
      the determination of our future potential revenue.


Our
        upfront negotiations with each customer will determine royalty rates for
        each
        market segment. Royalty rates are dependent upon the strength of our patent
        coverage, the strength of the market advantage provided by our technology,
        the
        availability of other technology options to solve a particular problem, as
        well
        as whether or not we grant an exclusive or non-exclusive license. We believe
        it
        is very important to demonstrate the value that we add to the product, and
        how
        that added value will improve our customer’s position in the market, to achieve
        an acceptable royalty rate.
 
 In
        situations where we possess several solutions to a problem, we expect that
        the
        customer will evaluate all of our technology options to determine which solution
        is best and whether or not it should license all of our solutions. Those
        solutions that are not licensed exclusively might be licensed-in by a
        competitor, who can then claim a comparable advantage. Broader license grants
        and stronger intellectual property positions can result in higher royalty
        rates.
        To achieve higher potential royalty rates, resulting in the best long-term
        benefit to our shareholders. We are aggressively patenting and acquiring
        technology solutions in the multiple markets in which we are
        active.
 
 For
        each
        potential customer with whom we enter into discussions, we identify which
        market
        segments they are interested in and which technologies they wish to license.
        We
        generally wish to see a commitment to ship a product within a certain time
        frame, certain annual minimum commitments, minimum royalty payments, milestone
        payments and an attractive royalty rate or material sale price, if the customer
        requirements dictate providing materials with an implicit license fee per
        unit
        of material weight.





The
      degree of exclusivity is also a key parameter in determining achievable license
      terms and royalty rates; however, the decision to license exclusively or
      non-exclusively is dependent upon multiple factors. Ultimately, our strategy
      related to exclusive versus non-exclusive licensing will be determined by market
      segment, and will be dependent upon market need, market fragmentation,
      competitive advantage market position and financial incentives offered by the
      potential licensees. For example, while giving one company a non-exclusive
      license, there remains the possibility for a second company to negotiate a
      "co-exclusive" license.





**Markets**





The
      Company has technologies that can provide benefits to many industry segments.
      Specific industries where management believes halloysite nanotubes may enhance
      products through controlled and extended release of active ingredients or
      through other treatments provided on the surfaces of the tubes
      include:





·
            Polymers,
                plastics and composites


·
            Cosmetics
                and cosmeceuticals


·
            Household
                products


·
            Electronics


·
            Agricultural
                products


·
            Drug
                delivery technologies





4





We
      anticipate that we will license our technology to one or more development
      partners who would be responsible for developing commercial products, obtaining
      necessary approvals, manufacturing, marketing and distributing the products.
      Our
      search for development partners is global; however, we cannot presently identify
      or predict the precise target markets, distribution methods or other marketing
      efforts of our potential development partners.





The
      potential market for technologies which we have under development is large.
      As
      examples, the total estimated North American market for polymers and plastics,
      as presented by the American Plastics Council, is approximately $300 billion
      in
      annual revenues; drug delivery technologies is estimated to be a U.S. $40
      billion market. Additionally, the projected growth of the nanotechnology market
      has been forecasted by the National Science Foundation to grow from
      approximately $25 billion in 2006 to $1 trillion by 2015.





**Strategic
      Partnerships**





Leveraging
      strategic relationships is vital to our mission. These relationships will help
      us to validate and expand our technology, develop extraction and separation
      processes, offer insight into additional application opportunities, and develop
      future sales channels, among other things. The Company has entered into
      cooperative research and development agreements with several nationally
      recognized universities and with an independent laboratory to jointly test
      and
      further develop core technologies and commercial applications for naturally
      occurring nanoscale materials. We will continue to seek partnering relationships
      with research facilities and commercial product suppliers around the world
      as we
      focus on developing new nanotechnology solution applications.





We
      have
      entered into nondisclosure agreements with prospective business partners and
      have discussed with these entities the potential for strategic relationships
      that could result in joint development and licensing agreements. This partnering
      of ideas and the joint development of applications has proven to be successful
      in accelerating our development of new processes and product opportunities
      and
      will continue to be pursued by the Company.





On
      May
      25, 2005 NN Research signed a joint research agreement with Nanolution, LLC
      (a
      wholly owned subsidiary of Biophan Technologies, Inc.) (“Nanolution”) to pursue
      the development of a new drug delivery application utilizing naturally occurring
      halloysite nanotechnologies. In connection with this agreement, the Company
      and
      Nanolution have agreed that all medical uses and inventions arising from these
      efforts will be owned and separately marketed by Nanolution. All purification
      processes and non-medical applications will be owned by
      NaturalNano.





**Sales
      and Marketing**





The
      Company intends to develop an internal direct sales group for future licensing
      and delivery of products and related production processes with prospective
      customers. At the present time, this is considered to be an important element
      of
      our overall strategy in the qualification of potential applications and
      opportunities with customers. As individual market segments are developed
      through this direct sales approach, the Company may consider the use of
      alternate sales and distribution methods.





We
        are
        collaborating jointly on sales, marketing and distribution with the Nanolution
        division of Biophan, which holds the worldwide exclusive rights to market
        the
        medical applications of halloysite. Biophan has been instrumental in the
        Company’s founding as well as in the development of the separation and
        characterization of nanotubes for use in numerous potential medical applications
        including: extended drug delivery and release and actively controlled release
        based on electromagnetic activation of coatings on the halloysite tubes which
        would allow the potential for the non-invasive activation of drug release
        from
        medical devices. An artificial hip, for example, which encounters wear and
        gets
        inflamed in an elderly patient several years after the implant, may be able
        to
        use pre-coated halloysite tubes with an anti-inflammatory agent to release
        drugs
        upon the activation of a specific EMF shield, and thus avoid potential
        complications, the discomfort of injection drugs and the possible use of
        anti-inflammatory drugs. Both the Company and Biophan see exciting medical
        uses
        for halloysite tubes. Nanolution’s preliminary discussions with medical device
        and pharmaceutical companies have indicated interest in these concept
        capabilities and we are proceeding to develop proof of principle prototypes
        for
        testing and evaluation.




5


**Competition**





In
      addition to a wide range of material additives that are currently being used
      in
      the industries targeted by the Company, the current nanomaterials market
      consists of approximately 200 companies globally, providing a wide variety
      of
      metal oxides and inorganic compounds. The Company expects that its future
      product offerings will provide new capabilities and anticipated superior
      performance compared to existing materials. Benefits from the use of novel
      nanomaterials may permit us to differentiate our product offerings from
      potential competitors. However, many of our current and prospective competitors
      are larger and have greater financial resources, which could create significant
      competitive advantages for those companies.





Within
      each of the targeted markets and product applications, the Company faces current
      and potential competition from many advanced material, encapsulation and
      chemical companies, suppliers of traditional materials and the in-house
      capabilities of several of its potential customers. With respect to larger
      producers of nanomaterials, while some of these producers do not currently
      offer
      products that directly compete with NaturalNano, these companies have greater
      financial and technical resources, larger research and development staffs and
      greater manufacturing and marketing capabilities and could soon begin to compete
      directly against the Company.




**Patents
      and Trademarks**





The
      Company has the rights to twenty issued or pending patents related to its
      processes and technologies and expects to continually invest in the growth
      of
      its intellectual property portfolio through in-house development of unique
      concepts and processes and third party licensing and joint research programs.
      This investment in intellectual property will include the filing of patent
      applications in the areas of material processing, new compositions of matter,
      and specific applications for use of the functionalized materials. The Company
      utilizes trademark protection for its current and anticipated
      products.





Some
      technologies used by the Company have been licensed in from third parties
      including the Company’s majority stockholder, Technology Innovations, LLC.
      NaturalNano expects to continue licensing-in processes and technologies that
      contribute to the further commercialization of naturally occurring
      nanomaterials.





**Raw
      Materials**





The
      Company has purchased from Atlas Mining Company a supply of halloysite clay,
      which the Company believes will be sufficient to meet the Company’s research and
      development needs for the coming period. Atlas Mining Company operates what
      is
      generally considered to be the largest commercial halloysite mine in the United
      States. NaturalNano has identified other halloysite sources that we believe
      are
      suitable as alternate suppliers of raw materials, and as such, we will not
      be
      solely dependent upon Atlas Mining Company for the supply of raw materials.





**Government
      Regulation**





We
      are
      subject to governmental regulation much like many other companies. There are
      still relatively few laws or regulations specifically addressing nanotechnology.
      As a result, the manner in which existing laws and regulations should be applied
      to nanotechnology in general, and how they relate to our business in particular,
      is unclear in many cases. We expect new laws and regulations to be adopted
      that
      may be directly applicable to our activities. Any existing or new legislation
      applicable to us could expose us to substantial liability, including significant
      expenses necessary to comply with such laws and regulations and could dampen
      the
      growth in the use of nanotechnology in general.





**Employees**





The
      Company currently employs six full-time employees and one part-time employee.
      We
      anticipate the addition of several full-time employees within the next twelve
      months in connection with the expansion of our technical knowledge of these
      novel nanomaterials. Our evaluation of human resource needs often results in
      our
      use of experienced part-time consultants in various functional areas in lieu
      of
      the immediate hiring of full-time employees.





6





The
      Company has at its disposal a number of consulting PhD and postdoctoral level
      scientists and engineers to assist in the extraction and classification
      processes for halloysite nanotubes and on other applications relating to our
      current research projects. All of our employees have signed confidentiality
      agreements and we have non-compete agreements in place with our key
      employees.





**Executive
      Officers of the Registrant**





See
      Part
      III, Item 9 of this Report for information about Executive Officers of the
      Company.





**Cementitious
      Materials, Inc.**





On
      November 29, 2005, pursuant to an Agreement and Plan of Merger, dated as of
      September 26, 2005 (the “Merger Agreement”) by and among Cementitious
      Materials, Inc., a Nevada corporation, Cementitious Acquisitions, Inc., a Nevada
      corporation and wholly owned subsidiary of the Company (“Merger Sub”), and
      NaturalNano, Inc., a Delaware corporation now known as NaturalNano Research,
      Inc. (“NN Research”), Merger Sub was merged with and into NN Research, with NN
      Research surviving as a wholly owned subsidiary of the Company (the “Merger”).
      Immediately following the Merger, we changed our name to “NaturalNano, Inc.” As
      a result of the Merger, we ceased being a shell company.




Pursuant
      to the Merger Agreement, we issued 89,838,756 split adjusted shares of our
      authorized but previously unissued common stock to the stockholders of NN
      Research in exchange for the 20,000,000 issued and outstanding common stock
      of
      NN Research. An additional 20,939,200 split adjusted shares of our authorized
      but previously unissued common stock were issued in consideration for the
      conversion of certain outstanding NN Research convertible debt. We also issued
      options and warrants for the purchase of an aggregate of 14,400,000 split
      adjusted shares of our common stock to the holders of outstanding NN Research
      options and warrants, in consideration of the cancellation of such options
      and
      warrants.




Because
      the shares issued to NN Research’s stockholders and note holders in the Merger
      represented a controlling interest in the Company, the transaction was accounted
      for as a recapitalization, and NN Research was considered the acquirer for
      accounting purposes. All of the historical financial statements which are
      attached to this report through the date of the recapitalization are those
      of NN
      Research.





Immediately
      following the effective time of the Merger the Company’s board of directors was
      reconstituted to consist of the following five directors: Steven Katz, Ross
      B.
      Kenzie, John F. Lanzafame, Michael Riedlinger and Michael L. Weiner, all of
      whom
      (other than Mr. Riedlinger) were formerly directors of NN Research. More
      complete biographical information concerning each of these directors is set
      forth below in the section entitled “Executive Officers and Directors” in this
      Report.





