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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">UNITED
      STATES</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECURITIES
      AND EXCHANGE COMMISSION</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">WASHINGTON,
      D.C. 20549</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>FORM
      8-K</strong></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CURRENT
      REPORT</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PURSUANT
      TO SECTION 13 OR 15(d) OF</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">THE
      SECURITIES EXCHANGE ACT OF 1934</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date
      of
      report (date of earliest event reported): March 31, 2006</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>DIAMOND
      ONE, INC.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Exact
      name of registrant as specified in its charter)</font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Colorado</font></div>
            </td>
            <td valign="top" width="24%">
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            </td>
            <td valign="top" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">47-0892061</font></div>
            </td>
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                or other jurisdiction of incorporation)</font></div>
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            <td valign="top" width="24%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Commission
                File Number)</font></div>
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            <td valign="top" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(IRS
                Employer Identification No.)</font></div>
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    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">303
      Twin
      Dolphin Drive,</font></div>
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      Floor, Redwood City, California 94065</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Address
      of principal executive offices) (Zip code) </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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      632-4440</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">9648
      East
      Arapahoe Rd., Suite A</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Greenwood
      Village, Colorado 80112</font></div>
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      name or former address, if changed since last report)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Check
      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions:</font></div>
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      communications pursuant to Rule 425 under the Securities Act (17 CFR
      230.425)</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-FAMILY: Wingdings">o</font>&#160;Soliciting
      material pursuant to
      Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-FAMILY: Wingdings">o</font>&#160;Pre-commencement
      communications
      pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
      240.14d-2(b))</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-FAMILY: Wingdings">o</font>&#160;Pre-commencement
      communications
      pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
      240.13e-4(c))</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      2.01. Completion of Acquisition or Disposition of Assets.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>MERGER
      TRANSACTION</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      March
      31, 2006 and pursuant to an Agreement and Plan of Merger and Reorganization
      dated March 16, 2006 (the&#160;&#8220;Merger Agreement&#8221;) by and among Diamond One,
      Inc., PureDepth Technologies, Inc., a Delaware corporation and wholly owned
      subsidiary of the Company (&#8220;PureDepth Technologies&#8221;), and PureDepth, Inc., a
      California corporation whose business is the development and commercialization
      of innovative technology incorporating a third dimension of &#8220;depth&#8221; into a
      smart, compact video display device, PureDepth, Inc. merged with and into
      PureDepth Technologies. As a result of the merger, PureDepth Technologies
      succeeded to the business of PureDepth and survives as a wholly owned operating
      subsidiary of Diamond One. The merger was effected by the filing of a
      certificate of merger with the Delaware Secretary of State on March 31,
      2006.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At
      the
      effective time of the merger, the legal existence of PureDepth ceased and all
      of
      the approximately 23,086,855 shares of PureDepth common stock that were
      outstanding immediately prior to the merger were cancelled. Simultaneously,
      PureDepth&#8217;s former shareholders received an aggregate of 230,869 shares of
      Diamond One&#8217;s Series A Preferred Stock, representing approximately 89% of the
      registrant&#8217;s outstanding voting power after the merger. In addition, all
      securities convertible into and exercisable for shares of PureDepth common
      stock
      (e.g., options and warrants) that were outstanding immediately prior to the
      merger were cancelled, and their holders received similar securities for the
      purchase of Diamond One common stock. In total, former holders of PureDepth
      securities now hold approximately 93% of the outstanding common stock of Diamond
      One on a fully diluted basis.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prior
      to
      the merger and pursuant to authority granted to it by the registrant&#8217;s articles
      of incorporation, as amended, Diamond One&#8217;s board of directors approved and
      adopted a Certificate of Designation relating to a new class of preferred stock
      denominated &#8220;Series A Preferred Stock.&#8221; All outstanding shares of Series A
      Preferred Stock will convert into shares of common stock on a 229.021-for-1
      basis upon the approval by Diamond One shareholders of an increase in the number
      of shares of common stock authorized for issuance under Diamond One&#8217;s articles
      of incorporation, as amended.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      merger represents a change in control of Diamond One inasmuch as greater than
      50% of the issued and outstanding voting stock of the registrant on a
      post-merger basis is now held by the former holders of PureDepth capital stock.
      In addition, and simultaneously with the effectiveness of the merger, the board
      of directors of Diamond One appointed Messrs. David Hancock, Fred Angelopoulos
      and Mark Kalow to its board of directors, and directors Troy Fullmer and Robert
      Chramosta thereupon resigned. Moreover, Messrs. Fullmer and Chramosta resigned
      their positions as officers of the Company. In their place, Fred Angelopoulos
      was appointed as its Chief Executive Officer and President, and Kristin Bowman
      was appointed as Chief Operating Officer, Secretary and acting Chief Financial
      Officer. As of the date of this report, there are 6,486,269 shares of Company
      capital stock issued and outstanding, 6,255,400 of which is common stock and
      230,869 of which is Series A Preferred Stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">What
      follows is a description of the business, property, legal proceedings, risk
      factors and certain other important information about the business of PureDepth
      that Diamond One acquired as part of the merger. Throughout this report, the
      terms &#8220;Company&#8221; and &#8220;PureDepth&#8221; refer to Diamond One and the business of
      PureDepth now owned and operated by Diamond One.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">1</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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      <div id="HDR">
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        </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>DESCRIPTION
      OF PUREDEPTH BUSINESS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      predecessor research and development business to PureDepth group, Deep Video
      Imaging Limited (&#8220;DVIL&#8221;), was incorporated in New Zealand in 1999. In April
      2005, and after a corporate restructuring of DVIL, PureDepth, Inc. was
      incorporated in California. Currently, the PureDepth group of affiliated
      companies includes PureDepth Limited (&#8220;PDL&#8221;) and PureDepth Incorporated Limited
      (&#8220;PDIL&#8221;), each now an indirect subsidiary of the Company. PDL, incorporated in
      New Zealand in August 2004, currently holds the intellectual property portfolio
      used and exploited by the Company pursuant to a perpetual and exclusive license.
      PDIL, incorporated in New Zealand in March 2005, currently provides operations
      and other support for the Company, including finance, administration, legal
      operations, research and development, and intellectual management operations
      on
      behalf of its parent entities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Liquid
      Crystal Displays (LCDs) are part of our everyday life, both in our work and
      personal lives; they are integral parts of the watches, mobile phones, iPods,
      computers, car navigation systems, televisions, control systems, medical
      monitors, military monitors, and other items that affect us everyday. In 2005,
      worldwide shipments of all forms of LCDs exceeded&#160;1 billion&#160;units. The
      growth of these markets is in excess of 20% and reaching as high as over 30%
      per
      year for specific markets like the LCD television market. The majority of the
      LCD market segments are now all considered commodities, such as LCD computer
      monitors and mobile phones.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      development of display technology has advanced in form from cathode ray tubes
      to
      LCDs, plasma displays and others. These advancements focused on introducing
      color, improving display resolutions and enhancing the ability of the display
      to
      run high-resolution graphics and full-motion video. We believe these
      advancements are significant for display technology but are more evolutionary
      than revolutionary.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PureDepth
      has a revolutionary technology which literally provides a new dimension to
      displays. The technology, known as Multi-Layer Display (MLD</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>TM</sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">),
      builds
      upon existing Single-Layer Display (SLD) technology to potentially redefine
      the
      way the user interacts with his or her screen by providing two or more display
      layers in a stacked arrangement. Each layer is physically separated by real
      depth (as opposed to perceived or simulated depth), which allows for distinct
      new ways in which to view, monitor and interact with displays&#8212;in a way that is
      more natural and convincing to the user.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Business
        Model</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        Company intends to base its business model on a &#8220;Dolby-like&#8221; licensing model for
        mass market consumer and business-to-business products. Use of this licensing
        model will leverage the key intellectual property of the Company from its
        core
        technology base to the manufacturing processes to deliver MLD products to
        market.</font></div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>MLD
      Technology</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">MLD
      technology, in its current form, utilizes two distinct layers of LCD panels
      which share a common back-light source. Through the control of optical
      correlation, compatibility and interferences between the LCD panels through
      patented interstitial elements within the optical stack of MLD layers, viewers
      are able to view two distinct planes/layers of data at the same time. Future
      realizations of MLD technology are expected to extend to emerging display
      technologies, such as Organic LEDs (OLEDs) and established technologies such
      as
      Electro-Luminescent (EL) and Plasma Displays (PDP).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      MLD
      arrangement allows the viewer to look through the front LCD display panel to
      see
      images displayed on the LCD display panel behind it. Traditionally, this type
      of
      arrangement using overlaid pixel patterns would give rise to what is called
      the
&#8220;Moire interference,&#8221; a visual interference pattern which results in distraction
      (bright and dark vertical bands) for the viewer and can lead to nausea.
      PureDepth has developed an interstitial optical component placed between the
      display layers that overcomes the problem of Moire interference with negligible
      effect on the optical quality of the image layers. Each of the LCD panels
      incorporated into the single module receive independent control signals through
      separate video outputs. Coordination of the images displayed allows for a true
      multi-layer visual display to be presented to the viewer.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">2</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
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        <div>&#160;</div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PureDepth
      has also proven the capability to manipulate the physical depth between layers
      to maximize the desired parallax effect for a given application. PureDepth
      is in
      the process of developing software which will allow the user to directly vary
      the depth between layers in order to customize the MLD for a particular
      application, enabling the viewer to personalize the application to maximize
      the
      viewer&#8217;s enjoyment of the application in a particular environment.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      level
      of independence or coordination and interaction of the two display layers and
      any other layer related system, such as a touch screen, can be customized to
      the
      specific requirements of the application. A variety of optional items can be
      integrated into an MLD, such as a media kit, touch screen, signal processing
      and
      USB hub functionality. Together with these optional items, MLD technology can
      be
      utilized in many application scenarios, and is also scalable from small display
      requirements of hand-held devices to regular desktop style monitors to large
      publicly viewed television monitors.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">MLD
      development has been focused on LCD panels for managing layered displays.
      However, PureDepth has extended research to investigate the use of alternative
      technologies. OLED and Transparent OLEDs are of specific interest as they have
      the benefit of substantially reducing back-light luminance generation
      requirements and associated heat and power consumption issues. In addition,
      these technologies offer PureDepth the opportunity to introduce a greater number
      of layers to an MLD display.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Competitive
      Advantages of MLD</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      most
      apparent feature of MLD technology is the eye-catching value of viewing content
      over multiple layers, which is colloquially known as the &#8220;wow&#8221; factor. We
      believe this factor makes the technology immediately suitable to the lucrative
      gaming and entertainment sectors. MLD technology also has the potential to
      redefine the way users interact with their computer display in office-type
      applications. Research has shown that usability and productivity can be
      increased through the addition of depth and the resulting &#8220;affordances&#8221; are what
      makes MLD unique and revolutionary in the marketplace. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      term
&#8220;affordance&#8221; relates to perceptual clues that give human beings insight on how
      to interact with objects in the world. For example, a vertical handle on a
      door
&#8220;affords,&#8221; or suggests to the viewer that he or she should pull the door to open
      it, while a flat panel on a door affords pushing to open it. With computers,
      using shadowing on a button creates the affordance of pushing or clicking.
      The
      additional dimension of depth with MLD technology provides an environment for
      a
      myriad of new affordances that can simply not be achieved with a Single-Layer
      Display (SLD). Some of these affordances obtained through the use of MLD
      technology are described below.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Affordance
      for representing layered information</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">MLD
      technology enables a viewer to see layer-based data as it actually exists.
