My wife and I have two young school-age children, and it is our policy that they are not allowed to watch any television on school nights until their homework is done. In spite of our best intentions, however, they still sometimes sneak into the family room before their work is complete and flick on the old boob tube. Being fairly good kids, though, the potential household crisis is usually averted with a simple admonishment to turn it off.

I was reminded of this maddening TV ritual the other day, when Headwaters (NYSE:HW) announced that it had developed a new chemical process based on nanotechnology that will "enable the production of high-quality, long-life, flat-screen television monitors at a fraction of the cost of today's devices."

I have no reason to doubt the sincerity of the claim -- which came from the company's nanotechnology division, NanoKinetix -- but investors in Headwaters should not be misled into believing that the company, by getting into the flat-panel display business, is either on the verge of embarking on something big or diversifying its business.

Nanotechnology is, in fact, poised to affect the flat-panel display market. In May, Motorola (NYSE:MOT) announced that it had created a new "nano-emissive" flat-panel display. DuPont (NYSE:DD), Dow Chemical (NYSE:DOW), and Samsung are also playing in the same area, and even a few small start-ups such as Nano-Proprietary, which Fools Carl Wherrett and John Yelovich discussed a few months back, have a chance to make some serious inroads in the field.

To be fair, NanoKinetix's technology is based on polymeric crystals and, as such, is different from the approach of all of the aforementioned companies, which all seek to apply carbon nanotubes to flat-panel displays. But I am still not confident that Headwaters can advance much beyond the announcement phase with this new development, given the level of expertise and competition in this field.

That's OK, though, because Headwaters' NanoKinetix division is working on some other nanotechnology-related developments in which it is far better suited to play. I am referring to NanoKinetix's exciting work in applying nanocatalyst applications to coal liquefaction and heavy-oil upgrading.

Coal liquefaction has long been a dream of the coal industry, and it's still likely a way off. But Headwaters, which is working with China's largest coal company, Shenhua Group, to build the world's first commercial plant to transform coal into gasoline and diesel fuel, is also working on the development of a new line of nanocatalysts that might facilitate this process. The development of such a technology could revolutionize the energy industry by creating the equivalent of liquid gold.

But even more exciting to me than this possible development is the more realistic scenario that Headwaters could develop nanocatalysts to aid in the conversion of heavy oils into usable materials. If Headwaters can find a way to efficiently turn the heavy crude materials sitting in Canada's massive tar sand reserves (one of the world's largest known oil reserves) into a diesel or lighter material, company profits could be out of this world. This would be true even if the price of oil were to drop from its current range of beyond $60 back to the $30-$40 range.

So, without meaning to sound too much like a parent, I would kindly advise the management at Headwaters to temporarily set aside its work on flat-panel display TVs until it has successfully completed the more pressing homework assignment of turning the heavy oils of Canada into a viable, profitable, and long-term source of energy.

As I tell my kids, there will be plenty of time for television once you're successful.

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Jack Uldrich has been accused by teachers and friends alike of thinking small since grade school. He is the author of The Next Big Thing Is Really Small: How Nanotechnology Will Change the Future of Your Business. Jack does not own shares of Headwaters, but he does own shares in Nano-Proprietary. The Motley Fool has a disclosure policy.