**Available
      Information**





The
      Company’s internet address is http:// www.naturalnano.com .
      The
      Company’s filings with the Securities and Exchange Commission (“SEC”), including
      its annual report on Form 10-KSB, quarterly reports on Form 10-QSB, current
      reports on Form 8-K and amendments to those reports, filed or furnished pursuant
      to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, are accessible
      free of charge at http://www.naturalnano.com as soon
      as reasonably practicable after the Company electronically files such material
      with, or furnishes it to, the SEC. Alternatively, such reports may be accessed
      at the internet address of the SEC, which is http://www.sec.gov .
      Also,
      the public may read and copy any materials that the Company files with at the
      SEC’s Public Reference Room at 100 F Street, N.E., Room 1580 Washington, D.C.
      20549. The public may obtain information on the operation of the Public
      Reference Room by calling the SEC at 1-800-SEC-0330.





7


**ITEM
      2. DESCRIPTION OF PROPERTY**





We
      conduct our primary business operations using office space rented from Lennox
      Tech Enterprise Center in West Henrietta, New York. We pay a monthly fee of
      $4,193 for the use of office space under a lease expiring May 31, 2008 (subject
      to our right to terminate any time after May 31, 2006 upon 90 days notice).





In
      January 2006, we signed a two-year lease for approximately 2000 square feet
      of
      laboratory space in Rochester, New York. This agreement includes a one-year
      renewal option that expires on January 31, 2009. The annual base rent under
      this
      agreement is $30,000 plus a pro rata share of the operating expenses for each
      of
      the first two years and increases to $31,500 for the optional renewal year.
      We
      believe that these facilities will be adequate for our anticipated needs through
      the respective lease terms.





We
      believe that appropriate insurance coverage is in place and effective for these
      facilities and related business needs.





**ITEM
      3. LEGAL PROCEEDINGS**





There
      are
      no material pending legal proceedings to which we are a party or to which any
      of
      our property is subject and, to the best of our knowledge, no such actions
      against us are contemplated or threatened.





**ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**





On
      September 23, 2005, in connection with the Merger, the holders of what then
      represented approximately 87% of our outstanding common stock, acting by written
      consent without a meeting of stockholders, approved an amendment to our Articles
      of Incorporation and the adoption of an incentive stock plan. We delivered
      to
      our stockholders a report on Schedule 14c describing the actions taken. The
      report was filed with the SEC on November 8, 2005 and is incorporated herein
      by
      reference.





**ITEM
      5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS**





**Market
      Information**





Our
      common stock is listed on the OTC Bulletin Board under the symbol NNAN. Because
      our shares had traded only on a limited and sporadic basis prior to the Merger,
      there is no meaningful history of reported trades in the public market before
      that date and we therefore have not included a price history of our trades
      prior
      to November 29, 2005. During the period from November 29, 2005 through December
      31, 2005, the high and low share price, on a split adjusted basis, has ranged
      from $0.625 to $1.07, respectively. These quotations reflect inter-dealer
      prices, without mark-up, mark-down or commission, and may not represent actual
      transactions.





Prior
      to
      the Merger, our stock was listed on the OTC Bulletin Board under the symbol
      “CTTM.”





As
      of
      December 31, 2005, we had 121,074,740 split adjusted shares of our common stock
      outstanding which were held by approximately 170 shareholders of
      record.





**Dividend
      Policy**





We
      have
      never paid any cash dividends and have no plans to do so in the foreseeable
      future. Our future dividend policy will be determined by our Board of Directors
      and will depend upon a number of factors, including our financial condition
      and
      performance, our cash needs and expansion plans, income tax consequences and
      the
      restrictions that applicable laws and other arrangements then impose.


8





**Recent
      Sales of Unregistered Securities**


In
        connection with the Merger we issued an aggregate of 110,777,956 split adjusted
        shares of common stock on November 29, 2005. The shares were issued in a
        private
        transaction to 59 persons that were the former stockholders and note holders
        of
        NN Research. We also issued, pursuant to the Merger Agreement, a warrant
        for the
        purchase of 4,500,000 (post split) shares of our common stock in exchange
        for a
        warrant for the purchase of an identical number of shares of NN Research
        common
        stock. The warrant issuance was made in reliance on an exemption from
        registration under the Securities Act of 1933 pursuant to Section 4(2) of
        that
        Act.
 
 On
        February 2, 2006 we issued an aggregate of 314,700 post-split shares of our
        common stock to three entities in transactions exempt from the registration
        requirements of the Securities Act of 1933 pursuant to Section 4 (2) of such
        Act. We issued 40,000 post-split shares to High Technology of Rochester,
        Inc.,
        our landlord, in consideration for certain leasehold improvements to our
        office
        facilities. We issued 74,700 post-split shares to Medienimpuls GmbH as payment
        for consulting services valued at $14,940. We issued 200,000 post-split shares
        to Ambit Corporation in connection with the license of certain patented
        technology in the field of electronic shielding.





**ITEM
      6. PLAN OF OPERATION**





**General**





The
      Company is a development stage company and is expected to remain so for at
      least
      the next twelve months. Our primary mission is to develop and exploit
      technologies in the area of nanotechnology, specifically focusing on naturally
      occurring nanoscale materials. Our strategy focus is to patent these processes
      and application technologies and license the associated patents to relevant
      industries including: polymers, plastics and composites, cosmetics and personal
      care products and medical and pharmaceutical device additives and coatings.





Our
      researchers have identified more than 200 applications within these industries
      as potential development opportunities which are subject to pending patents
      and
      issued patents under licensing agreements.





The
      Company’s near-term goal is focused on core technology development and
      application processes utilizing halloysite nanotubes. We expect to identify
      and
      develop other naturally occurring nanoscale materials in future research
      programs.





**Processing
      and Manufacturing**





In
      some
      instances, a prospective customer may require that NaturalNano provide them
      with
      functionalized HNTs as additives to their end products. In these cases, we
      anticipate that the functionalized HNTs would be provided as either a dry powder
      of colloidal suspension of nanotubes which may have additional materials as
      coatings or fillings. As examples, the HNTs may be metallized or not, unloaded
      or loaded with any one of a number of active agents for different applications.
      Different end-use applications and marketing partners would require different
      product configurations and will need to be assessed individually.





When
      required, our future manufacturing would likely begin with raw or minimally
      processed halloysite material. We would further process this material to extract
      nanotubes from the surrounding minerals present in halloysite clay and then
      further classify the nanotubes. This refined and classified material could
      then
      be shipped to customers or a designated toll manufacturing facility in the
      form
      of a dry powder or slurry mixture. The customer’s specific requirements will
      determine the final form of delivery.





NaturalNano
      can add further value to the refined and classified nanotubes by either adding
      material to the surface of the nanotubes or loading within the hollow openings
      of the nanotubes. The resulting intermediary materials can then be shipped
      to
      customers for use in their manufacturing processes.





These
      powders or suspensions will be designed as an intermediate component of a
      finished consumer product. Typically, these materials would be incorporated
      with
      other components to produce the finished product that our marketing partner
      would sell, for instance providing a controlled release agent or a strengthening
      agent to be added to the partners existing materials or products. If requested
      by a customer, the Company will evaluate and select suitable manufacturing
      partners in each of the targeted industry segments. We would then work with
      each
      manufacturing partner to build the expertise to provide the materials, in the
      various required configurations.





9


**Patents
      and Intellectual Property**





The
      Company’s intellectual property portfolio currently contains the rights to
      twenty issued and pending patents including several exclusively licensed within
      defined fields of use. Included in this total are four pending applications
      under license from the Company’s majority shareholder Technology Innovations,
      LLC. Over 200 applications for halloysite have been identified to date and
      are
      covered in these patents. As research and development continues, NaturalNano
      intends to aggressively seek patent protection for new developments and
      technologies in the United States and in strategic foreign markets, in addition
      to licensing-in patents to augment our development opportunities.





**Research
      and Development**





During
      the next twelve months the Company’s research and development focus will be in
      the following areas:





o
            Collaboration
                with potential customers in major market segments to demonstrate
                proof of
                principle for specific industry
                applications.





o
            Establishment
                of a research lab to produce unique processes and products at a
                competitive cost.





o
            Establishment
                of a pilot production program to extract, separate and categorize
                naturally occurring nanotubes found within halloysite clay, which
                will
                provide the basis for our future development of commercial scale
                production facilities.





During
      the twelve-month period ending December 31, 2006, the Company expects to spend
      approximately $250,000 for capital investments relating to the setup of the
      research lab.





Research
      and Development related expenditures for the twelve-month period ending December
      31, 2006, which will include salaries for employees, fees for collaborative
      research agreements and lab testing materials, will approximate $1,040,000.





**Investor
      Relations**





The
      Company intends to regularly communicate and re-enforce our brand awareness
      and
      corporate strategies in order to keep our shareholders, the investment community
      and our strategic partners informed regarding our progress in achieving our
      stated milestones and related discoveries. We believe our efforts to achieve
      widespread press exposure will help raise the scientific and investment
      community’s awareness of the science of nanotechnology  and increase the
      recognition of NaturalNano, Inc. as an innovative company. In this regard,
      the
      Company has engaged various professional firms to actively assist and advise
      in
      establishing public relations and investor relations strategies.





**Financing
      Activities**





The
      Company’s source of cash since inception has been from the issuance of
      $4,156,000 in Convertible Bridge Notes and from inter-company advances from
      our
      principal stockholder, Technology Innovations, LLC. The Convertible Bridge
      Notes
      included a mandatory conversion feature that resulted in the issuance of
      20,939,200 post split shares of the Company’s common stock coincident with the
      consummation of the Merger on November 29, 2005.




On
      March
      31, 2005, NN Research issued a warrant to SBI USA, LLC, (“SBI”) granting SBI the
      right to purchase 4,500,000 post split shares of NN Research common stock at
      an
      exercise price of $.115 per share. On November 29, 2005, in connection with
      the
      Merger, the rights and obligations relating to the warrant were assumed by
      NaturalNano Inc. During 2005, the original expiration date of this warrant
      was
      extended for an additional twelve months and now expires on March 31, 2007.





10


The
      estimated cash available and projected cash outflows for the twelve-month period
      ending December 31, 2006


are
      as
      follows:





**Cash
                on hand at December 31, 2005**
            
            **$**
            **1,718,365**Projected
                cash uses for 2006 operations**:**Research
                and product development expenses
            
            $
            1,040,000Research
                lab assets and licensing investments
            
            
            330,000General
                and administrative expenses, includingadministrative
                salaries and benefits, office expenses, rent expense,
              legal
                and accounting, marketing and investor relations
            
            
            2,030,000**Total
                estimated cash outflows for**
              **the
                twelve-months ending December 31, 2006**
            
            **$**
            **3,400,000**





NaturalNano
      has generated only nominal revenues to date, resulting from the sale of sample
      products, and is not expected to have significant recurring revenues in the
      near
      future. The Company’s ability to continue in business is dependent on obtaining
      sufficient financing to continue the advancement of our strategic objectives.
      We
      will continually evaluate all funding options including additional offerings
      of
      our securities to private and institutional investors and other credit
      facilities during the coming twelve months and in the future, as they become
      available.





**ITEM
      7. FINANCIAL STATEMENTS**





**NATURALNANO,
      INC.**


**(A
      Development Stage Company)**


**CONSOLIDATED
      FINANCIAL STATEMENTS**


**DECEMBER
      31, 2005**





**CONTENTS**





Report
                of Independent Registered Public Accounting Firm
            F-1Consolidated
                Financial Statements:Balance
                Sheet
            F-2Statement
                of Operations
            F-3Statement
                of Stockholders’ Equity
            F-4Statement
                of Cash Flows
            F-5Notes
                to Consolidated Financial Statements
            F-6
                - F-13





11





**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**





To
      the
      Board of Directors


NaturalNano,
      Inc.