      An
      example of a governmental application of this affordance would be to allow
      a
      municipal council to view a model of water, gas, and sewerage reticulation
      systems for a site development or subdivision layout as they exist through
      a
      live feed of each displayed in a single view.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Affordance
      for focusing and viewing context </em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      ability to maintain focus on detail while retaining view of context is a well
      known and well researched topic. Many have attempted to address this through
      software with fish-eye lenses and zoomable user interfaces. MLD technology
      has
      the potential to advance this goal by showing on the front panel information
      on
      which the viewer is to focus, while providing a contextual overview in the
      back
      panel. This significantly enhances the software techniques and provides a new
      solution to an old problem.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">3</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Affordance
      for view comprehension</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      proper integration of separate but related pieces of information across
      different displays is a well known problem. Cognitive research has identified
      that the human brain operates with a working memory which can only hold up
      to
      seven pieces of information at any one time&#8212;most people struggle with as much as
      three or four. The demand placed on a person&#8217;s working memory to overcome the
      keyhole problem essentially leaves the user overwhelmed and &#8220;lost within the
      data.&#8221; MLD technology attempts to resolve this problem by allowing the grouping
      of cluttered and complex information into a more manageable format, which is
      more easily interpreted by humans. By having potential to creating more visual
      connectivity between data presented across the overlapping displays, MLD has
      the
      potential to bring a unique solution to the keyhole problem.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Affordance
      for information extraction</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Information
      extraction is best achieved when information is presented in parallel rather
      than serially. For example, consider a nuclear power plant that has eight
      crucial pieces of related information to indicate smooth running. This could
      be
      displayed as a regular octagon where the length of each side represents one
      of
      the eight factors. Ultimately, eight factors are being presented in parallel.
      If
      the octagon changes shape dramatically (i.e., one of the sides becomes longer
      or
      shorter) then an operator will know at a glance that something is wrong. This
      overall concept is known as the &#8220;proximity-compatibility principle,&#8221; which
      argues that information used together in a decision should be presented as
      close
      together as possible. The inherent design of MLD monitors allows for parallel
      presentation of information (multiple layers) but also provides a mechanism
      that
      can cluster critical data together which is easily differentiated from
      non-critical data (depth). These features satisfy the proximity-compatibility
      principle whilst also reducing display real-estate clutter.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Affordance
      for change detection</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Critical
      decisions are often based on the ability to detect small changes in images,
      for
      example, the detection of changes to satellite images passing over a target
      of
      interest. Typically these comparisons must be made manually rather than by
      direct image comparison via a computer due to variations in the size, shape,
      rotation and position of the captured images with respect to one another. For
      these situations, overlaying images provides a significant advantage over
      side-by-side comparison. MLD technology has the ability to over-lay electronic
      images for comparison, without degrading either image through the use of depth.
      Much like using a transparency layer over a picture or monitor, MLD technology
      provides physical separation between the two image sources whilst comparing
      so
      that no information from the originals is lost or corrupted. MLD can enhance
      change detection by using techniques like back-to-front switching, a very
      promising feature that can be validated with scientific usability studies,
      which
      cannot be accomplished on traditional SLD monitors. This idea stems from Gestalt
      psychology research, which developed a number of rules of perception, one of
      which is the fact that objects in the foreground are more likely to be attended
      to than objects in the background.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Affordance
      for increasing discriminability</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Experiments
      conducted by Nakayama &amp; Silverman determined that depth was a more powerful
      cue than color to assist in locating an object within. Basically, people are
      able to search within one depth plane, ignoring the other. This affordance
      provides a distinct advantage to an operator who knows where (in that depth
      plane) to find the desired information. More recent research has also shown
      that
      information search times and accuracy using depth cues has several advantages
      over flat representations of the same data. It has been statistically shown
      that, when viewing layered information, attention can be focused on a selected
      layer without distraction from another. The importance of this is that
      information can be searched for, accessed and read quicker, when it is split
      across two levels of depth as opposed to having it all displayed on a single
      plane or side by side. Both of these research studies give strong arguments
      to
      support MLD technology for information processing of large
      datasets.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">4</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>MLD
      Vertical Markets and Applications</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      the
      relatively short time that PureDepth has made MLD technology commercially
      available, they have been deployed in a range of applications. Broadly speaking,
      MLD applications fall into five application categories: (1) Interactive
      Entertainment Systems; (2) Consumer Information Systems; (3) Topological Mapping
      Systems; (4) Monitoring and Analysis Systems; and (5) Layer-Based Information
      Visualization.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Interactive
      Entertainment Systems</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Gaming</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      gaming industry is one of the most exciting areas for applying MLD technology
      and harnessing the unique capabilities available for maximum eye-catching value.
      MLD technology has the capability to greatly enhance gaming visuals by adding
      physical depth dimensions to create stunning effects. For example, a game may
      require players to break through layers of a labyrinth while at the same time
      teasing players with the opportunity to see a little of what may be waiting
      behind by use of the parallax between the visible layers. In this instance
      the
      game designer can induce the player to &#8220;peer&#8221; around objects on the front-most
      layer(s) to see obscured objects in the rear.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">It
      is
      expected that much of the immediate and future development of MLD technology
      will be centered on refining both hardware and associated software and firmware
      for the enhancement of these effects. Gaming is not limited to desktop PCs
      and
      consoles and is rapidly gaining momentum in the portable and mobile phone
      markets. MLD technology, being scalable in size, has the potential to be the
      gaming display technology of choice and considerable research is being developed
      for the small portable display sector.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Interactive
      Television</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Television
      and computers are rapidly converging in technology to become the single
      multimedia center of the household. Subscriber-based systems such as TiVo and
      cable TV are providing more interactive-based entertainment and services (such
      as e-mail, downloadable games, and interactive shopping). These services are
      typically presented as overlaid or alpha-blended images on top of the video
      data
      stream, lending itself nicely to MLD technology.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">5</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
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      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Additionally,
      there is a strong research drive in developing automatic conversion of 2D images
      to 3D, especially in the movie industry. These are targeted for use in movie
      theatre environments and, in time, will trickle-down to the consumer level,
      as
      has happened for multi-speaker surround-sound systems. Obviously there will
      be a
      requirement for new display monitors capable of conveying this depth information
      and MLD technology is poised to be a major player in this market.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Consumer
      Information Systems</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Kiosk
      Applications</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Kiosk
      applications, shopping mall information centers, vending machines,
      train/bus/flight ticket sales systems and the like are ideally suited to MLD
      technology due to the eye-catching &#8220;wow&#8221; factor. With the addition of a touch
      screen to an MLD monitor (the process is essentially the same as for other
      regular display systems), a whole new level of interaction become available.
      By
      leveraging the pressure sensitivity functionality of current touch technologies,
      navigation of depth becomes intuitive. Pressing harder becomes a natural gesture
      to &#8220;push&#8221; objects towards the rear layers, teasing the user to interact further
      with the content.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Point-of-Sale
      Advertising</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Point-of-sale
      advertising is very similar to kiosk applications in that the goal of the
      monitor is to entice the user to interact with the content, ultimately for
      purchase of a product or service. The uniqueness of MLD technology coupled
      with
      the &#8220;wow&#8221; depth factor immediately grabs the customer&#8217;s attention, and holds
      their interest for longer than conventional displays. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Topological
      Mapping Systems</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.
      </font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Car
      &amp; Marine Navigation</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Since
      the
      availability of MLDs in the size range of in-car navigation systems, a number
      of
      parties have adopted an interest in developing applications to harness and
      exploit the unique features of MLD technology. Development work is currently
      being undertaken on functionality covering mapping, street navigation, GPS
      and
      radar linked marine navigation for defense, commercial and recreational use,
      using depth to de-clutter, discriminate and cluster related information together
      within a single view. This is especially important for portable GPS systems
      where there is a large amount of information to be conveyed and display
      real-estate is a premium.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Air
      Traffic Control (ATC)</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ATC
      applications show real-time displays of flight data being controlled. MLD
      technology is being utilized to preserve critical &#8220;live&#8221; data which would
      otherwise be hidden by dialogue box windows. MLDs also allow the reduction
      of
      clutter of non-ATC controlled aircraft within the same physical display area
      as
      commercial aircraft being controlled by ATC. Trials of MLD technology in ATC
      applications have resulted in a high level of acceptance by controllers due
      to
      the ease of viewing critical information and reduced clutter of non-critical
      data, whilst maintaining overall visibility at all times. MLD technology is
      proving sufficiently effective that consideration is being given to the
      replacement of very large scale precision displays with regular MLD
      monitors.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Monitoring
      and Analysis Systems</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Financial</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Financial
      futures trading requires the monitoring of &#8220;to-the-second&#8221; movements in future
      values, where small changes in unit values can represent very large dollar
      values in transactions. Users must monitor a range of information, but are
      also
      required to perform other routine tasks such as communication via e-mail with
      clients. MLD monitors allow the traders to display real-time graphical
      information futures values &#8220;floating&#8221; above other working displays. If a small
      change in value of monitored information occurs, the trader can respond by
      immediately making an appropriate transaction. The alternative of a window
      obscuring the critical data is unacceptable, as is the alternative of requiring
      the trader to monitor an adjacent screen.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">6</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Medical</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      medical industry has a number of applications that are able to exploit the
      benefits of MLD technology. For example, a surgeon performing a laparoscopic
      surgical procedure requires an unobstructed view of the images sourced from
      the
      instruments. If another window was to appear in the area of activity, the result
      could be disastrous. The alternative of having the surgeon change his or her
      point of focus from one screen to another is not considered acceptable. However,
      with MLD technology the images presented to the surgeon can remain clear and
      uninterrupted regardless of new information being displayed, therefore allowing
      the surgeon to maintain their focus on the task at hand. New information,
      together with complimentary information relevant to the operation (such as
      blood
      pressure and pulse rate), can be displayed floating above the primary screen.
      The floating of the image clearly delineates the images being
      displayed.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Layer-Based
      Information Visualization</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Computer-Assisted
      Engineering Software</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
      are
      a range of practical engineering-based applications suited to MLD technology.
      These include such uses as circuit board design, CAD drawing, civil engineering
      and architecture. These applications work with inherently layered data and
      MLD
      technology can be deployed to be a physical representation of this data. A
      simple example to illustrate this is printed circuit design. Up to 20 layer
      boards are available and the design and navigation of this number of layers
      can
      be daunting. Using MLD technology, specific layers or tracks can be pulled
      to
      the front or pushed to the rear layers, allowing the designer to differentiate
      these features whilst retaining the spatial layering information.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Web-Design
      / Graphical Content Creation</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Graphical
      software packages inherently have a multi-layer environment in the form of
      toolbars, property windows and dialog boxes. These objects tend to obscure
      canvas working area, be it 2D photographic retouching, 3D modeling, or web
      page
      design. Typical solutions to overcome this problem include using larger displays
      (21&#8221; or greater) or multiple monitors, but these fall into the traps of losing
      focus on the work by having a larger search area to find the appropriate
      controls. Depth can provide an elegant solution by placing toolbars onto the
      front-most layer and the work canvas onto the rear. In this configuration,
      the
      controls and canvas are always in view without distracting one another,
      increasing productivity.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Defense
      and Security</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
      substantial level of research on the differentiating features and benefits
      of
      MLD technology has been carried out within the US defense and security
      departments . In these scenarios, secure and non-secure data is typically
      compared and each computer system must be physically isolated so that there
      is
      no cross-contamination or leakage of data. In its simplest form, MLD displays
      allow electronic overlays of this information whilst still retaining the level
      of isolation required. From feedback within the respective US departments,
      it is
      likely that MLDs will become widely deployed in applicable defense and security
      applications.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">7</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Alternative
      Display Technologies</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      order
      to put the competitive advantages and benefits offered by MLD technology into
      perspective, it is important to understand what alternatives are available
      in
      display technologies. MLD technology is revolutionary and has the potential
      to
      redefine the display market but this does not necessarily exclude the use of
      alternative displays in conjunction with MLD.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Single
      Layer Displays (SLD)</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Programmers
      of applications utilizing SLD panels often attempt to provide an illusion of
      three dimensions by careful use of shading sections around windows and dialog
      boxes on screens. High-end gaming, CAD drawing and industrial design software
      packages have been developed with realistic surface rendering, lighting, shading
      and shadow effects together with photo-realistic perspective images in order
      to
      allow the viewers to &#8220;see&#8221; the three dimensional image, which can be manipulated
      and rolled around on the screen.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Encapsulating
      these images is the operating system graphical user interface (GUI) and this
      is
      based around the idea of layers of windows. The analogy stems from paper-based
      desktops where paper &#8220;layers&#8221; were stacked and overlaid upon one another. By
      merely stacking windows layer upon layer, without an intuitive method to
      discriminate between each one, decreases the usability of the GUI. Software
      techniques such as virtual desktops and transparent layers (alpha-blending)
      attempt to resolve this issue, however they still are just simulations of the
      layer metaphor and do not have an effective discriminator.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">MLD
      technology provides depth as an effective discriminator between layers, as
      it
      leverages off what is already hard-wired into the human visual system. MLD
      technology does not replace user interface techniques&#8212;it is a direct realization
      of the interface technique. MLD technology brings a new dimension of depth
      and
      enriches data semantically as there is a separate distinct channel of
      information carried over and above color and spatial cues.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>3D
      Stereoscopic Displays</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Comparisons
      between MLD and 3D stereoscopic displays are inevitable as both aim to convey
      depth information. With 3D stereoscopic displays the aim is to provide a full
      volumetric representation of an object, one with infinite depth, by presenting
      different pre-rendered images to each eye to simulate depth. MLD technology
      aims
      to present discrete layers with a degree of spatial separation, to present
      real
      depth. This distinction must be stressed.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At
      present, current technologies attempting to give the illusion of 3D have some
      significant drawbacks, including: the use of special lenses or a head mounted
      display systems and/or head tracking systems; a very narrow &#8216;sweet-spot&#8217; of
      viewing angle; considerable loss of color tones, brightness and resolution;
      and
      the possibility of a viewer&#8217;s eyes becoming tired or the viewer become nauseous
      after a short period of time. MLDs overcome some of these inherent problems
      by
      having real depth, as the brain is not tricked into believing depth exists
      in
      the image.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Competing
      Technology</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      main
      source of competition for PureDepth does not come from companies utilizing
      the
      same technology, but rather from companies utilizing alternate &#8216;3D&#8217; solutions.