We
      have
      audited the accompanying consolidated balance sheets of NaturalNano, Inc. (a
      development stage company) (an entity controlled by Technology Innovations,
      LLC)
      as of December 31, 2005 and 2004, and the related consolidated statements of
      operations, stockholders’ equity and cash flows for the year ended December 31,
      2005 and for the period from December 22, 2004 (inception) to December 31,
      2004
      and the cumulative amounts from inception to December 31, 2005. These financial
      statements are the responsibility of the Company's management. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining,
      on a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting principles used
      and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. We believe that our audits provide a
      reasonable basis for our opinion.





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of NaturalNano, Inc. as of
      December 31, 2005 and 2004 and the results of its operations and its cash flows
      for the year ended December 31, 2005 and for the period from December 22, 2004
      (inception) to December 31, 2004 and the cumulative amounts from inception
      to
      December 31, 2005 in conformity with United States generally accepted accounting
      principles.







**/s/
      GOLDSTEIN GOLUB KESSLER LLP**


New
      York,
      New York





February
      8, 2006




F-1




**NaturalNano,
        Inc.**


**(A
      Development Stage Company)**




**CONSOLIDATED
        BALANCE SHEET**




**December
                31,**
            
            **December
                31,****2005**
            
            **2004****Assets**Current
                assets:Cash
                and cash equivalents
            
            $
            1,718,365Prepaid
                halloysite materials
            
            
            249,650
            
            $
            125,000Other
                current assets
            
            
            34,704Due
                from related parties
            
            
            40,748Total
                current assets
            
            
            2,043,467
            
            
            125,000Atlas
                Mining warrant
            
            
            270,000License
            
            
            314,000Property
                and equipment, net
            
            
            34,752Total
                Assets
            
            $
            2,662,219
            
            $
            125,000**Liabilities
                and Stockholders' Equity****Liabilities**Current
                liabilities:Accounts
                payable
            
            $
            24,093Accrued
                payroll
            
            
            73,164Accrued
                expenses
            
            
            238,316Due
                to related parties
            
            
            
            
            $
            32,336Total
                current liabilities
            
            
            335,573
            
            
            32,336Other
                liability
            
            
            28,500Total
                Liabilities
            
            
            364,073
            
            
            32,336**Stockholders’
                Equity**Preferred
                Stock - no par value,
              10,000,000
                shares authorized, no shares issuedCommon
                stock - $.001 par valueAuthorized
                200,000,000 shares (a)Issued
                and outstanding 121,074,740 and 20,000,000 shares, respectively
            
            
            121,075
            
            
            20,000Additional
                paid in capital (a)
            
            
            4,829,563
            
            
            80,000Deficit
                accumulated in the development stage
            
            
            (2,652,492
            )
            
            (7,336
            )Total
                stockholders' equity
            
            
            2,298,146
            
            
            92,664Total
                liabilities and stockholders' equity
            
            $
            2,662,219
            
            $
            125,000





(a)
      Retroactively adjusted to reflect the recapitalization on November 29,
      2005.




See
      notes
      to financial statements





F-2


**NaturalNano,
      Inc.**


**(A
      Development Stage Company)**


**CONSOLIDATED
        STATEMENT OF OPERATIONS**




From
                inception
            
            From
                inceptionFor
                the twelve
              months
            
            **December
                22, 2004**
            
            **December
                22, 2004**ending
            
            through
            
            through**December
                31, 2005**
            
            **December
                31, 2004**
            
            **December
                31, 2005****Income:**Sample
                revenue
            
            $
            500
            
            
            
            
            $
            500**Operating
                expenses:**Research
                and development (a)
            
            
            565,254
            
            $
            5,000
            
            
            570,254General
                and administrative (b)
            
            
            2,184,537
            
            
            2,336
            
            
            2,186,8732,749,791
            
            
            7,336
            
            
            2,757,127**Loss
                from Operations**
            
            
            (2,749,291
            )
            
            (7,336
            )
            
            (2,756,627
            )**Other
                income:**Interest
                income, net
            
            
            14,135
            
            
            
            
            
            14,135Investment
                income
            
            
            90,000
            
            
            
            
            
            90,000104,135
            
            
            
            
            
            104,135**Net
                loss**
            
            
            ($
                2,645,156
            )
            
            ($
                7,336
            )
            
            ($
                2,652,492
            )**Loss
                per common share - basic and diluted (c)**
            
            
            ($
                0.03
            )
            
            ($
                0.00
            )**Weighted
                average shares outstanding (c)**
            
            
            101,575,332
            
            
            20,000,000


(a)
        Research and development expense includes options issued as stock-based
        compensation of $73,652.


(b)
      General and administrative expense includes options issued as stock-based
      compensation of $133,646.


(c)
        Retroactively adjusted to reflect the two-for-one stock split effective February
        8, 2006.





See
      notes
      to financial statements





F-3





**NaturalNano,
      Inc.**


**(A
      Development Stage Company)**




**CONSOLIDATED
        STATEMENT OF STOCKHOLDERS’ EQUITY**


**Period
        from December 22, 2004 (inception) to December 31,
        2005**









**Deficit
                Accumulated****Additional**
            
            **during
                the****Common
                Stock**
            
            **Paid-in**
            
            **Development**
            
            **Stockholders’****Shares
                (a)**
            
            **Amount
                (a)**
            
            **Capital
                (a)**
            
            **Stage**
            
            **Equity****December
                22, 2004**20,000,000
                shares issued for
              cash
                @ $.001 per share
            
            
            20,000,000
            
            $
            20,000
            
            $
            180,000
            
            
            
            
            $
            200,000Retro-active
                adjustment for
              two-for-one
                stock split
            
            
            
            
            
            
            
            
            (100,000
            )
            
            
            
            
            (100,000
            )Net
                loss from inception through December 31, 2004
            
            
            
            
            
            
            
            
            
            
            
            ($
                7,336
            )
            
            (7,336
            )**Balance
                at December 31, 2004**
            
            
            20,000,000
            
            
            20,000
            
            
            80,000
            
            
            (7,336
            )
            
            92,664Warrant
                issued for 4,500,000 shares
              of
                common stock for services
            
            
            
            
            
            
            
            
            225,000
            
            
            
            
            
            225,000Grant
                of common stock for
              services
                @ $0.20 per share
            
            
            74,700
            
            
            75
            
            
            14,865
            
            
            
            
            
            14,940Grant
                of common stock for
              services
                @ $0.835 per share
            
            
            40,000
            
            
            40
            
            
            33,360
            
            
            
            
            
            33,400Grant
                of common stock for
              services
                @ $1.07 per share
            
            
            200,000
            
            
            200
            
            
            213,800
            
            
            
            
            
            214,000Vesting
                of 3,473,332 stock options
              for
                services@
                $0.05 per share
            
            
            
            
            
            
            
            
            192,916
            
            
            
            
            
            192,916@
                $0.2976 per share
            
            
            
            
            
            
            
            
            14,382
            
            
            
            
            
            14,382Recapitalization
                on
              November
                29, 2005
            
            
            100,760,040
            
            
            100,760
            
            
            4,055,240
            
            
            
            
            
            4,156,000Net
                loss for twelve months
              ending
                December 31, 2005
            
            
            
            
            
            
            
            
            
            
            
            (2,645,156
            )
            
            (2,645,156
            )**Balance
                at December 31, 2005**
            
            
            121,074,740
            
            $
            121,075
            
            $
            4,829,563
            
            
            ($
                2,652,492
            )
            $
            2,298,146





(a)
      Retroactively adjusted to reflect the following; (i) the two-for-one stock
      split
      effective February 8, 2006 and (ii)
      the
      effect of the recapitalization on November 29, 2005.





See
      notes
      to financial statements




F-4




**NaturalNano,
      Inc.**


**(A
      Development Stage Company)**




**CONSOLIDATED
      STATEMENT OF CASH FLOWS**










From
                inception
            
            From
                inceptionFor
                the twelve
              months
            
            **December
                22, 2004**
            
            **December
                22, 2004**ending
            
            through
            
            through**December
                31, 2005**
            
            **December
                31, 2004**
            
            **December
                31, 2005****Cash
                flows from operating activities:**Net
                loss
            
            
            ($2,645,156
            )
            
            ($7,336
            )
            
            ($2,652,492
            )Adjustments
                to reconcile net loss to net cash
              used
                in operating activities:Depreciation
            
            
            4,748
            
            
            
            
            
            4,748Issuance
                of warrant for services
            
            
            225,000
            
            
            
            
            
            225,000Issuance
                of common stock for services
            
            
            262,340
            
            
            
            
            
            262,340Grant
                of stock options for services
            
            
            207,298
            
            
            
            
            
            207,298Change
                in market value of Atlas Mining warrant
            
            
            (90,000
            )
            
            
            
            
            (90,000
            )Receipt
                of Atlas Mining warrant
            
            
            (180,000
            )
            
            
            
            
            (180,000
            )Changes
                in operating assets and liabilities:(Increase)
                in prepaid halloysite materials
            
            
            (124,650
            )
            
            (125,000
            )
            
            (249,650
            )(Increase)
                in other current assets
            
            
            (34,704
            )
            
            
            
            
            (34,704
            )Increase
                in accounts payable, accruedpayroll
                and accrued expenses
            
            
            335,573
            
            
            
            
            
            335,573Increase
                in other liability
            
            
            28,500
            
            
            
            
            
            28,500**Net
                cash used in operating activities**
            
            
            (2,011,051
            )
            
            (132,336
            )
            
            (2,143,387
            )**Net
                cash used in investing activities**Purchase
                of property and equipment
            
            
            (39,500
            )
            
            
            
            
            (39,500
            )Purchase
                of license
            
            
            (314,000
            )
            
            
            
            
            (314,000
            )**Net
                cash used in investing activities**
            
            
            (353,500
            )
            
            
            
            
            (353,500
            )**Cash
                flows from financing activities:**Advances
                from related parties
            
            
            409,451
            
            
            32,336
            
            
            441,787Repayment
                of advances from related parties
            
            
            (482,535
            )
            
            
            
            
            (482,535
            )Issuance
                of convertible notes
            
            
            4,156,000
            
            
            
            
            
            4,156,000Issuance
                of common stock
            
            
            
            
            
            100,000
            
            
            100,000**Net
                cash provided by financing activities**
            
            
            4,082,916
            
            
            132,336
            
            
            4,215,252**Change
                in cash and cash equivalents and**
              **balance
                at end of period**
            
            $
            1,718,365
            
            
            0
            
            $
            1,718,365**Noncash
                investing activity:**Receipt
                of Atlas Mining warrant
            
            $
            180,000
            
            
            
            
            $
            180,000





See
      notes
      to financial statements





F-5




**NaturalNano,
        Inc.**
 (A
        Development Stage Company)
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2005**




**1.**
            **PRINCIPAL
                BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING
                POLICIES**





**Basis
      of Consolidation**





The
      consolidated financial statements include the accounts of NaturalNano, Inc.
      (“NaturalNano”), a Nevada corporation, and its wholly owned subsidiary
      NaturalNano Research Inc. (“NN Research”) a Delaware corporation. All
      significant inter-company accounts and transactions have been eliminated in
      consolidation.