      These competitors can be divided into three main groups: (1) the layered
      technologies, (2) autostereoscopic displays and (3) glasses based stereoscopic
      displays.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">8</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Layered
      Technologies</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Foremost
      among the layered technologies are the volumetric projector televisions. These
      comprise a series of ultra thin PDLC LCDs. Contrary to the LCDs used in standard
      screen technologies, PDLCs have bubbles of liquid crystal randomly spread
      through the PDLC matrix. Each LCD layer can be made white or transparent through
      the application of electric voltage through it. A projector is placed behind
      the
      series of LCDs and projects an image on to each of the LCD plates. The LCD
      plates are turned on and off sequentially at a predetermined rate to create
      an
      image. If timed properly, a composite picture can be displayed by the image
      on
      each LCD forming a slice of the 3D composite.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">While
      at
      first blush the PDLC technology appears to be similar to the PureDepth
      technology, it is in fact quite different. First, the PDLC unit is large,
      requiring a layering of numerous screens together with a rear projection unit.
      Additionally, with PDLCs there are often issues with picture quality, generally
      caused by the bleeding of the image projected on one LCD plate onto other LCD
      plates. Finally, the PDLC unit is, unsurprisingly, expensive.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Autostereoscopic
      Technologies</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Autostereoscopic
      technologies, such as Sharp&#8217;s 3D display, are another competing technology. This
      technology works by directing slightly different images to a viewer&#8217;s left and
      right eye. In the Sharp display, this is achieved through the use of a
      lenticular lens which directs synchronized alternate strips of imaging to each
      eye. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">With
      this
      technology, there is an optimum viewing position, or &#8220;sweet spot,&#8221; from which
      the viewer best achieves the 3D effect. The significant drawback of this
      technology is that if the viewer is not seated in the sweet spot, he or she
      will
      not observe a 3D effect. Additionally, some users will become nauseous due
      to
      the lenticular lens.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Recently,
      Philips has demonstrated an autostereoscopic switchable 2D/3D display. The
      display includes an LCD together with a switchable LC filled lenticular lens.
      This technology overcomes, to a certain extent, the issues that exist with
      the
      Sharp display. Philips has substantially overcome their uniformity issue with
      a
      combination of slanting the lenticular lens together with good lens design.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Glasses
      Based Stereoscopic Technologies</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Glass
      based stereoscopic technologies change the polarity of the image directed to
      each eye. The viewer wears glasses of complementary polarity which cause each
      eye to see a slightly different image, resulting in the appearance of a 3D
      image. As with the autostereoscopic display technologies, the image communicated
      to the device must be synchronized with the polarity.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      technology overcomes some of the difficulties with the autostereoscopic
      technologies. However, it also has drawbacks. Most significantly, viewers are
      required to wear the glasses to achieve the 3D effect. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Competition
      Summary</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      summary, competition consists of either similar technologies (e.g. dedicated
      partition screens), 3D monitors (e.g. from Sharp and other manufacturers),
      alternative solutions (e.g. two or more physical displays), and single layer
      displays as a commodity product.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">9</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Customers</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      key
      customers for PureDepth technology will include: (1) LCD manufacturers; (2)
      Navigation solutions (e.g. in-car, marine, avionics); (3) Defense and Homeland
      Security; (4) Medical Visualization and Diagnostics; (5) Casino Gaming; and
      (6)
      Mobile and Handheld device manufacturers.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PureDepth
      has already established business relationships with all of these markets, with
      the exception of the Mobile and Handheld device segment, which the Company
      intends to launch in the near future. Due to the confidentiality of the
      agreements, the actual customer names cannot be disclosed at this time, with
      the
      exception of DRS Technologies, Inc. (&#8220;DRS&#8221;), one of the largest U.S. defense
      contractors (see www.puredepth.com for press release information).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Suppliers</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Key
      suppliers for PureDepth will be large LCD manufacturers as well as contract
      manufacturers for integration and final assembly. In addition, large integrators
      such as DRS for the defense industry, will be the manufacturing integrator
      and
      license the technology and processes from PureDepth. PureDepth has established
      contract manufacturing relationships in the United States and Asia.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>INTELLECTUAL
      PROPERTY AND LICENSE AGREEMENTS </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      goal
      is to obtain, maintain and enforce patent protection for our products,
      formulations, processes, methods and other proprietary technologies, to preserve
      our trade secrets, and to operate without infringing the proprietary rights
      of
      other parties, both in the US and in other countries. Our policy is to actively
      seek the broadest possible intellectual property protection for our product
      candidates through a combination of contractual arrangements and patents, both
      in the US and abroad.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Intellectual
      Property and Patents</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PureDepth
      has maintained a rigorous intellectual property (&#8220;IP&#8221;) strategy since inception.
      The strategy has ensured the core technology developed by PureDepth is protected
      and simultaneously limits the ability, of competitors to operate in the market.
      PureDepth&#8217;s IP portfolio includes an extensive range of defensive and offensive
      patents, trademarks and designs. The main focus of the portfolio relates to
      the
      MLD technology together with improvements and components. In addition, the
      portfolio includes applications directed at software for use with a MLD. A
      detailed listing of the intellectual property portfolio is available upon
      request.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Hardware
      Technology Patents</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PureDepth&#8217;s
      family of patents were filed to protect PureDepth&#8217;s core technology and the idea
      of providing an image with depth rather than a true 3D image. The base patent
      relating to the MLD technology was originally filed as a PCT application in
      July
      1998. Subsequently, the application has entered the national phase in thirteen
      territories, notably including the major markets of Europe, United States and
      Japan. The patent covers having two or more layers arranged such that one can
      look through the front most layer(s) and see the images displayed on the layers
      behind it and includes the use of a diffuser to overcome Moire interference.
      The
      patent has been granted in New Zealand, Japan, Canada, Singapore&#160;and the
      USA.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      patent portfolio is not limited to one method of eliminating Moire interference.
      Additional hardware patents have been granted which offer protection of MLD
      technology beyond the original scope of the base patent. Other patent
      applications filed address embedded hardware and end-user applications. These
      include an MLD PDA and in-car viewing applications. Broader applications address
      the use of MLDs, such as an MLD interfaced to a computing device.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">10</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Software
      Technology Patents</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      patent applications filed which relate to software technology address the
      control or use of MLD technology and the integration of the technology into
      existing software programs. The protected control or use software allows users
      to allocate screen objects to specific layers within the optical stack, either
      on an object by object basis, region basis, or as an automated process based
      on
      image analysis and modification. In addition, software is used to control the
      characteristics of an object (control, color, brightness etc), and those
      spatially adjacent in the depth axis, to enhance the viewing
      experience.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      integration software seeks to include additional features in currently available
      software. The use of a MLD in an instrumentation application, for example,
      allows an alert to be by way of an object flashing from back to front screens
      rather than by a change of color or a noise. The software applications are
      also
      forward looking envisaging learning applications for the MLD where related
      information is displayed on front and back screens to reinforce a
      message.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>License
      of Intellectual Property from the BASS Group</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      December 2001, Deep Video Imaging Limited entered into an agreement with BASS
      Group, a Florida limited liability company (&#8220;BASS Group&#8221;) and John Bass and
      Robert Bass to acquire the right to use certain technology protected by patents
      granted in the USA. These rights have since been assigned to PDL. PDL is
      required to pay BASS Group approximately $175,000 per year through 2010 in
      consideration of this intellectual property. Currently, the Company owes BASS
      Group an aggregate of approximately $850,000. Pursuant to the agreement with
      BASS Group, the Company may be required to reassign the intellectual property
      to
      BASS Group in the event of certain defaults, including failure to pay pursuant
      to the agreement. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Other
      Intellectual Property Rights and Protection</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      depend
      upon the skills, knowledge and experience of our scientific and technical
      personnel, as well as those of our advisors, consultants and other contractors,
      none of which is patentable. To help protect our proprietary know-how, which
      is
      not patentable, and for inventions for which patents may be difficult to
      enforce, we currently rely and will in the future rely on trade secret
      protection and confidentiality agreements to protect our interests. To this
      end,
      we, as a matter of general practice, require our employees, consultants,
      advisors and other contractors to enter into confidentiality agreements that
      prohibit the disclosure of confidential information and, where applicable,
      require disclosure and assignment to us of the ideas, developments, discoveries
      and inventions important to our business.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>DESCRIPTION
      OF PROPERTY</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PureDepth&#8217;s
      corporate office is located at Twin Dolphin Drive, Redwood Shores, California.
      The Company intends, however, to relocate to new premises, also in Redwood
      Shores. The proposed lease for the new space covers approximately 2,400 square
      feet for $5,000 per month under a two-year lease agreement expiring in May
      2008.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PureDepth
      also leases premises in New Zealand which houses its Research and Development
      and Rapid Prototyping units. These premises are located at 24 Morrin Road,
      Panmure, Auckland. The lease for these premises covers approximately 5,750
      square feet for $4,048 per month under a three-year lease agreement expiring
      in
      October 2008 (subject to certain rights of renewal).</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>LEGAL
      PROCEEDINGS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company is not currently involved in any material legal
      proceedings.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CAUTIONARY
      NOTE REGARDING FORWARD-LOOKING STATEMENTS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      report certain statements that are &#8220;forward-looking statements&#8221; under Section
      27A of the Securities Act and Section 21E of the Securities Exchange Act of
      1934, as amended, and includes, among other things, discussions of our business
      strategies, future operations and capital resources. Words such as, but not
      limited to, &#8220;may,&#8221; &#8220;likely,&#8221; &#8220;anticipate,&#8221; &#8220;expect&#8221; and &#8220;believes&#8221; indicate
      forward-looking statements.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Forward-looking
      statements are included in the section of this report entitled &#8220;Description of
      PureDepth Business.&#8221; Although we believe that the expectations reflected in such
      forward-looking statements are generally reasonable, we cannot assure you that
      such expectations will ultimately prove to be correct. Generally, these
      statements relate to our business plans and strategies, projected or anticipated
      benefits or other consequences of market conditions and opportunities, business
      plans or strategies, projections involving anticipated sales and revenues,
      expenses, projected future earnings and other aspects of operational results.
      All phases of our operations are subject to a number of uncertainties, risks
      and
      other influences, most of which are outside our control, and any one or
      combination of which could materially and adversely affect the results of our
      operations, and also, could affect whether any such forward-looking statements
      contained herein ultimately prove to be accurate. Important factors that could
      cause actual results to differ materially from our current expectations are
      summarized in the following section captioned &#8220;Risk Factors.&#8221;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>RISK
      FACTORS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      purchase of shares of our common stock is very speculative and involves a very
      high degree of risk. Accordingly, an investment in the Company is suitable
      only
      for the persons who can afford the loss of their entire investment. Investors
      should carefully consider the following risk factors, as well as other
      information set forth herein, in making an investment decision with respect
      to
      our securities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Risks
      Related to our Industry:</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      operate in a highly competitive environment and we may not be able to sustain
      our current market position. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">MLD
      technology has a number of competitive alternatives, including layered and
      autostereoscopic technologies. Some of our competitors may currently, or at
      some
      point in the future, will have greater financial, sales and marketing,
      manufacturing, research and development or technological resources than we
      do.
      Additionally, our competitors may be able to manufacture competitive products
      on
      a larger scale or with greater cost efficiencies than we do. Any price erosion
      resulting from competition may materially adversely affect our financial
      condition and results of operations. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">12</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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      <div>&#160;</div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      ability to compete successfully also depends on factors both within and outside
      our control, including product pricing, performance and reliability, successful
      and timely investment and product development, success or failure of our
      end-brand customers in marketing their brands and products, component and raw
      material supply costs, and general economic and industry conditions. We cannot
      provide assurance that we will be able to compete successfully with our
      competitors on these fronts and, as a result, we may be unable to sustain our
      current market position. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      may experience declines in the average selling prices of our MLDs.
</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      average selling prices of our MLDs are expected to continually decline over
      time
      as a result of, among other factors, technology advances, cost reductions and
      increased competition. Although we may be able to take advantage of the higher
      selling prices typically associated with new products and technologies we may
      bring to market, we cannot provide assurance that we can maintain these prices
      in the face of market competition. If we are unable to effectively anticipate
      and counter the price erosion that accompanies our products, or if we are unable
      to reduce our manufacturing costs, our profit margins will be negatively
      affected.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Governmental
      regulation may limit our activities or increase our costs of
      operations.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      business and operations are subject to various forms of government regulation
      in
      countries in which we do business, including required business/investment
      approvals, as well as export regulations based on national security or other
      reasons and other export/import regulations such as tariffs. In addition,
      commercial, antitrust, patent, consumer, taxation, exchange control and
      environment/recycling laws and regulations also apply. If we are unable to
      comply with these regulations, they can serve to limit our activities. In
      addition, compliance with these regulations could result in increased costs.
      Accordingly, these regulations could adversely affect our results of operations.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Risks
      Relating to our Business and Company:</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      are not currently profitable and may never become
      profitable.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      have a
      history of losses and expect to incur substantial losses and negative operating
      cash flow for the foreseeable future, and we may never achieve or maintain
      profitability. Even if we succeed in developing and commercializing one or
      more
      product candidates, we expect to incur substantial losses for the foreseeable
      future and may never become profitable. We expect also to continue to incur
      significant operating and capital expenditures and anticipate that our expenses
      will increase substantially in the foreseeable future. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      also
      expect to experience negative cash flow for the foreseeable future as we fund
      our operating losses and capital expenditures. As a result, we will need to
      generate significant revenues in order to achieve and maintain profitability.
      We
      may not be able to generate these revenues or achieve profitability in the
      future. Our failure to achieve or maintain profitability could negatively impact
      the value of our securities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      have a limited operating history upon which to base an investment decision.
      </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company and its subsidiaries each have a limited commercial operating history.
      These operations provide a limited basis for investors to assess our ability
      to
      successfully compete in our industry and generate revenues. This limited history
      also limits the ability of investors to assess the advisability of investing
      in
      our securities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      may not successfully manage our growth. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      success will depend upon the expansion of our operations and the effective
      management of our growth, which will place a significant strain on our
      management and on our administrative, operational and financial resources.
      To
      manage this growth, we must expand our facilities, augment our operational,
      financial and management systems and hire and train additional qualified
      personnel. If we are unable to manage our growth effectively, our business
      may
      be harmed.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>If
      we are unable to hire additional qualified personnel, our ability to grow our
      business may be harmed. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      will
      need to hire additional qualified personnel with expertise in software
      development, testing, research, technology development and manufacturing, as
      well as sales and marketing. We compete for qualified individuals with numerous
      companies. Competition for such individuals is intense, and we cannot be certain
      that our search for such personnel will be successful. Attracting and retaining
      qualified personnel will be critical to our success.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>If
      we are unable to innovate and to develop attractive new products, our future
      growth and profitability may be adversely affected.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      will
      derive a substantial portion of our estimated revenues from the incorporation
      of
      the MLD</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>TM</sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      technology into innovative new products for sale (hereinafter referenced to
      generically as &#8220;products&#8221;). We expect that sales of our new products will in the
      future account for a substantial portion of our revenues, and we expect our
      future growth and profitability to rely primarily on the continued development
      and sale of innovative new products. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">While
      we
      believe that we are capable of continuing to develop innovative and attractive
      new products, the industry in which we operate is characterized by rapid
      changes, including technological changes. The process of developing and
      marketing new products is inherently complex and uncertain, and there are a
      number of risks, including the following: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
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            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">we
                may be unable to obtain adequate funding and resources necessary
                for
                investments in new products and technologies;
</font></div>
            </td>
          </tr>

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    <div>
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          <tr valign="top" style="line-height: 1.25;">
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            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">our
                long-term investments and commitment of significant resources may
                not
                result in successful new products or
                technologies;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">we
                may not be able to anticipate successfully the new products and
                technologies which will gain market acceptance and that such products
                can
                be successfully marketed; </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">our
                newly developed products or technologies may not be successfully
                protected
                as proprietary intellectual property rights;
</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">our
                products may become obsolete earlier than expected due to rapid
                advancements in technology and changes in consumer preferences;
                or</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a
                delay in commercializing new technologies now under development may
                prevent us from keeping up with market demand. For example, if we
                lag
                behind our competitors in the commercialization of active-matrix
                full-color OLED displays, we may not secure a significant share of
                this
                market.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">14</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
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        </div>
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      failure to anticipate adequately changes, in the industry and the market, and
      to
      develop attractive new products, including any of the risks described above,
      may
      reduce our future growth and profitability.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Our
      financial condition may be adversely affected if we cannot introduce new
      products to adapt to rapidly evolving customer needs on a timely basis.
</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">New
      products are developed in anticipation of future demand. Our success will depend
      greatly on our ability to respond quickly to emerging customer requirements
      and
      to develop new products in anticipation of future demand. Any delay in our
      development of commercially successful products with reliable quality and
      advanced features may adversely affect our business. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      success of a new product also depends on other factors such as close cooperation
      with our partners and customers to gain insights into their product needs and
      to
      understand general trends in the market. If we are unable to work together
      with
      our partners and customers, and their respective suppliers, or to sufficiently
      understand their respective needs and capabilities, we may not be able to
      introduce new products in a timely manner, which may have a material adverse
      effect on our financial situation. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      plan
      to continue to expand our operations to meet the growing demand for new
      applications in the markets in which we participate. Because many products,
      such
      as televisions, mobile phones and personal digital assistants in our consumer
      market, are expected to be marketed to a diverse group of end users with
      different specifications, functions and prices, we may be required to vary
      our
      sales and marketing strategies to successfully promote our products. We cannot
      provide assurance that our expansion strategy for these products will be
      successful.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Our
      results of operations depend on our ability to keep pace with changes in
      technology. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Advances
      in technology typically lead to rapid declines in sales volumes for products
      made with older technologies and may lead to these products becoming less
      competitive in the marketplace, or even obsolete. As a result, we will likely
      be
      required to make significant expenditures to develop or acquire new process
      and
      product technologies. Also, our ability to manufacture our products by utilizing
      advanced process technologies to increase production yields at low production
      cost will be critical to our sustained competitiveness. We cannot provide
      assurance that we will be able to continue to successfully develop new products
      through our research and development efforts or through obtaining technology
      licenses, or that we will keep pace with technological changes in the
      marketplace. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Our
      revenues depend on continuing demand for consumer electronics products with
      MLD
      panels. Our sales may not grow at the rate we expect if consumers do not
      purchase these products. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      introduction of alternative display panel technologies, including those
      currently under development by our competitors and us, may erode future sales
      of
      MLD panels, which may have a material adverse effect on our financial condition
      and results of operations. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">15</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Economic
      conditions may adversely affect our sales and
      profitability.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Demand
      for consumer electronics products, which is forecast to account for a
      significant proportion of our worldwide operating revenue, may be affected
      by
      general economic trends in the countries or regions in which our products are
      sold. Purchases of our products are, to a significant extent, discretionary.
      Similarly, demand for our business use products and for components we
      manufacture that go into products of third parties is affected by general
      economic trends in the various markets in which we sell our products. Economic
      downturns and resulting declines of demand in our major markets, including
      Australia, North America, Europe and Asia, may thus adversely affect our sales
      and profitability. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      will have significant capital requirements in connection with our business
      strategy and if capital resources are not available we may not be able to
      implement our strategy and future plans. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      connection with our strategy to increase the research and development of our
      MLD
      technology, we estimate that we will incur significant expenditures. These
      capital expenditures will be made well in advance of any additional sales that
      will be generated from these expenditures. However, in the event of adverse
      market conditions, or if our actual expenditures far exceed our planned
      expenditures, our external financing activities combined with our internal
      sources of liquidity may not be sufficient to effect our current and future
      operational plans, and we may decide not to expand capacity. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      failure to obtain sufficient financing on commercially reasonable terms to
      complete our expansion plans could delay or derail our ability to pursue our
      business strategy, which could materially and adversely affect our business
      and
      results of operations. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Our
      MLD manufacturing processes are complex and periodic improvements to increase
      efficiency can expose us to potential disruptions in
      operations.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      manufacturing process for MLD products is highly complex, requiring
      sophisticated and costly equipment that is periodically modified and updated
      to
      improve manufacturing yields and product performance, and reduce unit
      manufacturing costs. These updates expose us to the risk that from time to
      time
      production difficulties will arise that could cause delivery delays, reduced
      output or both. We cannot provide assurance that we will not experience
      manufacturing problems with our manufacturing partners in achieving acceptable
      output, product delivery delays or both as a result of, among other factors,
      construction delays, difficulties in upgrading or modifying existing production
      lines or ramping up new plants, difficulties in changing manufacturing line
      technologies or delays in equipment deliveries, any of which could constrain
      our
      capacity and adversely affect our results of operations. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>If
      we are unable to successfully manage the risks inherent in our international
      activities and our overseas expansion, our results of operations and production
      capacity could be adversely affected. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
      substantial portion of our manufacturing and marketing activity will be
      increasingly conducted outside of the United States and New Zealand, including
      in Asia. There are a number of risks inherent in doing business in such overseas
      markets, including the following: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">unexpected
                legal or regulatory changes;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">unfavorable
                political or economic factors;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">difficulties
                in recruiting and retaining personnel;
</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">16</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
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      <div id="HDR">
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">labor
                disputes including strikes; </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">less
                developed technological infrastructure, which can affect our production
                or
                other activities or result in lower customer acceptance of our products
                and services; </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">potentially
                adverse tax consequences; and </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">social,
                political or economic turmoil due to terrorism, war, or other
                factors.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Product
      defects resulting in a large-scale product recall or successful
      product-liability claims against us could result in a significant cost or a
      negative impact on our reputation and adversely affect our business results
      and
      financial condition.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      manufacture various products in accordance with internationally accepted
      quality-control standards. We cannot be certain, however, that all of our
      products are defect-free and may not be recalled at some later date.