**Description
      of the Business**





NaturalNano
      (the “Company”), located in West Henrietta, New York, is a development stage
      company engaged in the discovery, refinement and commercialization of naturally
      occurring nanoscale materials. The Company’s current activities are directed
      toward research, development, production and marketing of its proprietary
      technologies relating to the extraction and separation of nanotubes from
      halloysite clay and the development of related commercial applications
      for:





·
            material
                additives for polymers, plastics and
                composites


·
            cosmetics
                and other personal care products


·
            absorbent
                materials; and


·
            pharmaceutical
                and medical device additives.





NaturalNano
      is in the development stage and is expected to remain so for at least the next
      twelve months. The Company has generated only nominal revenue, resulting from
      the sale of sample products, since its inception and is not expected to have
      any
      significant recurring revenues in the near future. The Company’s ability to
      continue in business is dependent upon obtaining sufficient financing or
      attaining profitable operations.





NaturalNano
      is domiciled in the state of Nevada as a result of the merger with Cementitious
      Materials, Inc. which was completed on November 29, 2005.





**Cash
      Equivalents**





Cash
      equivalents consist of money market securities with a maturity of three months
      or less when purchased. Cash equivalents are stated at cost plus accrued
      interest, which approximates market value.





**Concentration
      of Credit Risk**





The
      Company maintains cash in bank deposit accounts which, at times, exceed
      federally insured limits. The Company has not experienced any losses on these
      accounts.





**Liquidity**





As
      shown
      in the accompanying financial statements, the Company has incurred a loss from
      operations and negative cash flows from operations. During 2005, the Company’s
      growth was funded through a combination of convertible debt from private
      investors and cash advances from its majority shareholder Technology
      Innovations, LLC. The Company expects that it will need to raise additional
      capital to accomplish its business objectives in 2006. The Company will
      continually evaluate all funding options including additional offerings of
      its
      securities to private and institutional investors and other credit facilities
      as
      they become available. There can be no assurance as to the availability or
      terms
      upon which such financing alternatives might be available.





F-6





**NaturalNano,
      Inc.**


(A
      Development Stage Company)





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2005**


**Research
      and Development**





Research
      and development costs are expensed in the period the expenditures are incurred.
      Capital assets acquired in support of research and development are capitalized
      and depreciated over their estimated useful life and related depreciation
      expense is included in research and development expense.





**Intangible
      Assets**





Licenses
      are initially measured and recorded based on their fair market value at the
      date
      of their acquisition. The Company evaluates the recoverability of identifiable
      intangibles whenever events or changes in circumstances indicate that an
      intangible asset’s carrying value may not be recoverable. Such circumstances
      could include, but are not limited to, a significant decrease in market value
      of
      the asset or a significant adverse change in the extent or manner in which
      an
      asset is used. The evaluation of potential asset impairment requires significant
      judgments about future cash flows over the life of the asset under evaluation
      and actual future results may differ from assumed and estimated amounts.





**Property
      and Equipment**





Property
      and equipment, at cost, consists of the following:




Useful
                LifeFurniture
                and office equipment
            
            $
            26,079
            
            
            5
                yearsComputers
                and software
            
            
            13,421
            
            
            3
                years39,500Less
                accumulated depreciation
            
            
            (4,748
            )Property
                and equipment, net
            
            $
            34,752




Depreciation
      of property and equipment is provided on a straight-line basis over the
      estimated useful lives of the related assets.





Costs
      of
      internally developed intellectual property rights with indeterminate lives
      are
      expensed as incurred.





**Deferred
      Taxes**





Deferred
      tax assets and liabilities are recognized for future tax consequences
      attributable to differences between the financial statement carrying amounts
      of
      existing assets and liabilities and their respective tax bases. Deferred tax
      assets and liabilities are measured using enacted rates expected to apply when
      the differences are expected to be realized. A valuation allowance is recognized
      if it is anticipated that some or all of the deferred tax asset may not be
      realized.





**Loss
      Per Share**





Basic
      loss per common share is computed by dividing net loss by the weighted-average
      number of shares of common stock outstanding during the period. Diluted loss
      per
      common share gives effect to dilutive options and warrants outstanding during
      the period. Shares to be issued upon the exercise of the outstanding options
      and
      warrants are not included in the computation of diluted loss per share as their
      effect is anti-dilutive. There were 14,310,000 post split shares underlying
      outstanding options and warrants which have been excluded from the calculation
      at December 31, 2005.




F-7
 
  **NaturalNano,
          Inc.**
 (A
          Development Stage Company)
 
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
          31, 2005**





**Estimates**





The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires the use of estimates by management. Actual
      results could differ from these estimates.





**Stock
      Split**





On
      January 27, 2006, the Company amended its Restated Articles of Incorporation
      to
      increase the number of authorized
      shares of our common stock, par value $0.001 per share, from 100 million shares
      to 200 million shares.
      This amendment increased the number of issued and outstanding shares of its
      common shares held by each
      stockholder of record as of February 8, 2006. The $0.001 par value was not
      changed as a result of this action.




For
      accounting purposes, this board action has been treated as a two-for-one stock
      split of common stock effected in the form of a stock dividend to holders of
      record on February 8, 2006. Accordingly, all references to numbers of shares
      and
      to per share information in the consolidated financial statements have been
      adjusted to reflect the stock split on a retroactive basis.





**Stock
      Options**





The
      Company has elected to apply Accounting Principles Board (“APB”) Opinion No. 25, *Accounting
      for Stock*  *Issued*  *to
      Employees* ,
      and
      related interpretations in accounting for its stock options issued to employees
      (intrinsic value) and has adopted the disclosure-only provisions of Statement
      of
      Financial Accounting Standards (“SFAS”) No. 123, *Accounting
      for Stock-Based Compensation* .
      Had the
      Company elected to recognize compensation cost based on the fair value of the
      options granted at the grant date as prescribed by SFAS No. 123, the Company’s
      net loss and loss per common share for the twelve-month period ending December
      31, 2005 would have been as follows:





**Net
                loss as reported**
            
            
            ($
                2,645,156
            )Deduct:
                Total stock-based employee compensationexpense
                determined under fair-value-based methodfor
                all awards, net of related tax effects
            
            
            (
                198,036
            )**Pro
                Forma net loss**
            
            
            ($
                2,843,192
            )Basic
                and diluted loss per share as reported
            
            
            ($0.03
            )Basic
                and diluted loss per share pro forma
            
            
            ($0.03
            )





The
      Company’s assumptions used to calculate the fair values of options re-issued as
      a result of the merger with Cementitious Materials, Inc. (“Cementitious”), which
      occurred on November 29, 2005, were as follows: (i)
      risk-free interest rate of 4.578%, (ii) expected life of the options of 4.9
      years, (iii) expected stock price volatility of 90.48%, and (iv) expected
      dividends of zero.




F-8
 
  **NaturalNano,
          Inc.**
 (A
          Development Stage Company)
 
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
          31, 2005**





**Recent
      Accounting Pronouncements**





In
      December 2004, the FASB issued SFAS No. 123 (revised 2004),” *Share-Based
      Payment* ”
(“SFAS
      No. 123R”), which replaces SFAS No. 123 and supersedes APB No. 25. SFAS No. 123R
      requires that compensation cost relating to share-based payment transactions
      be
      recognized in financial statements based on alternative fair value models.
      The
      pronouncement requires that the cost of share-based compensation be measured
      based on the fair value of the equity or liability instruments issued. Per
      APB
      No. 25, compensation expense was recognized only to the extent the fair value
      of
      common stock exceeded the stock option exercise price at the measurement date.
      The pro forma disclosures previously permitted under SFAS No. 123 will no longer
      be an alternative to financial statement recognition. SFAS No. 123R requires
      the
      benefits of tax deductions in excess of recognized compensation cost be reported
      as a financing cash flow item.




The
      SEC
      delayed the effective date for implementation of SFAS No. 123R to the first
      fiscal year beginning after June 15, 2005. The Company will adopt SFAS No.
      123R
      effective January 1, 2006.





Management
      does not believe that any other recently issued, but not yet effective,
      accounting standards if currently adopted would have a material effect on the
      accompanying financial statements.





**2.**
            **COOPERATIVE
                RESEARCH AGREEMENTS**





The
      Company has cooperative research and development agreements with three
      universities and an independent laboratory to jointly test and further develop
      commercial applications for naturally occurring nanomaterials. These agreements
      generally cover shared research personnel and facilities for a period of twelve
      to twenty-four months with termination provisions requiring 30 days advance
      written notice. These agreements are subject to confidentiality clauses and
      include provisions relating to the ownership and the right to use any jointly
      developed intellectual property. Minimum future payments required under these
      agreements are as follows:




For
                the year ending December 31, 2006
            
            $
            62,569




**3.**
            **RELATED
                PARTY RESEARCH AGREEMENT**





On
      May
      25, 2005, the Company entered into a joint research agreement with Nanolution,
      LLC, a wholly owned subsidiary of Biophan Technologies, Inc. (“BTI”). BTI is
      related to the Company’s majority shareholder, Technology Innovations, LLC,
      through common ownership. This agreement covers the exchange of ideas in support
      of a new drug delivery capability. NaturalNano has secured the mineral rights
      and is developing the separation capabilities needed to support this drug
      delivery application. The term of this agreement shall continue until the
      desired technology becomes commercially viable or until mutually terminated
      by
      both parties. **





All
      medical uses and inventions that arise as a result of this agreement will be
      owned by Nanolution, LLC and all purification processes for raw halloysite
      and
      non-medical applications will be owned by the Company.




F-9
 
  **NaturalNano,
          Inc.**
 (A
          Development Stage Company)
 
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
          31, 2005**





**4.**
            **LICENSE
                AGREEMENT WITH TECHNOLOGY INNOVATIONS,
                LLC**





On
      April
      27, 2005, the Company entered into an exclusive, field of use limited license
      agreement (the “License Agreement”) with its majority shareholder, Technology
      Innovations, LLC. This agreement grants the Company an exclusive world-wide
      license to make, use and sell the products developed under these patents. The
      License Agreement covers several patent applications and provisional patents
      owned by Technology Innovations LLC that will
      expire at various future dates. The Company also has the right to grant
      sublicenses to third parties under the agreement.





Future
      minimum royalty payments of $6,250 per quarter are required under the terms
      of
      this agreement, commencing in the calendar quarter that the first patent is
      issued.




**5.**
            **LICENSE
                AGREEMENT**





On
      December 31, 2005, the Company entered into a licensing agreement for the rights
      to a patented technology in the field of electronics shielding. This license
      agreement calls for royalties and revenue sharing upon NaturalNano’s sale of
      licensed products utilizing this technology or in instances of sublicense
      agreements. The license agreement includes $12,500 in minimum quarterly royalty
      payments beginning in the first quarter of 2010, annual reporting of progress
      made on product development and various confidentiality elements. This agreement
      shall remain in effect until the expiration date of the last-to-expire related
      patent that is cited in the agreement, which is currently projected to be in
      fiscal year 2014.





In
      consideration for the rights granted to NaturalNano under this agreement, the
      Company paid $100,000 in cash and issued 200,000 shares (on a post-split basis)
      of common stock valued at $1.07 per share upon execution of this agreement.
      If
      during the eight-month period ending August 31, 2006, the licensor has not
      realized at least $150,000 in net consideration from the sale of these shares,
      the licensor shall have the right to payment by the Company for any shortfall.





The
      license was recorded as a non-current asset at December 31, 2005 and will be
      amortized on a straight line basis over an estimated useful life of nine years
      ending in fiscal year 2014. The related amortization expense for this license
      agreement is $34,900 annually for each twelve-month period beginning in fiscal
      2006. Future royalty payments resulting from this agreement will be expensed
      as
      incurred.