      Furthermore, although we maintain insurance against product-liability claims,
      we
      cannot be certain that such insurance can adequately satisfy the liabilities
      ultimately incurred. In addition, insurance may not continue to be available
      on
      terms acceptable to us. A large-scale product recall or a successful
      product-liability claim against us could result in significant costs or have
      a
      negative impact on our reputation, which may in turn lead to a decrease in
      sales, adversely affecting our results of operations. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      may be unable to successfully execute our expansion strategy or manage and
      sustain our growth on a timely basis, if at all, and, as a result, our business
      may be harmed. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      have
      experienced, and expect to continue to experience, rapid growth in the scope
      and
      complexity of our operations. This growth may strain our managerial, financial,
      manufacturing and other resources. We may experience manufacturing difficulties
      with our partners in starting new production lines. In addition, failure of
      our
      manufacturing partners to keep up with our competitors in future investments
      in
      manufacturing capacity would impair our ability to effectively compete within
      the industry. Failure to obtain intended economic benefits from research and
      development expansion projects could adversely affect our business, financial
      condition and results of operations. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>If
      we cannot maintain high capacity-utilization rates, our profitability will
      be
      adversely affected. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      production of panels incorporating our MLD technology entails high fixed costs
      resulting from considerable expenditures for the construction of complex
      fabrication and assembly facilities and the purchase of costly equipment. We
      aim
      to maintain high capacity utilization rates so that we can allocate these fixed
      costs over a greater number of panels produced and realize higher gross margins.
      However, we cannot provide assurance that we will be able to sustain our
      capacity utilization rates in the future. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      and our manufacturing partners depend on a limited number of third party
      suppliers for key raw materials, components and manufacturing equipment, and
      any
      disruption in their supply will negatively affect our business.
</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      production operations depend on obtaining adequate supplies of quality raw
      materials and components on a timely basis. As a result, it is important for
      us
      to control our component and raw material costs and reduce the effects of
      fluctuations in price and availability. In general, we source most of our raw
      materials as well as key components of MLD products such as the LCDL panels,
      CCFL tubes and interstitial components, from two or three suppliers for each
      key
      component. We may experience shortages in the supply of these and other
      components or raw materials as a result of, among other things, anticipated
      capacity expansion in the MLD and competitive industries. Our results of
      operations would be adversely affected if we were unable to obtain adequate
      supplies of high quality raw materials or components in a timely manner or
      make
      alternative arrangements for such supplies, or if there were significant
      increases in the costs of raw materials or components that we could not pass
      on
      to our customers. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">17</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Our
      results of operations are subject to exchange rate fluctuations.
</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      sales
      and purchases of raw materials and expenditures on capital equipment are
      denominated mainly in U.S. dollars, and to a lesser extent, New Zealand dollars
      and certain Asian currencies. Accordingly, fluctuations in exchange rates,
      in
      particular between the U.S. dollar and other currencies will affect our gross
      profit and pre-tax income. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Our
      business relies on patent rights and our patent rights may be narrowed in scope
      or found to be invalid or otherwise unenforceable. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      success will also depend, to a significant extent, on our ability to obtain,
      defend and enforce our patent rights worldwide. The coverage claimed in a patent
      application can be significantly reduced before a patent is issued.
      Consequently, we cannot provide assurance that any of our pending or future
      patent applications will result in the issuance of patents. Patents issued
      to us
      may be subjected to further proceedings limiting their scope and may not provide
      significant proprietary protection or competitive advantage. Our patents also
      may be challenged, circumvented, invalidated or deemed unenforceable. In
      addition, because patent applications in various countries publish at different
      times, the difficulty in monitoring patent applications filed by other parties
      in multiple countries, and because publication of discoveries in scientific
      or
      patent literature often lags behind actual discoveries, we cannot be certain
      that we were the first creator of inventions covered by pending patent
      applications, that we or any of our licensors will be entitled to any rights
      in
      purported inventions claimed in pending or future patent applications, or that
      we were the first to file patent applications on such inventions. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Furthermore,
      pending patent applications or patents already issued to us may become subject
      to dispute, and any dispute could be resolved against us. For example, we may
      become involved in re-examination, reissue or interference proceedings and
      the
      result of these proceedings could be the invalidation or substantial narrowing
      of our patent claims. We also could be subject to court proceedings that could
      find our patents invalid or unenforceable or could substantially narrow the
      scope of our patent claims. In addition, depending on the jurisdiction,
      statutory differences in patentable subject matter may limit the protection
      we
      can obtain on some of our inventions. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Failure
      to protect our intellectual property rights could impair our competitiveness
      and
      harm our business and future prospects. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      believe that developing new products and technologies that can be differentiated
      from those of our competitors is critical to the success of our business. We
      intend to take active measures to obtain international protection of our
      intellectual property by obtaining patents and undertaking monitoring activities
      in our major markets. However, we cannot assure that the measures we are taking
      will effectively deter competitors from improper use of our proprietary
      technologies. Our competitors may misappropriate our intellectual property,
      disputes as to ownership of intellectual property may arise and our intellectual
      property may otherwise become known or independently developed by our
      competitors. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">18</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>If
      we infringe the rights of third parties we could be prevented from selling
      products, forced to pay damages, and defend against litigation.
</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If
      our
      products, methods, processes or other technologies infringe the proprietary
      rights of other parties, we could incur substantial costs and we may have
      to:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
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            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">obtain
                licenses, which may not be available on commercially reasonable terms,
                if
                at all;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">abandon
                an infringing implementation or
                product;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">redesign
                our products or processes to avoid
                infringement;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">stop
                using the subject matter claimed in the patents held by
                others;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">pay
                damages; or</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">defend
                litigation or administrative proceedings which may be costly whether
                we
                win or lose, and which could result in a substantial diversion of
                our
                valuable management resources.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      rely upon trade secrets and other unpatented proprietary know-how to maintain
      our competitive position in our industry, and any loss of our rights to, or
      unauthorized disclosure of, our trade secrets or other unpatented proprietary
      know-how could negatively affect our business. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      also
      rely upon trade secrets, unpatented proprietary know-how and continuing
      technological innovation in our business. We typically enter into
      confidentiality agreements with each of our employees and consultants upon
      the
      commencement of an employment or consulting relationship, whereby each employee
      or consultant agrees to maintain the confidentiality of trade secrets and
      certain other Company information on a perpetual basis. However, we cannot
      assure the enforceability of these types of agreements, or that they will not
      be
      breached. We also cannot be certain that we will have adequate remedies for
      any
      breach. The disclosure of our trade secrets or other know-how as a result of
      such a breach could adversely affect our business. Disputes may arise concerning
      the ownership of intellectual property or the applicability or enforceability
      of
      our confidentiality agreements, and there can be no assurance that any such
      disputes would be resolved in our favor. Further, others may acquire or
      independently develop similar technology, or if patents are not issued with
      respect to products arising from research, we may not be able to maintain
      information pertinent to such research as proprietary technology or trade
      secrets and that could have an adverse effect on our competitive position within
      the industry. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      rely on key engineers, senior management and other personnel, and the loss
      of
      the services of any such personnel or the inability to attract and retain
      suitable replacements may negatively affect our business. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      success depends to a significant extent upon the continued service of our
      research and development and engineering personnel, and on our ability to
      continue to attract, retain and motivate qualified researchers and engineers,
      especially during periods of rapid growth. In particular, our focus on leading
      the market in introducing new products and advanced manufacturing processes
      has
      meant that we must aggressively recruit engineers with expertise in cutting-edge
      technologies. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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        <div id="GLFTR" style="WIDTH: 100%" align="left">
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">19</font></div>
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        </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      also
      depend on the services of experienced key senior management, and if we lose
      their services, it would be difficult to find and integrate replacement
      personnel in a timely manner, or at all.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      loss
      of the services of any of our key research and development and engineering
      personnel or senior management without adequate replacement, or the inability
      to
      attract new qualified personnel, could result in delays in product development,
      loss of customers, partners and sales, and a diversion of management resources,
      each of which could have a material adverse effect on our
      operations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Because
      we became public by means of a triangular merger, we may not be able to attract
      the attention of major brokerage firms.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Additional
      risks may exist since we became public through a triangular merger transaction.
      Security analysts of major brokerage firms may not provide coverage of the
      Company since, </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">because
      we became public through a merger,</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      there is
      no incentive to brokerage firms to recommend the </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">purchase</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      of its
      common stock. No assurance can be given that brokerage firms will want to
      provide analyst coverage of our Company in the future.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      are subject to Sarbanes-Oxley and the reporting requirements of federal
      securities laws, which can be expensive. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      a
      public reporting company, we are subject to Sarbanes-Oxley Act and the
      information and reporting requirements of the Securities Exchange Act of 1934
      and other federal securities laws. The costs of compliance with Sarbanes-Oxley
      and of preparing and filing annual and quarterly reports and other information
      with the SEC, and furnishing audited reports to shareholder, will cause our
      expenses to be higher than they would be if PureDepth Inc. had remained
      privately held and did not consummate the merger transaction with the
      Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Our
      common stock trades only in an illiquid trading market.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Trading
      of our common stock is conducted on the over-the-counter bulletin board. This
      has an adverse effect on the liquidity of our common stock, not only in terms
      of
      the number of shares that can be bought and sold at a given price, but also
      through delays in the timing of transactions and reduction in security analysts&#8217;
and the media&#8217;s coverage of our Company and its common stock. This may result in
      lower prices for our common stock than might otherwise be obtained and could
      also result in a larger spread between the bid and asked prices for our common
      stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>There
      is not now, and there may never be, an active market for shares of our common
      stock.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      general, there has been very little trading activity in shares of the Company&#8217;s
      common stock. The small trading volume will likely make it difficult for our
      stockholders to sell their shares as and when they choose. Furthermore, small
      trading volumes generally depress market prices. As a result, our shareholders
      may not always be able to resell shares of our common stock publicly at the
      time
      and prices that they feel are fair or appropriate.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Because
      it is a &#8220;penny stock,&#8221; shareholders may have difficulty selling shares of our
      common stock.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      common stock is a &#8220;penny stock&#8221; and is therefore subject to the requirements of
      Rule 15g-9 under the Securities and Exchange Act of 1934. Under this rule,
      broker-dealers who sell penny stocks must provide purchasers of these stocks
      with a standardized risk- disclosure document prepared by the Securities and
      Exchange Commission. Under applicable regulations, our common stock will
      generally remain a &#8220;penny stock&#8221; until and for such time as its per-share price
      is $5.00 or more (as determined in accordance with SEC regulations), or until
      we
      meet certain net asset or revenue thresholds. These thresholds include the
      possession of net tangible assets (i.e., total assets less intangible assets
      and
      liabilities) in excess of $2,000,000 in the event we have been operating for
      at
      least three years or $5,000,000 in the event we have been operating for fewer
      than three years, and the recognition of average revenues equal to at least
      $6,000,000 for each of the last three years. We do not anticipate meeting any
      of
      the foregoing thresholds in the foreseeable future.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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      </div>
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      </div>
      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      penny-stock rules severely limit the liquidity of securities in the secondary
      market, and many brokers choose not to participate in penny-stock transactions.
      As a result, there is generally less trading in penny stocks. In sum, our
      shareholders may not always be able to resell shares of our common stock
      publicly at the time and prices that they feel are fair or
      appropriate.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      have never paid dividends and do not intend to do so for the foreseeable
      future.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      have
      never paid dividends on our capital stock and we do not anticipate that we
      will
      cause the Company to pay any dividends after the merger, for the foreseeable
      future. Accordingly, any return on an investment in our Company will be
      realized, if at all, only when an investor sells shares of our common
      stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>The
      Company may have material liabilities of which our management is not
      aware.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Although
      PureDepth Inc. conducted a due-diligence review of the financial condition
      and
      legal status of Diamond One, the Company may have material liabilities related
      to its existence and operations prior to the merger that our new management
      has
      not yet discovered. Further, although the Merger Agreement contains customary
      representations and warranties from the Company concerning its assets,
      liabilities, financial condition and affairs, the business of PureDepth and
      our
      shareholders may have no recourse against the Company, or any of its former
      or
      current owners or principals, in the event those representations and warranties
      prove to be untrue. In connection with the Merger Agreement, we entered into
      an
      Option Agreement pursuant to which we may determine to sell, to the former
      principals of Diamond One, the business that Diamond One conducted prior to
      the
      merger (the sale of jewelry and precious gems and stones). That Option Agreement
      contains a covenant in favor of the Company whereby the former principals of
      Diamond One have agreed to indemnify the Company for liabilities arising in
      connection with such business, as conducted prior to and after the merger.