**6.**
            **TRANSACTIONS
                WITH ATLAS MINING COMPANY**





On
      December 29, 2004, the Company contracted with Atlas Mining Company (OTC BB:
      ALMI) in Utah for the purchase of 500 tons of processed halloysite nanotubes.
      The Company paid $250,000 to a designated distributor of Atlas Mining with
      an
      additional $100,000 payable when commercial shipments in excess of $250,000
      are
      achieved. As additional consideration, NaturalNano will pay 10% of the resale
      cash proceeds received from unaffiliated third parties in instances where the
      purchase price is in excess of $700 per ton up to a maximum of $2,000 per ton.





Payments
      made by the Company in accordance with this agreement are presented as prepaid
      expenses and will be recorded as inventory upon receipt of the processed
      nanotubes. Operating expenses are recognized in the period the nanotubules
      are
      used in the development of proprietary applications and processes or as customer
      shipments are made.




F-10




**NaturalNano,
        Inc.**
 (A
        Development Stage Company)
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2005**
 On
        January 28, 2005, NaturalNano was issued a two-year warrant for the right
        to
        acquire 750,000 shares of Atlas Mining common stock at $.40 per share. This
        warrant expires two years from the original issue date which will be January
        28,
        2007. Neither the warrant nor the shares of common stock issuable upon exercise
        have been registered under the Securities Act of 1933 and, as such, are not
        readily available for sale or transfer in the public markets. The fair value
        of
        this asset on January 28, 2005 and at December 31, 2005 was estimated at
        $180,000 and $270,000, respectively. The warrant was recorded as a non-current
        asset at January 28, 2005 with an offsetting liability included in accrued
        expenses. The liability is being amortized over the two-year period commencing
        January 28, 2005 and reflects the Company’s commitment to future research and
        development efforts which are expected to benefit both NaturalNano and Atlas
        Mining. During 2005, $90,000 of this liability has been offset against research
        and development expenses in the accompanying statements of operations. At
        December 31, 2005, the remaining liability, included in accrued expenses,
        is
        $90,000.





At
      December 31, 2005, the warrant was marked-to-market at $270,000 with the change
      in fair market value recorded as
      investment income.





**7.**
            **INCOME
                TAXES**





As
      of
      December 31, 2005, the Company had a net operating loss carryforward, for
      federal income tax purposes, of approximately $2,652,500. The Company recorded
      a
      deferred income tax asset for the tax effect of the net operating loss
      carryforward of approximately $902,000. In recognition of the uncertainty
      regarding the ultimate amount of income tax benefits to be derived, the Company
      has recorded a full valuation allowance at December 31, 2005.





**8.**
            **STOCKHOLDERS’
                EQUITY**





On
      November 29, 2005, the Company completed a recapitalization as a result of
      the
      reverse merger with Cementitious Materials, Inc. (a public shell company).
      Under
      the merger agreement, the Company merged into a newly formed subsidiary of
      Cementitious with NaturalNano, Inc. being the surviving entity. The components
      of the recapitalization are presented below on a post stock split
      basis.





Common
              Shares
            
            Common
              Stock
            
            Additional
              Paid
                In Capital
            
            Accumulated
              Deficit
            
            Stockholders’
              EquityCMI
                equity outstanding
              at
                November 29, 2005
            
            
            9,982,084
            
            $
            9,982
            
            $
            357,483
            
            
            ($367,465
            )
            $
            0Cancellation
                of NN shares
              as
                of November 29, 2005
            
            
            (20,000,000
            )
            
            (20,000
            )
            
            (80,000
            )
            
            
            
            
            (100,000
            )Issuance
                of new shares
              to
                NN shareholders
            
            
            89,838,756
            
            
            89,839
            
            
            10,161
            
            
            
            
            
            100,000Issuance
                of new shares to
              convertible
                debt holders
            
            
            20,939,200
            
            
            20,939
            
            
            4,135,061
            
            
            
            
            
            4,156,000Elimination
                of CMI
              accumulated
                deficit
            
            
            
            
            
            
            
            
            (367,465
            )
            
            367,465
            
            
            0Recapitalization
            
            
            100,760,040
            
            $
            100,760
            
            $
            4,055,240
            
            $
            0
            
            $
            4,156,000





F-11
 
  **NaturalNano,
          Inc.**
 (A
          Development Stage Company)
 
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
          31, 2005**





In
      connection with the merger, Technology Innovations, LLC, the Company’s majority
      stockholder exchanged each of
      its
      outstanding shares for 4.4919378 (pre-split) shares of Cementitious stock for
      an
      aggregate of 89,838,756 shares (on a post-split basis). Each of the Company’s
      previously outstanding options and warrants were cancelled and replaced with
      the
      same number of options and warrants of Cementitious with rights to acquire
      common stock at economic and contractual terms consistent with the rights as
      defined in the original NaturalNano option and warrant agreements. The original
      options were not modified to accelerate vesting or extend the term of the new
      options.





The
      Company received $225,000 in financial consulting services from SBI USA, LLC
      for
      which payment was satisfied through the issuance of 4,500,000 post-split common
      stock warrants. These warrants have an exercise price of $0.115 per share (on
      a
      post-split basis) were fully vested as of the March 31, 2005 issuance date
      and
      had an original expiration date of March 31, 2006. The expiration date of this
      instrument was extended to March 31, 2007.





The
      consulting expenses relating to this warrant are included in general and
      administrative expenses in the accompanying statements of operations. None
      of
      these warrants had been exercised as of December 31, 2005. Neither these
      warrants nor the common stock issuable upon exercise of the warrants, have
      been
      registered under the Securities Act of 1933.





**9.**
            **STOCK-BASED
                COMPENSATION PLAN**





The
      Company has a stock option plan (the “Plan”) which provides for the granting of
      nonqualified or incentive stock options (“ISO”) to officers, key employees,
      non-employee directors and consultants. The Plan authorizes the granting of
      options to acquire up to 14,000,000 (post-split) common shares. ISO grants
      under the Plan are exercisable at the market value of the Company’s stock on the
      date of the grant. Nonqualified options under the Plan are exercisable at
      amounts determined by the Board. All options under the Plan are exercisable
      at
      times as determined by the Board, not to exceed 10 years from the date of grant.
      Additionally, the Plan provides for the granting of restricted stock to officers
      and key employees.





During
      2005, the Company’s Board of Directors granted stock options at fair market
      value, which was estimated by the Board of Directors at $0.05 per share (on
      a
      post-split basis) on the date of the grant, to purchase 9,900,000 (post-split)
      shares of the Company’s common stock at $0.05 (on a post-split basis) per share.
      These stock options were  re-issued,
      in connection with the merger with Cementitious on November 29, 2005, without
      modification to the original terms and conditions. The weighted-average fair
      value of the re-issued stock options, on November 29, 2005, determined using
      the
      Black- Scholes valuation method was $0.2976 (on a post-split basis) per option.
      During 2005, a total of 90,000 (post-split) shares previously issued option
      grants were forfeited resulting in 9,810,000 (post-split) options outstanding
      December 31, 2005 with 4,940,000 (post-split) options exercisable as of the
      end
      of the year.





During
      2005, the Company granted 4,436,666 (post-split) stock options to non-employees
      of which 3,473,332 were vested as of December 31, 2005. The fair value of the
      stock options granted to non-employees has been recorded as expense of $207,298
      in the accompanying statement of operations.




F-12




**NaturalNano,
        Inc.**
 (A
        Development Stage Company)
 
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **December
        31, 2005**


**10.**
            **CONVERTIBLE
                BRIDGE NOTES**





As
      a
      result of the merger on November 29, 2005, $4,156,000 in Convertible Bridge
      Notes (the “Notes”) were converted into 20,939,200 post-split shares of the
      Company’s common stock. These notes included a mandatory conversion feature
      whereby $800,000 in debt was converted into 4,159,200 common shares and
      $3,356,000 in debt was converted into 16,780,000 shares of common stock in
      connection with the Cementitious Materials, Inc. merger which was completed
      on
      November 29, 2005.





The
      Notes
      included an accrued interest provision of 8% per annum, generally beginning
      six
      months after the date of issuance. No interest was accrued or paid on these
      notes since all of this outstanding debt was satisfied with the conversion
      into
      common stock coincident with the merger.





**11.**
            **LEASE
                OBLIGATION**


****


On
      May
      13, 2005, the Company entered into an operating lease agreement for office
      space
      expiring May 31, 2008. At
      any
      time after May 31, 2006, the Company may terminate the lease upon ninety days
      prior written notice to the landlord. On January 17, 2006, the Company entered
      into an operating lease agreement, expiring in 2009, for approximately 2000
      square feet in connection with the establishment of a research lab in Rochester,
      New York. The
      Company is also responsible for a pro rata allocation of the operating costs
      of
      this facility, to be assessed annually by the landlord. Following are the
      minimum future payments under these lease agreements:





For
                each of the years ending December 31:2006
            
            $
            83,8072007
            
            
            89,3692008
            
            
            57,372$
            230,548





**12.**
            **LINE
                OF CREDIT AND PROMISSORY NOTE WITH TECHNOLOGY INNOVATIONS
                LLC**





On
      December 29, 2004 the Company entered into a Line of Credit Agreement and a
      Promissory Note with its majority shareholder, Technology Innovations, LLC.
      This
      Line of Credit allowed for borrowings of up to $500,000 for working capital
      purposes and included an interest rate of 8% per annum. This agreement expired
      on December 31, 2005.





F-13




**ITEM
      8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE**





Not
      applicable.





**ITEM
      8A. CONTROLS AND PROCEDURES**





Based
      on
      their evaluation as of the end of the period covered by this annual report
      on
      Form 10-KSB, our principal executive officer and principal financial officer,
      with the participation and assistance of our management, concluded that our
      disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated
      under the Securities Exchange Act of 1924, were effective in design and
      operation. There have been no changes in our system of internal control over
      financial reporting in connection with the evaluation by our principal executive
      officer and principal financial officer during the period since December 31,
      2005 through the date of the filing of this From 10-KSB that have materially
      affected, or are reasonably likely to materially affect, our internal control
      over financial reporting.





The
      ability to manage and operate our business as we execute our development and
      growth strategy will require effective planning. Significant rapid growth could
      strain our internal resources, and other problems that could adversely affect
      our financial performance. We expect that our efforts to grow will place a
      significant strain on our personnel, management systems, infrastructure and
      other resources. Our ability to manage future growth effectively will also
      require us to successfully attract, train, motivate, retain and manage new
      employees and continue to update and improve our operational, financial and
      management controls and procedures. If we do not manage our growth effectively,
      our operations could be adversely affected, resulting in slower growth and
      a
      failure to achieve or sustain profitability.





**ITEM
      8B. OTHER INFORMATION**




Not
      applicable.