      Nevertheless, the covenantors may not be able to perform their indemnification
      obligations, should any arise.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
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        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>MANAGEMENT</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At
      the
      effective time of the merger, the Company&#8217;s board of directors was reconstituted
      by the appointment of David Hancock, Fred Angelopoulos and Mark Kalow as
      directors (of whom Messrs. Hancock and Angelopoulos were directors of PureDepth,
      Inc. immediately prior to the merger), and the resignations of Troy Fullmer
      and
      Robert Chramosta from their roles as directors of the Company. The Company&#8217;s
      executive management team was also reconstituted at the effective time of the
      merger by the resignations of Messrs. Fullmer and Chramosta, and the appointment
      of Frederick Angelopoulous as the Company&#8217;s Chief Executive Officer and
      President, and Kristin Bowman as the Company&#8217;s Chief Operating Officer,
      Secretary and acting Chief Financial Officer.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following table sets forth the name and position of each of the Company&#8217;s
      directors and executive officers after the merger.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="26%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Name</strong></font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td valign="top" width="8%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Age</strong></font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="36%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Positions</strong></font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Fred
                Angelopoulos</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="8%">&#160;</td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="36%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
                Executive Officer, President</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 18pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">and
                Director</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Kristin
                Bowman</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">43</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="36%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
                Operating Officer, Secretary and</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 18pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">acting
                Chief Financial Officer</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">David
                Hancock</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="8%">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">62</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="36%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chairman</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="26%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mark
                Kalow</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">51</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="36%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Director
                <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">and
                Chairman of the Audit
                Committee</font></font></div>
            </td>
          </tr>

      </table>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      biographies of the directors and officers listed above are set forth below,
      all
      of whom began serving the Company in their respective positions as of the
      effective time of the Merger:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Fred
      Angelopolous has served as the Chief Executive Officer of PureDepth, Inc. since
      April 2005. Prior to that, he served as the PureDepth Group&#8217;s Vice President of
      Global Sales and General Manager for the Americas from May 2004 to April 2005.
      From 1998 to 2002, Mr. Angelopolous served as the Chief Executive Officer of
      Pulse Entertainment, where he helped secure over $45 million in venture funding
      for that company and established partnerships with companies such as Warner
      Bros., NBC, IBM, SBC and BMG Music Group, helping Pulse be named among Red
      Herring&#8217;s Top 100 Private Companies in the World in 2001. From 1994 to 1998, he
      served as Senior Vice President of Sales for Hitachi PC. In 2001, Mr.
      Angelopolous was named one of the ten most influential people in the prior
      ten
      years by Animation Magazine.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">David
      Hancock has served <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">in
      various roles for </font>PureDepth, Inc. (and its predecessor) <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">from</font>
      2002 <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">to
      April
      2005, including </font>Chief Executive Officer<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      Director and Executive Chairman. Mr. Hancock has been a director of PureDepth,
      Inc. since April 2005, and became Chairman in January 2006.</font> From 2000
      until 2002, Mr. Hancock served as an executive of Presenter Inc. Prior to that,
      he served as the Chief Executive Officer of Hitachi PC from January 1996 to
      September 1999. From January 1995 to December 1995, Mr. Hancock served as Chief
      Executive Officer of Velocity Corporation. Mr. Hancock also has served in
      executive positions for a number of other entities, including Apple Computer
      Corp., Gillette International and PaperMate USA.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Kristin
      Bowman has served as the Chief Operating Officer of PureDepth, Inc. since April
      2005. Prior to that, Ms. Bowman served as the PureDepth Group&#8217;s Vice President
      of Business Operations from September 2004 until April 2005. After working
      extensively in corporate and investment financing law in both New Zealand and
      London, Ms. Bowman was a partner of a 150-year-old leading New Zealand law
      firm
      in their Business and Taxation Team from 2001 until 2004. She served as General
      Counsel for a then newly listed entity, Auckland International Airport Limited,
      from 1999 to 2001. Ms. Bowman serves on the Board of Soccer New Zealand. Ms.
      Bowman received a First Class Honours degree in law from New Zealand&#8217;s
      International University, Auckland University, and continues to hold a current
      practicing certificate as a barrister and solicitor of the Supreme Court of
      New
      Zealand.</font></div>
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      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mark
      Kalow specializes in business and financial analysis and the commercialization
      of intellectual property for high technology companies. His current engagements
      include serving on the board of directors and audit committees of PhotoWorks
      (online photography) [NASDAQ: FOTO]; LSF Network (e-marketing services); and
      Delean Imaging (pattern recognition applications). Previously, Mr. Kalow was
      a
      Managing Director for the Venture Capital division of Trans Cosmos USA. Trans
      Cosmos is a major Japanese IT services company and strategic investor in US
      rich
      media, CRM and e-marketing companies. Mr. Kalow was formerly co-founder and
      COO/CFO of Live Picture Inc. (LPI), where he managed multiple financings
      totaling over $60 million, two acquisitions and, as CEO, the sale of the Company
      to MGI Software. LPI&#8217;s imaging and Internet products won over 30 industry awards
      and its technology and products and technologies were licensed to industry
      leaders such as H-P, Canon, Kodak, FujiFilm and many others.&#160; Mr. Kalow
      holds a S.B. degree from the Massachusetts Institute of Technology (MIT) and
      an
      MBA with a concentration in Financial Management from the University of
      Chicago.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>EXECUTIVE
      COMPENSATION</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Summary
      Compensation Table</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following table sets forth the cash and non-cash compensation for awarded to
      or
      earned by (i) each individual serving as chief executive officer of PureDepth,
      Inc. since its incorporation in April 2005; and (ii) each other individual
      that
      served as an executive officer of PureDepth, Inc. at the conclusion of the
      year
      ended December 31, 2005 and who received in excess of $100,000 in the form
      of
      salary and bonus during such year.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
      <div align="left">
        <table border="0" cellpadding="0" cellspacing="0" id="ftable" width="100%">

            <tr>
              <td align="left" valign="bottom" width="48%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="left" colspan="8" valign="bottom" width="50%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Annual
                  Compensation</strong></font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="48%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Name
                  and Principal Position</strong></font></div>
              </td>
              <td width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="border-bottom: black thin solid;">&#160;

                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Year</strong></font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="border-bottom: black thin solid;">&#160;

                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Salary
                  ($)</strong></font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="border-bottom: black thin solid;">&#160;

                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Bonus
                  ($)</strong></font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="left" valign="bottom" width="48%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Fred
                  Angelopoulos,</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 27pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
                  Executive Officer </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>(1)
                  (2)</sup></font></div>
              </td>
              <td width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2005</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
              </td>
              <td align="right" valign="bottom" width="15%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">203,333</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
              </td>
              <td align="right" valign="bottom" width="15%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">25,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="bottom" width="48%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Kristin
                  Bowman,</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 27pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
                  Operating Officer, Secretary and acting Chief Financial Officer
                  </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>(3)
                  (4)</sup></font></div>
              </td>
              <td width="1%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2005</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
              </td>
              <td align="right" valign="bottom" width="15%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">115,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
              </td>
              <td align="right" valign="bottom" width="15%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">15,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="left" valign="bottom" width="48%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">David
                  Hancock</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Director
                  and former President of PureDepth Group </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>(5)</sup></font></div>
              </td>
              <td width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2005</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
              </td>
              <td align="right" valign="bottom" width="15%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">100,000</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="15%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">-0-</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            </tr>

        </table>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">23</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1)</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mr.
                Angelopoulos became the Chief Executive Officer of PureDepth, Inc.
                in
                April 2005. He began serving as the Chief Executive Officer and President
                of Diamond One, Inc. at the closing of the merger transaction on
                March 31,
                2006. </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2)</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prior
                to the merger effected on March 31, 2006, Mr. Robert Chramosta served
                as
                the Company&#8217;s Chief Executive Officer and President. During each of the
                last three fiscal years (ended January 31, 2006, 2005 and 2004),
                Mr.
                Chramosta received no cash compensation for services rendered to
                the
                Company in those capacities.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(3)</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ms.
                Bowman became the Chief Operating Officer, Secretary and acting Chief
                Financial Officer of PureDepth, Inc. in April 2005. She began serving
                in
                those roles for Diamond One, Inc. at the closing of the merger transaction
                on March 31, 2006. </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(4)</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prior
                to the merger effected on March 31, 2006, Mr. Troy Fullmer served
                as the
                Company&#8217;s Chief Financial Officer and Secretary. During fiscal 2005 (ended
                January 31, 2006), Mr. Fullmer received cash compensation totaling
                $29,300
                for services rendered to the Company. For each of fiscal 2004 and
                2005
                (ended January 31, 2005 and 2004, respectively), Mr. Fullmer received
                cash
                compensation totaling $24,000.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(5)</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mr.
                Hancock <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">returned
                as&#160;</font> Chairman of the Board in <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">January
                2006,&#160;</font> but does not serve as an officer of the Company. Mr.
                Hancock previously served as the <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
                Executive Officer and Executive Chairman of the </font>predecessor
                PureDepth Group <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">through
                to the end of January 2005. Between January 2005 and January 2006,
                Mr.
                Hancock held the position of Director.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Employment
      and Change-in-Control Agreements</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PureDepth
      or its subsidiaries are parties to current employment agreements with Messrs.
      Hancock and Angelopoulos and Ms. Bowman. Under those respective agreements,
      Mr.
      Hancock is paid $100,000 per year, Mr. Angelopoulos is paid approximately
      $203,000 per year, and Ms. Bowman is paid $115,000 per year. Under all of the
      employment agreements, the executives have agreed to standard confidentiality
      and assignment-of-inventions covenants. In addition, all of the employment
      agreements provide that the executive will not compete with PureDepth nor
      solicit any employee, consultant or contractor of PureDepth for a period of
      six
      months after any termination of employment.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under
      PureDepth&#8217;s agreements with Mr. Angelopoulos and Ms. Bowman, in the event either
      executive is constructively terminated due to a reorganization (or certain
      other
      similar situations) the executive will be entitled to the greater of (i) four
      months of base salary or (ii) any payments, benefits or the net value of any
      incentives that the executive has become entitled to in connection with certain
      transactions.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Director
      Compensation</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">During
      2005, PureDepth, Inc. agreed to pay Mr. Hancock approximately $100,000 per
      year.