**ITEM
      9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
      WITH
      SECTION 16(a) OF THE EXCHANGE ACT**





The
      following table shows information about our executive officers and directors
      as
      of December 31, 2005:




**Name**
            **Age**
            **Position**Steven
                Katz
            57
            DirectorRoss
                B. Kenzie
            74
            DirectorJohn
                F. Lanzafame
            37
            DirectorMichael
                L. Weiner
            57
            DirectorMichael
                D. Riedlinger
            48
            President
                and DirectorKathleen
                A. Browne
            50
            Chief
                Financial Officer, Treasurer and SecretarySarah
                M. Cooper
            28
            Chief
                Technology Officer




12


The
      business experience of each of the persons listed above during the past five
      years is as follows:





***Steven
      Katz*** is
      President of Steven Katz & Associates, Inc., a health care and
      technology-based management consulting firm specializing in strategic planning,
      corporate development, new product planning, technology licensing, and
      structuring and securing various forms of financing. Mr. Katz has been President
      of Steven Katz & Associates, Inc. since 1982. From January 2000 to October
      2001 Mr. Katz was President, Chief Operating Officer and a director of Senesco
      Technologies, Inc., an American Stock Exchange listed company engaged in the
      identification and development of proprietary gene technology with application
      to human, animal and plant systems. From 1983 to 1984 he was a co-founder and
      Executive Vice President of S.K.Y. Polymers, Inc., a bio-materials company.
      Prior to this, Mr. Katz was Vice President and General Manager of a non-banking
      division of Citicorp. From 1976 to 1981 he held various senior management
      positions at National Patent Development Corporation, including President of
      three subsidiaries. Prior positions were with Revlon, Inc. (1975) and Price
      Waterhouse & Co. (1969 to 1974). Mr. Katz received a Bachelors of Business
      Administration degree in Accounting from the City College of New York in 1969.
      He is presently a member of the Board of Directors of Biophan Technologies,
      Inc., Health Systems Solutions, Inc., Nanoscience Technologies, Inc., USA
      Technologies, Inc., and Vivid Learning Systems, Inc. as well as several private
      companies.





***Ross
      B. Kenzie*** currently
      serves on the boards of several companies including the publicly
      held ** Rand
      Capital Corporation and Biophan Technologies Inc. as well as many
      entrepreneurial ventures that are privately held, including Biomed Solutions
      LLC
      and Technology Innovations, LLC. Mr. Kenzie is a former Chairman and Chief
      Executive Officer of Goldome Bank, from which he retired in June 1989. He was
      previously Executive Vice President of Merrill Lynch & Co., in the New York
      worldwide headquarters, and is a former member of the Merrill Lynch & Co.
      Board of Directors. He is a former Director of the Federal Home Loan Bank of
      New
      York ( from 1984 to 1988) and served on the boards of the National Council
      of
      Savings Institutions (from 1982 to 1986), the Federal Reserve Bank of New York,
      Buffalo Branch (from 1985 to 1987), and the Savings Banks Association of New
      York State (from 1984 to 1987). Mr. Kenzie was a Director of Millard Fillmore
      Hospitals (from 1982 to 1995) and is currently Past Chairman Emeritus. He served
      on the Board of the Kaleida Health, Education and Research Foundation (from
      1998
      to 2000) and is currently on its Investment Committee. He was Director of the
      Health Systems Agency of Western New York (from 1988 to 1991), and was a member
      of the College Council of the State University College at Buffalo (from 1981
      to
      1998) and served as Chairman. He was a Director of the College’s Foundation and
      a member of its Finance Committee (from 1984 to 1998) and is currently on its
      Investment Committee. He served on the Council of the Burchfield-Penney Art
      Center (from 1990 to 2001) and the Albright Knox Art Gallery (from 1983 to
      1985). He is also a member of the Board, and the Chairman of the Investment
      Committee of the State University at Buffalo Foundation.




***John
      Lanzafame*** is
      Vice
      President for Business Development of Biophan Technologies, Inc. He has fifteen
      years experience in the medical device industry, with a background that includes
      a bachelor’s degree in chemical engineering and a master’s degree in industrial
      engineering.  Until early 2004, Mr. Lanzafame was employed by STS
      Biopolymers, Inc., a privately held medical device company that marketed high
      performance polymer-based coatings for the medical device industry, including
      drug eluting surfaces for devices such as coronary stents and indwelling
      catheters.  Mr. Lanzafame held a variety of positions with STS Biopolymers,
      including positions in research, product development, and sales and marketing,
      ultimately leading to his assuming the position of President of STS Biopolymers
      beginning in 2003.  In 2004, Mr. Lanzafame left STS Biopolymers following
      sale of the company to Angiotech Pharmaceuticals, and is currently Vice
      President, Business Development for Biophan, and President of Nanolution,
      Biophan’s drug delivery division.  This newly formed division was created
      to leverage new discoveries in the field of nanotechnology for the purposes
      of
      targeted drug delivery and highly controlled drug elution from medical devices.





***Michael
      L. Weiner*** is
      President, Chief Executive Officer and co-founder of Biophan Technologies,
      Inc.
      He began his career at Xerox Corporation in 1975, where he served in a variety
      of capacities in sales and marketing, including manager of software market
      expansion and manager of sales compensation planning. In 1982, he received
      the
      President’s award, the top honor at Xerox for an invention benefiting a major
      product line. In 1985, Mr. Weiner founded Microlytics, a Xerox spin-off company
      which developed technology from the Xerox Palo Alto Research Center into a
      suite
      of products, including the award-winning Word Finder Thesaurus, with licenses
      out to over 150 companies, including Apple, Microsoft, and Sony. Microlytics
      was
      acquired by a merger with a public company in 1990, which Mr. Weiner then headed
      up through 1993. In February 1999, Mr. Weiner founded Technology Innovations,
      LLC, to develop intellectual property assets. In August 2000, Technology
      Innovations, LLC created a subsidiary, Biomed Solutions, LLC, to pursue certain
      biomedical and nanotechnology opportunities, investing in embryonic-to-seed
      stage innovations which generate new ventures and/or licenses. Mr. Weiner is
      the
      CEO and a director of Biophan Technologies, Inc., a medical research and
      development company located in West Henrietta, New York engaged in providing
      technology to enable implantable medical devices and interventional devices
      to
      be used safely and effectively in conjunction with Magnetic Resonance Imaging
      (MRI), since December 2000. Mr. Weiner serves on the Boards of Biophan
      Technologies, Inc., Biomed Solutions, LLC, Technology Innovations, LLC, Stem
      Capture, Inc., OncoVista, Inc., Myotech, LLC, TE Bio, LLC, and Nanoset, LLC,.
      Mr. Weiner holds seventeen U.S. patents.





13





***Michael
      D. Riedlinger*** became
      President of NaturalNano in December 2004. Prior to joining NaturalNano, he
      was,
      from 2002 to 2005, President of Technology Sales and Licensing Services, a
      firm
      specializing in business development for organizations that seek new sources
      of
      revenue from licensing or selling their technical innovations to others. Mr.
      Riedlinger continues to provide limited consulting services to Biophan
      Technologies, Inc. relative to licensing and technical development projects
      in
      connection with this former role. From 2000 to 2002, Mr. Riedlinger was Chief
      Executive Officer of Vitalwork, Inc., an organizational development company
      focused on training and corporate culture change for the telecommunications
      industry. From 1995 to 2000, Mr. Riedlinger was Director of Sales and Marketing
      at Metamor Software Solutions, a computer programming services division of
      Metamor Worldwide with offices in over 20 countries. From 1993 to 1995 he was
      Vice President of QSoft Solutions, a provider of quality management software
      and
      information to major corporations in North America. From 1986 to 1993, Mr.
      Riedlinger held several positions, including OEM Products Director and Director
      of Strategic Planning at Microlytics, Inc. Mr. Riedlinger has a MBA from the
      University of Rochester and a BFA from the Rochester Institute of
      Technology.





***Kathleen
      A. Browne*** became
      Chief Financial Officer of NaturalNano in July 2005. For the four years prior
      to
      joining NaturalNano, Ms. Browne was the Corporate Controller and Chief
      Accountant of Paychex, Inc., a payroll service provider in Rochester, New York.
      During the period from 1996 to 2000, she served as the Vice President and
      Corporate Controller of W.R. Grace, a worldwide specialty chemicals manufacturer
      located in Boca Raton, Florida. From 1992-1996, Ms. Browne served in various
      financial positions for Bausch & Lomb in Rochester, New York. From 1977 to
      1992, Ms. Browne was with the Rochester, New York office of Price Waterhouse.
      Ms. Browne holds a Bachelor of Science degree from St. John Fisher
      College.  She is a member of the American Institute of Certified Public
      Accountants and the New York State Society of CPAs.





***Sarah
      M. Cooper*** has been
      Chief Technology Officer of NaturalNano since December 2004. Ms. Cooper has
      an
      extensive background in nanotechnology and material science. Trained as a
      chemical engineer, she was, prior to joining NaturalNano, a research fellow
      at
      NASA Ames Center for Nanotechnology, studying the fundamental properties of
      carbon nanotubes and other nanomaterials. Ms. Cooper is also a consultant to
      Biophan Technologies, Inc. for that company’s bio-thermal battery project. While
      on sabbatical from NASA in 2003, Ms. Cooper attended NJIT’s BioMEMS Summer
      Institute to study the potential of BioMEMS as an integration platform to scale
      nano-sized components into practical devices. Before going to NASA, she
      conducted research at Los Alamos National Lab and IDEXX Laboratories. Ms. Cooper
      received her BS in chemical engineering from Brown University in 2000, and
      is
      currently finishing a PhD in Materials Physics at the University of Sydney,
      expanding on her work at NASA on nanoengineered thermoelectric materials. Ms.
      Cooper has authored numerous scientific and professional journal
      articles.




14





**Potential
      Conflicts of Interest**





Two
      members of our Board of Directors, Michael L. Weiner and Ross B. Kenzie, are
      managers and significant equity holders of Technology Innovations, LLC, which
      owns approximately 53.8% of our outstanding common stock. Messrs. Weiner and
      Kenzie and Technology Innovations are also significant equity holders of Biomed
      Solutions LLC, a company engaged in the business of identifying and acquiring
      for exploitation technologies in the biomedical field. Further, Mr. Weiner
      is on
      the board of Nanoset, LLC, an entity owned in part by Biomed Solutions, which
      is
      engaged in the development of nanomagnetic particle coatings. Messrs. Weiner
      and
      Kenzie and a third member of our Board, Steven Katz, are also on the Board
      of,
      and Mr. Weiner and a fourth member of our Board, John Lanzafame, are executive
      officers of, Biophan Technologies, Inc., a company with whose wholly-owned
      subsidiary, Nanolution, LLC, we have a joint research and development agreement
      for the development of drug delivery and medical applications utilizing
      nanotechnology discoveries.





Prior
      to
      joining NN Research, our President, Michael Riedlinger, advised Biophan
      Technologies on certain licensing and technological development projects as
      an
      independent consultant. During 2005, Mr. Riedlinger provided services estimated
      at $16,500 for consulting on these projects; the Company received reimbursement
      from Biophan for this same amount prior to year-end.





Our
      Chief
      Technology Officer, Sarah Cooper, also provides ongoing consulting services
      to
      Biophan Technologies. During 2005, the Company received $5,077 as reimbursement
      for these services.





Because
      of the nature of our business and the business of these other entities, the
      relationships of all of the members of our Board of Directors with these other
      entities may give rise to conflicts of interest with respect to certain matters
      affecting us. Potential conflicts may not be resolved in a manner that is
      favorable to us. We believe it is not possible to predict the precise
      circumstances under which future potential conflicts may arise and therefore
      intend to address potential conflicts on a case-by-case basis. Under Nevada
      law,
      directors have a fiduciary duty to act in good faith and with a view to the
      best
      interests of the corporation.





**The
      Board and Committees of the Board**





The
      standing committees of the Board are the Audit Committee and the Compensation
      Committee. The Board does not currently have a nominating committee and has
      not
      established specific procedures for selecting candidates for director. However,
      directors are currently nominated by a majority vote of the Board. There is
      also
      no established procedure for shareholder communications with members of the
      Board or the Board as a whole. However, shareholders may communicate with the
      investor relations department of the Company and such communications are either
      responded to immediately or are referred to the president or chief financial
      officer of the Company for a response.





***Audit
      Committee*** *.* The
      Audit
      Committee is currently composed of Messrs Katz (Chairman), and Kenzie. The
      responsibilities of the Audit Committee are more fully set forth in the Audit
      Committee Charter which the Board adopted in December 2005. The Audit Committee
      Charter has been posted on our website at *www.naturalnano.com* .
      The
      Audit Committee reviews with the independent accountants the results of the
      audit engagement, approves professional services provided by the accountants
      including the scope of non-audit services, if any, and reviews the adequacy
      of
      our internal accounting controls. The Board has determined that Messrs. Katz
      and
      Kenzie meet the qualifications as “audit committee financial experts”.




***Compensation
      Committee*** *.* The
      Compensation Committee is composed of Messrs Kenzie (Chairman), Weiner and
      Katz.
      The responsibilities of the Compensation Committee are more fully set forth
      in
      the Compensation Committee Charter which the Board adopted in December 2005.
      The
      Compensation Committee Charter has been posted on our website at *www.naturalnano.com* .





15





**Compensation
      of the Board**





Directors
      who are also our employees do not receive additional compensation for serving
      on
      the Board or its committees. Non-employee directors, for their services as
      directors, are paid an annual fee of $8,000. Mr. Katz receives an additional
      $5,000 annually for serving as the Chairman of the Audit Committee. Otherwise,
      no additional compensation is paid to any director for serving as a member
      of
      any committee of the Board. In addition, non-employee directors receive option
      grants under our Stock Option Plan. All directors are reimbursed for their
      reasonable expenses incurred in attending all board meetings. We maintain
      directors and officers liability insurance.





**Code
      of Ethics**




The
      Company has adopted a Code of Ethics for Senior Executive and Financial Officer
      that is applicable to our principal executive officer and principal financial
      officer and can be viewed on our website *www.naturalnano.com* .





**Limitation
      on Liability and Indemnification of Directors and Officers**





Our
      articles of incorporation provide that no director or officer shall have any
      liability to the Company if the person acted in good faith and with the same
      degree of care and skill as a prudent person in similar circumstances.




Our
      articles of incorporation and bylaws provide that we will indemnify our
      directors and officers and may indemnify our employees or agents to the fullest
      extent permitted by law against liabilities and expenses incurred in connection
      with litigation in which they may be involved because of their offices. However,
      nothing in our articles of incorporation or bylaws protects or indemnifies
      a
      director, officer, employee or agent against any liability to which he would
      otherwise be subject by reason of willful misfeasance, bad faith, gross
      negligence or reckless disregard of the duties involved in the conduct of his
      or
      her office. To the extent that a director has been successful in defense of
      any
      proceeding, the Nevada Revised Business Corporations Act provides that he or
      she
      shall be indemnified against reasonable expenses incurred in connection with
      the
      proceeding.





**Scientific
      Advisory Board**





The
      Company’s Scientific Advisory Board is a significant source of technical and
      scientific expertise and is an integral part of the NaturalNano team. The
      advisory board’s purpose is to inform and guide our management on relevant
      nanotechnology research, development, validation and evaluation in the global
      marketplace. The advisory board includes experts in a broad range of scientific
      disciplines including materials science, nanocomposites, plastics and polymers,
      cosmetics, pharmaceutical, and other related nanotechnologies.





The
      members of our Scientific Advisory Board serve without fixed cash compensation
      but are each entitled to receive 30,000 stock options (on a post split basis)
      that are subject to vesting as follows: 10,000 options vesting on December
      31,
      2005 and 20,000 options vesting on December 31, 2006 provided that the option
      holder remains on the Scientific Advisory Board through these vesting dates.





The
      members of the NaturalNano Scientific Advisory Board are:





Robert
      Corkery, Ph.D., YKI, Ytkemiska Institute AB-Institute for Surface Chemistry,
      Stockholm


Dr.
      Corkery is globally recognized as a key physical chemistry and materials science
      problem solver. He has been granted patents in nanozeolite chemical technology
      and porous materials technology with four patents pending in materials science
      technology. Dr. Corkery is the Area Manager for Nanostructured Materials at
      the
      YKI, Institute for Surface Chemistry in Stockholm, Sweden, one of the leading
      surface chemistry institutes in the world. Dr. Corkery’s research is aimed at
      technical understanding and breakthrough, new materials discovery and industrial
      innovation in the areas of nano- and bio-nanotechnologies. He was formerly
      a
      research scientist with The Procter & Gamble Company and was leader of the
      company’s corporate colloid laboratory and was responsible for developing
      nanostructure, biomembrane and complex fluid technologies. Dr. Corkery received
      his Bachelor of Science degree in Geology and Geophysics from the Australian
      National University as well as his Ph.D. in Physical and Materials Science
      where
      he was devoted entirely to nanotech and included extensive experimental and
      theoretical work on nanostructured clays, including halloysite. Dr. Corkery
      carried out postdoctoral research at the Australian National University as
      well
      as at the University of Lund in Sweden.





16


Emmanuel
      P. Giannelis, Ph.D., Cornell University


Dr.
      Giannelis is internationally recognized as a pioneer and one of the leading
      experts in polymer nanocomposites. He is the Walter R. Reed Professor of
      Engineering and Director of Materials Science and Engineering at Cornell
      University. He is also a member of the Fields of Chemistry and Chemical Biology
      and Chemical and Biomolecular Engineering at Cornell. His research interests
      range from synthesis of new nanostructured materials to characterization and
      property evaluation and include polymer nanocomposites, nanocomposite
      electrolytes, nanobiohybrids and nanofluids. Dr.
      Giannelis has served on the editorial boards of *Chemistry
      of Materials* and *Macromolecules* and
      currently serves on the editorial boards of *Polymer
      and Small* .
      He is
      the author or co-author of over 135 papers and 9 patents and is listed as one
      of
      the top 25 cited authors on Nanotechnology and a Highly-Cited Author in
      Materials Science by Thompson Scientific (formerly Thompson ISI), an information
      provider to researchers and scholars. He received a Bachelor of Science degree
      in Chemistry from the University of Athens, Greece and a PhD in Inorganic
      Chemistry from Michigan State University.





Raymond
      Kurzweil, Kurzweil Technologies, Inc.


Dr.
      Kurzweil has been described as “the restless genius” by the *Wall
      Street Journal* and “the
      ultimate thinking machine” by *Forbes.* In
      addition, *Inc.* magazine
      recently ranked him #8 among entrepreneurs in the United States calling him
      the
“rightful heir to Thomas Edison,” and PBS included Dr. Kurzweil as one of 16
“revolutionaries who made America.” Dr.
      Kurzweil is the recipient of the $500,000 MIT-Lemelson Prize, the world's
      largest prize for innovation. In 1999, he received the National Medal of
      Technology, the United States’ highest honor in technology. In 2002, he was
      inducted into the National Inventor's Hall of Fame established by the US Patent
      Office. As one of the leading inventors of our time, Dr. Kurzweil has worked
      in
      such areas as music synthesis, speech and character recognition, reading
      technology, virtual reality and cybernetic art. He was the principal developer
      of the first omni-font optical character recognition, the first print-to-speech
      reading machine for the blind, the first CCD flat-bed scanner, the first
      text-to-speech synthesizer, the first music synthesizer capable of recreating
      the grand piano and other orchestral instruments, and the first commercially
      marketed large-vocabulary speech recognition.





**Section
      16(a) Beneficial Ownership Reporting Compliance**





Section
      16(a) of the Securities Exchange Act of 1937, as amended (the “Exchange Act”)
      requires our executive officers and directors and persons who own more than
      ten
      percent of our common stock to file reports of ownership and changes in
      ownership with the SEC. Such executive officers, directors and greater than
      ten
      percent stockholders are also required by SEC rules to furnish us with copies
      of
      all Section 16(a) forms they file. Based on information supplied to the Company
      and filings made with the SEC, the Company believes that during the fiscal
      year
      ended December 31, 2005, all Section 16(a) filing requirements applicable to
      its
      Directors, officers, and greater than ten percent beneficial owners were
      complied with.




17


**ITEM
      10. EXECUTIVE COMPENSATION**





NN
      Research was incorporated on December 22, 2004 and did not have any employees
      for the fiscal year ended December 31, 2004. The table set forth below
      summarizes the compensation paid to our named executive officers during 2005.





**SUMMARY
      COMPENSATION TABLE**





Annual
                Compensation
            Long
                Term CompensationName
                / Position
            Year
            Salary
            Bonus
            Restricted
              Stock
              Awards
            Securities
              Underlying
              Options
                / SAR
              (post
                split)Michael
                D. Riedlinger
              President
            2005
            $122,007
            $10,000
            none
            3,000,000Kathleen
                A. Browne
              CFO
            2005
            $85,489
            none
            none
            800,000Sarah
                M. Cooper
              CTO
            2005
            $40,580
            $7,000
            none
            600,000Edward
                F. Cowle
              Former
                CEO
            2005
            $6,425
            none
            none
            none





Columnar
      information required by Item 402(a) (2) of Regulation SB has been omitted for
      categories where there has been no compensation awarded to, or paid to, the
      named executive officers required to be reported in the table during fiscal
      years 2003 through 2005.




18





**Stock
      Options**




On
      September 23, 2005, the Board of Directors adopted the NaturalNano, Inc. 2005
      Stock Option Plan (“the Plan.”) The Plan provides for incentive and
      non-qualified stock options to employees, the grant of non-qualified options
      to
      selected consultants and to directors and advisory board members. The Plan
      is
      administered by the Compensation Committee of the Board of Directors and
      authorizes the grant of 14,400,000 post split shares. The Compensation Committee
      determines the employees and consultants who participate under the Plan, the
      terms and conditions of options, the option price, the vesting schedule of
      options and other terms and conditions of the options granted pursuant thereto.
      As of December 31, 2005 the Company had granted 9,900,000 (post-split) shares
      of
      common stock under the option plan and 9,810,000 were outstanding.





The
      following table summarizes information concerning stock options, presented
      on a
      post-split basis, granted to the named executive officers during the last fiscal
      year ended December 31, 2005:





Name
            
            Number
                of securities underlying options/SARsgranted
                (#)
            
            Percent
                of total options/SARs granted to employees infiscal
                year
            
            Exercise
                or base price($/Share)
            
            Expiration
              DateMichael
                D. Riedlinger
            
            
            3,000,000
            
            
            64.33
            %
            
            $0.05
            
            
            3/1/2015Kathleen
                A. Browne
            
            
            800,000
            
            
            17.16
            %
            
            $      
                0.05
            
            
            7/1/2015Sarah
                M. Cooper
            
            
            600,000
            
            
            12.87
            %
            
            $      
                0.05
            
            
            3/1-10/1/2015Edward
                F. Cowle
            
            
            0
            
            
            0





No
      named
      executive officer exercised options in the fiscal year ended December 31, 2005.
      The following table presents the number and values of exercisable and
      unexercisable options presented on a post-split basis, at December 31,
      2005:





Name
            
            Shares
                acquired onexercise
            
            Value
                realized
            
            Number
                of Securities underlying unexercised options/SARs at FY-end (#)
              Exercisable/Unexercisable
            
            Value
                of unexercised in-the-money options/SARs at FY-end ($)
              Exercisable/UnexercisableMichael
                D. Riedlinger
            
            
            none
            
            
            --
            
            
            1,000,000/2,000,000
            
            
            $1,020,000/$2,040,000Kathleen
                A. Browne
            
            
            none
            
            
            --
            
            
            266,666/533,334
            
            
            $271,999/$544,001Sarah
                M. Cooper
            
            
            none
            
            
            --
            
            
            200,000/400,000
            
            
            $204,000/$408,000Edward
                F. Cowle
            
            
            none
            
            
            --
            
            
            none
            
            
            none





19


**ITEM
      11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS**


The
        following table sets forth certain information as of February 15, 2006 with
        respect to beneficial ownership of our common stock by each stockholder known
        by
        us to be the beneficial owner of more than 5% of our common stock and by
        each of
        our directors and executive officers and by all of the directors and executive
        officers as a group. Unless otherwise indicated, the address of each of the
        persons below is c/o NaturalNano, Inc., 150 Lucius Gordon Drive, Suite 115,
        West
        Henrietta, New York 14586. Unless otherwise indicated in the footnotes, shares
        are owned of record and beneficially by the person. For purposes of the
        following table, a person is deemed to be the beneficial owner of any shares
        of
        common stock (a) over which the person has or shares, directly or indirectly,
        voting or investment power, or (b) of which the person has a right to acquire
        beneficial ownership at any time within 60 days after February 15, 2006.
“Voting
        power” is the power to vote or direct the voting of shares and “investment
        power” includes the power to dispose or direct the disposition of
        shares.