      PureDepth, Inc. had previously granted Mr. Hancock a stock option to purchase
      the equivalent of 1,011,380 shares of Company common stock at an exercise price
      of $0.28382 per share in consideration of his <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">numerous
      </font>services as a director to the PureDepth Group <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">and
      prior
      roles as Chief Executive Officer and Executive Chairman</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font>pursuant
      to his written
      consultancy agreement with the Company. </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Other
      than pursuant to current salaries for their executive positions with the
      Company, if applicable, no other directors are currently compensated by the
      Company in consideration of their service as a director.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
        March
        31, 2006, PureDepth issued Mark Kalow, a director, an option to purchase
        101,708
        shares of PureDepth common stock as an inducement to join the Board. This
        option
        will be converted pursuant to the Merger into an option to purchase 232,933
        shares of the Company&#8217;s Common Stock at an exercise price of $0.43664 per
        share.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">24</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
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      <div>&#160;</div>
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      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      of the
      close of business on April 4, 2006, the Company had outstanding two classes
      of
      voting securities&#8212;common stock, of which there were 6,255,400 shares
      outstanding, and Series A Preferred Stock, of which there were 230,869 shares
      outstanding. Each share of common stock is entitled to one vote on all matters
      put to a vote of our stockholders. Each share of Series A Preferred Stock is
      entitled to vote on an as-if-converted basis (i.e., 229.021 votes).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following table sets forth the number of common shares, and percentage of
      outstanding common shares, beneficially owned as of April 4, 2006,
      by:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
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          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
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                person known by the Company to be the beneficial owner of more than
                5% of
                the Company&#8217;s outstanding common
                stock</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
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                director</font></div>
            </td>
          </tr>

      </table>
    </div>
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    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">each
                executive officer named in the Summary Compensation Table included
                in this
                report, and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 72pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
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              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">all
                current executive officers and directors as a
                group.</font></div>
            </td>
          </tr>

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      otherwise indicated, the address of each of the following persons is 303 Twin
      Dolphin Drive, 6th Floor, Redwood City, California 94065, and each such person
      has sole voting and investment power with respect to the shares set forth
      opposite his or her name. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" id="ftable" width="100%">

          <tr>
            <td align="left" valign="bottom" width="55%">&#160;</td>
            <td width="1%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="right" valign="bottom" width="20%">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;<strong><font size="2">Shares
                of
</font></strong></div>
            </td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="right" valign="bottom" width="20%">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;<strong><font size="2">Percentage
                of
                </font></strong></div>
            </td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="55%">&#160;</td>
            <td width="1%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="right" valign="bottom" width="20%">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;<strong><font size="2">Common
                Stock</font></strong></div>
            </td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="right" valign="bottom" width="20%">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;<strong><font size="2">Common
                Stock</font></strong></div>
            </td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
          </tr>
          <tr>
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                and Address of Beneficial Owner</strong></font></div>
            </td>
            <td width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Beneficially
                Owned (#)</strong></font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman, serif"><sup><strong>(1)</strong></sup></font></div>
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            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
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              Owned (%)</strong></font></td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="55%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Fred
                Angelopoulos </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>(2)</sup></font></div>
            </td>
            <td width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2,960,477</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">4.8</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="55%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">David
                Hancock </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>(3)</sup></font></div>
            </td>
            <td width="1%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2,022,760</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">3.4</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="55%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Kristin
                Bowman </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>(2)</sup></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">24
                Morrin Road</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Panmure,
                Auckland</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">New
                Zealand</font></div>
            </td>
            <td width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,989,892</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">3.3</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="55%" style="border-bottom: white solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mark
                Kalow </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>(2)</sup></font></div>
            </td>
            <td width="1%" style="border-bottom: white solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: #ffffff thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;
                &#160;&#160;&#160;&#160; &#160;232,933</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white solid;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: white solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">*</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white solid;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="55%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
                executive officers and directors</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">as
                a group </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>(4)</sup></font></div>
            </td>
            <td width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
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            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">11.0</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
          </tr>
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            <td align="left" valign="bottom" width="55%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">K
                One W One Limited </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><sup>(5)</sup></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 27pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">c/o
                BDO Spicers,</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 27pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">120
                Albert Street,</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 27pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Auckland,
                New Zealand</font></div>
            </td>
            <td width="1%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">37,548,700</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">61.7</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="55%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Vision
                Opportunity Master Fund, Ltd.</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">317
                Madison Avenue, Suite 1220</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">New
                York, NY 10017</font></div>
            </td>
            <td width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">4,580,420</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="20%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">7.5</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <hr style="COLOR: black" align="left" noshade size="1" width="20%">
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">*
      Less
      than 1%</font></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">25</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1)</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Beneficial
                ownership is determined in accordance with the rules of the SEC,
                and
                includes general voting power and/or investment power with respect
                to
                securities. Shares of common stock issuable upon exercise of options
                or
                warrants that are currently exercisable or exercisable within 60
                days of
                the record rate, and shares of common stock issuable upon conversion
                of
                other securities currently convertible or convertible within 60 days,
                are
                deemed outstanding for computing the beneficial ownership percentage
                of
                the person holding such securities but are not deemed outstanding
                for
                computing the beneficial ownership percentage of any other
                person.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2)</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consists
                of shares issuable upon the exercise of stock options that are currently
                exercisable.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(3)</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                1,011,380 shares issuable upon the exercise of stock options that
                are
                currently exercisable.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(4)</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                Messrs. Angelopoulos, Hancock, Kalow and Ms. Bowman.
                Includes&#160;6,194,682 shares issuable upon exercise of stock options
                held by the executive officers and directors, all of which are currently
                exercisable.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(5)</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                1,768,697 shares that are issuable upon exercise of warrants that
                are
                currently exercisable.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(6)</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                2,290,210 shares that are issuable upon exercise of warrants that
                are
                currently exercisable.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>DESCRIPTION
      OF SECURITIES</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      authorized capital consists of 60,000,000 shares of common stock and 10,000,000
      shares of preferred stock. As of April 4, 2006, we had 6,255,400 shares of
      common stock outstanding, held by approximately 110 holders of record. Our
      common stock is listed for trading on the over-the-counter bulletin board under
      the symbol &#8220;DMDO.OB.&#8221; We have one class of preferred stock, denominated &#8220;Series
      A Preferred Stock,&#8221; outstanding. As of the date of this report, we had 230,869
      shares of our Series A Preferred Stock outstanding held by approximately 90
      holders of record. The Series A Preferred Stock is not listed for public
      trading.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
      shares of our common stock have equal voting rights and are entitled to one
      vote
      per share in all matters to be voted upon by our shareholders. The shares of
      common stock do not entitle their holders to any preemptive, subscription,
      conversion or redemption rights, and may be issued only as fully paid and
      non-assessable shares. Cumulative voting in the election of directors is not
      permitted; which means that the holders of a majority of the issued and
      outstanding shares of common stock represented at any meeting at which a quorum
      is present will be able to elect our entire board of directors if they so
      choose. In that event, the holders of the remaining shares of common stock
      will
      not be able to elect any directors. In the event of our liquidation, each
      shareholder is entitled to receive a proportionate share of the assets available
      for distribution to shareholders after the payment of liabilities and after
      distribution in full of preferential amounts, if any, to be distributed to
      holders of our preferred stock. Holders of shares of common stock are entitled
      to share pro rata in dividends and distributions with respect to the common
      stock when, as and if declared by our board of directors out of funds legally
      available for dividends. This is after requirements with respect to preferential
      dividends on, and other matters relating to, the preferred stock, if any, have
      been met. We have not paid any dividends on our common stock and intend to
      retain earnings, if any, to finance the development and expansion of our
      business. Future dividend policy is subject to the discretion of the board
      of
      directors. All shares of our common stock issued and outstanding are fully
      paid
      and non-assessable.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">26</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Shares
      of
      preferred stock may be issued from time to time in one or more series as may
      be
      determined by our board of directors. The voting powers and preferences, the
      relative rights of each such series and the qualifications, limitations and
      restrictions of each series will be established by the board of directors,
      except that no holder of preferred stock will have preemptive rights. We have
      designated 1,000,000 shares of our preferred stock as &#8220;Series A Preferred
      Stock.&#8221; Upon a liquidation of the Company, the Series&#160;A Preferred Stock
      does not have a liquidation preference. Nevertheless, it does have priority
      distribution rights in the event that dividends are declared, as well as other
      rights accorded preferred stock under applicable law. The Series&#160;A
      Preferred Stock does not provide its holders with any preemptive rights, rights
      of first refusal, or director-appointment rights. The Series&#160;A Preferred
      Stock grants its holders the right to vote on all matters submitted to a vote
      of
      Company shareholders on an as-if-converted basis. All outstanding shares of
      Series&#160;A Preferred Stock will automatically convert into shares of our
      common stock on a 229.021-for-1 basis after the filing of articles of amendment,
      approved by our shareholders as required under applicable law, increasing the
      number of shares of common stock that the Company is authorized to
      issue.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      transfer agent and registrar for our common stock is Republic Stock Transfer,
      Inc., 5105 DTC Parkway, Suite 425, Greenwood Village, Colorado
      80111.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      3.02. Unregistered Sales of Equity Securities.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      disclosed under Item 2.01 above and in connection with the merger transaction
      discussed therein, the Company issued an aggregate of 230,869 shares of Series
      A
      Preferred Stock to the former holders of capital stock of PureDepth, Inc.,
      a
      California corporation, and other securities having the right to purchase
      approximately 30,557,857 shares of our common stock, all of which were
      unregistered. For these issuances, the Company relied on the exemption from
      federal registration under Section 4(2) of the Securities Act of 1933. The
      Company relied on this exemption based on the fact that there were approximately
      90 shareholders of PureDepth, Inc. who were recipients of such unregistered
      shares in connection with the merger, all of whom, either alone or through
      a
      purchaser representative, had knowledge and experience in financial and business
      matters such that each was capable of evaluating the risks of the investment,
      and had access to information regarding PureDepth, Inc., Diamond One, Inc.
      and
      the merger transaction.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      5.01. Changes in Control of Registrant.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      disclosures set forth in Item 2.01 above are hereby incorporated by reference
      into this Item 5.01.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 63pt; TEXT-INDENT: -63pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      5.02. Departure of Directors or Principal Officers; Election of Directors;
      Appointment of Principal Officers.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      disclosures set forth in Item 2.01 regarding the reconstitution of the Company&#8217;s
      board of directors, the resignation of the Company&#8217;s Chief Executive and Chief
      Financial Officers, and the appointment of new Chief Executive and Chief
      Financial Officers, are hereby incorporated by reference into this Item
      5.02.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">27</font></div>
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      9.01. Financial Statements and Exhibits.</strong></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      a
      result of the merger transaction described in this report, the registrant will
      file audited financial statements of PureDepth, Inc. by amendment, as permitted
      by Item 9.01 of Form 8-K.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      a
      result of the merger transaction described in this report, the registrant will
      file certain </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>pro
      forma</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      financial information by amendment, as permitted by Item 9.01 of Form
      8-K.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SIGNATURE</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned hereunto
      duly authorized.</font></div>
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              <td width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
              <td width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
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              <td colspan="2"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">DIAMOND
                ONE,
                INC.:</font></td>
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              <td>&#160;</td>
              <td colspan="2"><font size="2">(<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Registrant</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)</font></font></td>
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              <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
              <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
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              <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">Date:&#160;April
                6, 2006</font></td>
              <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">By:&#160;&#160;</font></td>
              <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">/s/&#160;Kristin
                Bowman</font></td>
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                <hr style="COLOR: black" align="left" noshade size="2" width="80%"><font size="2">Kristin
                Bowman</font></td>
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              <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: "><em>Chief
                Operating Officer, Secretary and </em></font></td>
            </tr>
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              <td><em><font size="2">acting Chief Financial
                Officer</font></em></td>
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{"company-data": {"conformed-name": "DIAMOND ONE INC", "cik": "0001281108", "assigned-sic": "5944", "irs-number": "470892061", "state-of-incorporation": "CO", "fiscal-year-end": "0131"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "333-113273", "film-number": "06745982"}, "mail-address": {"street1": "48 E ARAPAHOE RD", "street2": "STE A", "city": "GREENWOOD VILLAGE", "state": "CO", "zip": "80112"}}
UNITED
      STATES
SECURITIES
      AND EXCHANGE COMMISSION
WASHINGTON,
      D.C. 20549
FORM
      8-K
CURRENT
      REPORT
PURSUANT
      TO SECTION 13 OR 15(d) OF
THE
      SECURITIES EXCHANGE ACT OF 1934
Date
      of
      report (date of earliest event reported): March 31, 2006
DIAMOND
      ONE, INC.
(Exact
      name of registrant as specified in its charter)
Colorado
None
47-0892061
(State
                or other jurisdiction of incorporation)
(Commission
                File Number)
(IRS
                Employer Identification No.)
303
      Twin
      Dolphin Drive,
6th
      Floor, Redwood City, California 94065
(Address
      of principal executive offices) (Zip code)
(650)
      632-4440
(Registrant's
      telephone number, including area code)
9648
      East
      Arapahoe Rd., Suite A
Greenwood
      Village, Colorado 80112
(Former
      name or former address, if changed since last report)
Check
      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions:
o
Written
      communications pursuant to Rule 425 under the Securities Act (17 CFR
      230.425)
o
Soliciting
      material pursuant to
      Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement
      communications
      pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
      240.14d-2(b))
o
Pre-commencement
      communications
      pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
      240.13e-4(c))
Item
      2.01. Completion of Acquisition or Disposition of Assets.
MERGER
      TRANSACTION
On
      March
      31, 2006 and pursuant to an Agreement and Plan of Merger and Reorganization
      dated March 16, 2006 (the "Merger Agreement") by and among Diamond One,
      Inc., PureDepth Technologies, Inc., a Delaware corporation and wholly owned
      subsidiary of the Company ("PureDepth Technologies"), and PureDepth, Inc., a
      California corporation whose business is the development and commercialization
      of innovative technology incorporating a third dimension of "depth" into a
      smart, compact video display device, PureDepth, Inc. merged with and into
      PureDepth Technologies. As a result of the merger, PureDepth Technologies
      succeeded to the business of PureDepth and survives as a wholly owned operating
      subsidiary of Diamond One. The merger was effected by the filing of a
      certificate of merger with the Delaware Secretary of State on March 31,
      2006.