**Name
                and Address**
              **of
                Beneficial Owner**
            
            **Number
                of Shares**
              **Beneficially
                Owned****(1)**
            
            **Percent
                of**
              **Class**(2)*Directors
                and Executive Officers*:Steven
                Katz
            
            
            200,000
            
            
            *Ross
                B. Kenzie
            
            
            0
            
            
            0
            %John
                F. Lanzafame
            
            
            366,668
            
            
            *Michael
                L. Weiner
            
            
            65,692,194
            (3)
            
            53.9
            %Michael
                D. Riedlinger
            
            
            2,000,000
            
            
            1.6
            %Kathleen
                A. Browne
            
            
            366,652
            
            
            *Sarah
                M. Cooper
            
            
            400,000
            
            
            *All
                Directors and Executive Officers as a group (7 persons)
            
            
            68,658,848
            
            
            54.9
            %*Other
                5% Beneficial Owners*:Technology
                Innovations, LLC
              150
                Lucius Gordon Drive, Suite 117West
                Henrietta, NY 14586
            
            
            65,425,526
            (4)
            
            53.8
            %





*
            Less
                than 1%1)
            All
                shares presented reflect the two-for-one stock distribution effective
                on
                February 8, 2006.
              Except
                as may be set forth below, the persons named in the table have sole
                voting
                and investment power with respect to all shares shown as beneficially
                owned by them.


2)
            Applicable
                percentage of ownership is based on 121,074,740 shares outstanding
                together with applicable options for such stockholder.
              Shares
                subject to options currently exercisable or exercisable within 60
                days are
                included in the number of shares beneficially owned and are deemed
                outstanding for purposes of computing the percentage ownership of
                the
                person holding such options, but are not deemed outstanding for computing
                the percentage of any other stockholder.3)
            Includes
                64,925,526 shares and 500,000 options held by or issuable to Technology
                Innovations, LLC, of which Mr. Weiner is a member and
                manager.
              Mr.
                Weiner disclaims beneficial ownership of the shares held by Technology
                Innovations, LLC except to the extent of his beneficial ownership
                of a
                membership interest in Technology Innovations,
                LLC.


4)
            Includes
                500,000 shares issuable pursuant to currently exercisable
                options.




20





**ITEM
      12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**





**Registration
      Rights Agreement**  **and
      Other Registration Obligations**




NN
      Research entered into a certain Registration Rights Agreement on December 22,
      2004 with Technology Innovations LLC, our principal stockholder which holds
      64,925,526 post split shares of our common stock. We assumed NN Research’s
      obligations under the Registration Rights Agreement in connection with the
      Merger. Under the Registration Rights Agreement, we are required to use our
      reasonable best efforts to prepare and file with the SEC, and to cause to be
      declared effective, a registration statement on an appropriate form pursuant
      to
      the Securities Act of 1933 to permit the offer and resale by Technology
      Innovations, LLC of the shares held by it. We are obligated to keep such
      registration statement effective for a period of one year after it first becomes
      effective. All expenses incident to the performance of our obligations under
      the
      Registration Rights Agreement, including all registration fees and expenses,
      will be borne by the Company. The Registration Rights Agreement is filed
      herewith as Exhibit 4.3 and the foregoing description is qualified in its
      entirety by reference to such Exhibit.




In
      connection with the Merger, on November 29, 2005, we issued to SBI USA, LLC
      a
      warrant for the purchase of 4,500,000 post split shares of our common stock,
      in
      exchange for a warrant which had been issued to SBI by NN Research and which
      was
      cancelled pursuant to the Merger Agreement. Under the warrant, if we determine
      to register any shares of our common stock under the Securities Act of 1933
      in
      connection with a public offering of our common stock (other than under an
      employee benefit plan or in connection with a merger or similar transaction),
      we
      are required to include in such registration any shares of our common stock
      issuable to SBI under the warrant (or in certain other specified transactions).
      We have agreed to bear all expenses incurred by us or by SBI in connection
      with
      such registration. The warrant is filed herewith as Exhibit 4.5 and the
      foregoing description is qualified in its entirety by reference to such
      Exhibit.




In
      the
      Subscription Agreement pursuant to which NN Research issued the Convertible
      Notes that were converted, at the effective time of the Merger, into an
      aggregate of 20,939,200 post split shares of our common stock, NN Research
      agreed to use its best efforts to include the securities issued upon conversion
      of such Convertible Notes in any registration statement filed by NN Research
      under the Securities Act of 1933 in connection with a public offering of its
      common stock (other than under an employee benefit plan or in connection with
      a
      merger or similar transaction) for its own account or for the account of others.
      In the Merger Agreement, we assumed the obligations of NN Research with respect
      to such registration rights. All expenses incident to the performance of our
      obligations, including all registration fees and expenses, will be borne by
      the
      Company. The form of the Subscription Agreement is filed herewith as Exhibit
      4.4
      and the foregoing description is qualified in its entirety by reference to
      such
      Exhibit.




21


**ITEM
      13. EXHIBITS**





**NaturalNano,
      Inc.**


**(A
      Development Stage Company)**




**EXHIBIT
                INDEX****Exhibit**
              **Number**
            **Description**2.1
            Agreement
                and Plan of Merger among NaturalNano, Inc., Cementitious Materials,
                Inc.
                and Cementitious Acquisitions, Inc. (1)3.1
            Restated
                Articles of Incorporation (2)3.2
            Certificate
                of Change to Articles of Incorporation (3)3.3
            By
                laws (4)4.1
            NaturalNano,
                Inc. 2005 Incentive Stock Plan (5)4.2
            Form
                of Non-Qualified Stock Option Agreement (2)4.3
            Registration
                Rights Agreement dated as of December 22, 2004 between NaturalNano,
                Inc.
                and Technology Innovations, LLC (2)4.4
            Form
                of Subscription Agreement for the Purchase of Convertible Notes of
                NaturalNano, Inc. (2)4.5
            Warrant
                issued to SBI USA, LLC *10.1
            License
                Agreement between Technology Innovations, LLC and NaturalNano, Inc.
                dated
                as of April 27, 2005 (filed in redacted form pursuant to a request
                for
                confidential treatment filed separately with the Securities and Exchange
                Commission) (2)10.2
            Joint
                Research Agreement between Nanolution, LLC and NaturalNano Inc. dated
                as
                of May 25, 2005 (2)10.3
            Employment
                Letter of Michael Riedlinger and Amendment No. 1 thereto #
                (2)10.4
            Employment
                Letter of Kathleen A. Browne and Amendment No. 1 thereto #
                (2)10.5
            Employment
                Letter of Sarah Cooper # (2)10.6
            Line
                of Credit Agreement dated as of December 29, 2004 between NaturalNano,
                Inc. and Technology Innovations, LLC *14.1
            Code
                of ethics for CEO and senior financial officer *21.1
            Subsidiaries
                *31.1
            Certification
                of Chief Executive Officer pursuant to Rule 13a-14(a) *31.2
            Certification
                of Chief Financial Officer pursuant to Rule 13a-14(a) *32.1
            Certification
                of Chief Executive Officer pursuant to 18 U.S.C. Section 1350
                *32.2
            Certification
                of Chief Financial Officer pursuant to 18 U.S.C Section 1350
                *


22





*
            Filed
                herewith





#
            May
                be deemed a compensatory plan or
                arrangement





1.
            Incorporated
                by reference to Exhibit 2.1 to Current Report on Form 8-K dated September
                26, 2005





2.
            Incorporated
                by reference to similarly numbered Exhibit to Current Report on Form
                8-K
                datedNovember
                29, 2005





3.
            Incorporated
                by reference to Exhibit 3.1 to Current Report on Form 8-K dated January
                27, 2006





4.
            Incorporated
                by reference to Exhibit 3.2 to Form 10-SB filed July
                2002





5.
            Incorporated
                by reference to Appendix C to Information Statement on Schedule 14C
                filed
                November29,
                2005


23


**ITEM
      14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**





Our
      accountant is Goldstein Golub Kessler LLP (the “Firm”) which had a continuing
      relationship with American Express Tax and Business Services Inc. (“TBS”) from
      which it leased auditing staff who were full-time, permanent employees of TBS
      and through which its partners provided non-audit services. Subsequent to
      September 30, 2005, this relationship ceased and the firm established a similar
      relationship with RSM McGladrey, Inc. (RSM). The Firm has no full time employees
      and therefore, none of the audit services performed for us were provided by
      permanent full-time employees of the Firm. The Firm manages and supervises
      the
      audit and audit staff, and is exclusively responsible for the opinion rendered
      in connection with its examination.





1)
            Audit
                Fees





The
      aggregate fees billed by Goldstein Golub Kessler LLP for professional services
      rendered for the audit of the Company’s annual financial statements for the
      period from inception through December 31, 2005 and for the quarterly report
      included on Form 8K dated November 29, 2005 was $60,546.





2)
            Audit-Related
                Fees





The
      Company did not engage its principal accountants to provide assurance and
      related services during the last two fiscal years.





3)
            Tax
                Fees





The
      Company did not engage its principal accountants to provide tax compliance,
      tax
      advice and tax planning services during the last two fiscal years.





4)
            All
                Other Fees





The
      Company did not engage its principal accountants to render services to the
      Company during the last two fiscal years, other than reported
      above.





5)
            Pre-Approval
                Policies and Procedures





In
      accordance with its charter, the Audit Committee is required to approve all
      audit and non-audit services provided by the independent auditors and shall
      not
      engage the independent auditors to perform the specific non-audit services
      prescribed by law or regulation.





24




SIGNATURES





In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.




NATURALNANO, INC.Dated: 
              February 15, 2006
            By:
            \s\
              Michael D. RiedlingerName:
              Michael D. RiedlingerTitle:President




In
      accordance with the Exchange Act, this report has been signed below by the
      following persons on behalf of the registrant and in the capacities and on
      the
      dates indicated.





Signature
            
            Title
            
            Date\s\
                Michael D. Riedlinger
            
            President
                and Director
            
            February
                15, 2006Michael
                  D. Riedlinger
            
            (Principal
                Executive Officer)\s\
                Kathleen A. Browne
            
            Chief
                Financial Officer, Secretary
            
            February
                15, 2006Kathleen
                  A. Browne
            
            and
                Treasurer(Principal
                Financial Officer andPrincipal
                Accounting Officer)\s\
                Steven Katz
            
            Director
            
            February
                15, 2006Steven
                  Katz\s\
                Ross Kenzie
            
            Director
            
            February
                15, 2006Ross
                  Kenzie\s\
                John Lanzafame
            
            Director
            
            February
                15, 2006John
                  Lanzafame\s\
                Michael L. Weiner
            
            Director
            
            February
                15, 2006Michael
                  L. Weiner








25