At
      the
      effective time of the merger, the legal existence of PureDepth ceased and all
      of
      the approximately 23,086,855 shares of PureDepth common stock that were
      outstanding immediately prior to the merger were cancelled. Simultaneously,
      PureDepth's former shareholders received an aggregate of 230,869 shares of
      Diamond One's Series A Preferred Stock, representing approximately 89% of the
      registrant's outstanding voting power after the merger. In addition, all
      securities convertible into and exercisable for shares of PureDepth common
      stock
      (e.g., options and warrants) that were outstanding immediately prior to the
      merger were cancelled, and their holders received similar securities for the
      purchase of Diamond One common stock. In total, former holders of PureDepth
      securities now hold approximately 93% of the outstanding common stock of Diamond
      One on a fully diluted basis.
Prior
      to
      the merger and pursuant to authority granted to it by the registrant's articles
      of incorporation, as amended, Diamond One's board of directors approved and
      adopted a Certificate of Designation relating to a new class of preferred stock
      denominated "Series A Preferred Stock." All outstanding shares of Series A
      Preferred Stock will convert into shares of common stock on a 229.021-for-1
      basis upon the approval by Diamond One shareholders of an increase in the number
      of shares of common stock authorized for issuance under Diamond One's articles
      of incorporation, as amended.
The
      merger represents a change in control of Diamond One inasmuch as greater than
      50% of the issued and outstanding voting stock of the registrant on a
      post-merger basis is now held by the former holders of PureDepth capital stock.
      In addition, and simultaneously with the effectiveness of the merger, the board
      of directors of Diamond One appointed Messrs. David Hancock, Fred Angelopoulos
      and Mark Kalow to its board of directors, and directors Troy Fullmer and Robert
      Chramosta thereupon resigned. Moreover, Messrs. Fullmer and Chramosta resigned
      their positions as officers of the Company. In their place, Fred Angelopoulos
      was appointed as its Chief Executive Officer and President, and Kristin Bowman
      was appointed as Chief Operating Officer, Secretary and acting Chief Financial
      Officer. As of the date of this report, there are 6,486,269 shares of Company
      capital stock issued and outstanding, 6,255,400 of which is common stock and
      230,869 of which is Series A Preferred Stock.
What
      follows is a description of the business, property, legal proceedings, risk
      factors and certain other important information about the business of PureDepth
      that Diamond One acquired as part of the merger. Throughout this report, the
      terms "Company" and "PureDepth" refer to Diamond One and the business of
      PureDepth now owned and operated by Diamond One.
1
DESCRIPTION
      OF PUREDEPTH BUSINESS
The
      predecessor research and development business to PureDepth group, Deep Video
      Imaging Limited ("DVIL"), was incorporated in New Zealand in 1999. In April
      2005, and after a corporate restructuring of DVIL, PureDepth, Inc. was
      incorporated in California. Currently, the PureDepth group of affiliated
      companies includes PureDepth Limited ("PDL") and PureDepth Incorporated Limited
      ("PDIL"), each now an indirect subsidiary of the Company. PDL, incorporated in
      New Zealand in August 2004, currently holds the intellectual property portfolio
      used and exploited by the Company pursuant to a perpetual and exclusive license.
      PDIL, incorporated in New Zealand in March 2005, currently provides operations
      and other support for the Company, including finance, administration, legal
      operations, research and development, and intellectual management operations
      on
      behalf of its parent entities.
Liquid
      Crystal Displays (LCDs) are part of our everyday life, both in our work and
      personal lives; they are integral parts of the watches, mobile phones, iPods,
      computers, car navigation systems, televisions, control systems, medical
      monitors, military monitors, and other items that affect us everyday. In 2005,
      worldwide shipments of all forms of LCDs exceeded 1 billion units. The
      growth of these markets is in excess of 20% and reaching as high as over 30%
      per
      year for specific markets like the LCD television market. The majority of the
      LCD market segments are now all considered commodities, such as LCD computer
      monitors and mobile phones.
The
      development of display technology has advanced in form from cathode ray tubes
      to
      LCDs, plasma displays and others. These advancements focused on introducing
      color, improving display resolutions and enhancing the ability of the display
      to
      run high-resolution graphics and full-motion video. We believe these
      advancements are significant for display technology but are more evolutionary
      than revolutionary.
PureDepth
      has a revolutionary technology which literally provides a new dimension to
      displays. The technology, known as Multi-Layer Display (MLD
TM
),
      builds
      upon existing Single-Layer Display (SLD) technology to potentially redefine
      the
      way the user interacts with his or her screen by providing two or more display
      layers in a stacked arrangement. Each layer is physically separated by real
      depth (as opposed to perceived or simulated depth), which allows for distinct
      new ways in which to view, monitor and interact with displays—in a way that is
      more natural and convincing to the user.
Business
        Model
The
        Company intends to base its business model on a "Dolby-like" licensing model for
        mass market consumer and business-to-business products. Use of this licensing
        model will leverage the key intellectual property of the Company from its
        core
        technology base to the manufacturing processes to deliver MLD products to
        market.
MLD
      Technology
MLD
      technology, in its current form, utilizes two distinct layers of LCD panels
      which share a common back-light source. Through the control of optical
      correlation, compatibility and interferences between the LCD panels through
      patented interstitial elements within the optical stack of MLD layers, viewers
      are able to view two distinct planes/layers of data at the same time. Future
      realizations of MLD technology are expected to extend to emerging display
      technologies, such as Organic LEDs (OLEDs) and established technologies such
      as
      Electro-Luminescent (EL) and Plasma Displays (PDP).
The
      MLD
      arrangement allows the viewer to look through the front LCD display panel to
      see
      images displayed on the LCD display panel behind it. Traditionally, this type
      of
      arrangement using overlaid pixel patterns would give rise to what is called
      the
"Moire interference," a visual interference pattern which results in distraction
      (bright and dark vertical bands) for the viewer and can lead to nausea.
      PureDepth has developed an interstitial optical component placed between the
      display layers that overcomes the problem of Moire interference with negligible
      effect on the optical quality of the image layers. Each of the LCD panels
      incorporated into the single module receive independent control signals through
      separate video outputs. Coordination of the images displayed allows for a true
      multi-layer visual display to be presented to the viewer.
2
PureDepth
      has also proven the capability to manipulate the physical depth between layers
      to maximize the desired parallax effect for a given application. PureDepth
      is in
      the process of developing software which will allow the user to directly vary
      the depth between layers in order to customize the MLD for a particular
      application, enabling the viewer to personalize the application to maximize
      the
      viewer's enjoyment of the application in a particular environment.
The
      level
      of independence or coordination and interaction of the two display layers and
      any other layer related system, such as a touch screen, can be customized to
      the
      specific requirements of the application. A variety of optional items can be
      integrated into an MLD, such as a media kit, touch screen, signal processing
      and
      USB hub functionality. Together with these optional items, MLD technology can
      be
      utilized in many application scenarios, and is also scalable from small display
      requirements of hand-held devices to regular desktop style monitors to large
      publicly viewed television monitors.
MLD
      development has been focused on LCD panels for managing layered displays.
      However, PureDepth has extended research to investigate the use of alternative
      technologies. OLED and Transparent OLEDs are of specific interest as they have
      the benefit of substantially reducing back-light luminance generation
      requirements and associated heat and power consumption issues. In addition,
      these technologies offer PureDepth the opportunity to introduce a greater number
      of layers to an MLD display.
Competitive
      Advantages of MLD
The
      most
      apparent feature of MLD technology is the eye-catching value of viewing content
      over multiple layers, which is colloquially known as the "wow" factor. We
      believe this factor makes the technology immediately suitable to the lucrative
      gaming and entertainment sectors. MLD technology also has the potential to
      redefine the way users interact with their computer display in office-type
      applications. Research has shown that usability and productivity can be
      increased through the addition of depth and the resulting "affordances" are what
      makes MLD unique and revolutionary in the marketplace.
The
      term
"affordance" relates to perceptual clues that give human beings insight on how
      to interact with objects in the world. For example, a vertical handle on a
      door
"affords," or suggests to the viewer that he or she should pull the door to open
      it, while a flat panel on a door affords pushing to open it. With computers,
      using shadowing on a button creates the affordance of pushing or clicking.
      The
      additional dimension of depth with MLD technology provides an environment for
      a
      myriad of new affordances that can simply not be achieved with a Single-Layer
      Display (SLD). Some of these affordances obtained through the use of MLD
      technology are described below.
Affordance
      for representing layered information
MLD
      technology enables a viewer to see layer-based data as it actually exists.
      An
      example of a governmental application of this affordance would be to allow
      a
      municipal council to view a model of water, gas, and sewerage reticulation
      systems for a site development or subdivision layout as they exist through
      a
      live feed of each displayed in a single view.
Affordance
      for focusing and viewing context
The
      ability to maintain focus on detail while retaining view of context is a well
      known and well researched topic. Many have attempted to address this through
      software with fish-eye lenses and zoomable user interfaces. MLD technology
      has
      the potential to advance this goal by showing on the front panel information
      on
      which the viewer is to focus, while providing a contextual overview in the
      back
      panel. This significantly enhances the software techniques and provides a new
      solution to an old problem.
3
Affordance
      for view comprehension
The
      proper integration of separate but related pieces of information across
      different displays is a well known problem. Cognitive research has identified
      that the human brain operates with a working memory which can only hold up
      to
      seven pieces of information at any one time—most people struggle with as much as
      three or four. The demand placed on a person's working memory to overcome the
      keyhole problem essentially leaves the user overwhelmed and "lost within the
      data." MLD technology attempts to resolve this problem by allowing the grouping
      of cluttered and complex information into a more manageable format, which is
      more easily interpreted by humans. By having potential to creating more visual
      connectivity between data presented across the overlapping displays, MLD has
      the
      potential to bring a unique solution to the keyhole problem.
Affordance
      for information extraction
Information
      extraction is best achieved when information is presented in parallel rather
      than serially. For example, consider a nuclear power plant that has eight
      crucial pieces of related information to indicate smooth running. This could
      be
      displayed as a regular octagon where the length of each side represents one
      of
      the eight factors. Ultimately, eight factors are being presented in parallel.
      If
      the octagon changes shape dramatically (i.e., one of the sides becomes longer
      or
      shorter) then an operator will know at a glance that something is wrong. This
      overall concept is known as the "proximity-compatibility principle," which
      argues that information used together in a decision should be presented as
      close
      together as possible. The inherent design of MLD monitors allows for parallel
      presentation of information (multiple layers) but also provides a mechanism
      that
      can cluster critical data together which is easily differentiated from
      non-critical data (depth). These features satisfy the proximity-compatibility
      principle whilst also reducing display real-estate clutter.
Affordance
      for change detection
Critical
      decisions are often based on the ability to detect small changes in images,
      for
      example, the detection of changes to satellite images passing over a target
      of
      interest. Typically these comparisons must be made manually rather than by
      direct image comparison via a computer due to variations in the size, shape,
      rotation and position of the captured images with respect to one another. For
      these situations, overlaying images provides a significant advantage over
      side-by-side comparison. MLD technology has the ability to over-lay electronic
      images for comparison, without degrading either image through the use of depth.
      Much like using a transparency layer over a picture or monitor, MLD technology
      provides physical separation between the two image sources whilst comparing
      so
      that no information from the originals is lost or corrupted. MLD can enhance
      change detection by using techniques like back-to-front switching, a very
      promising feature that can be validated with scientific usability studies,
      which
      cannot be accomplished on traditional SLD monitors. This idea stems from Gestalt
      psychology research, which developed a number of rules of perception, one of
      which is the fact that objects in the foreground are more likely to be attended
      to than objects in the background.
Affordance
      for increasing discriminability
Experiments
      conducted by Nakayama & Silverman determined that depth was a more powerful
      cue than color to assist in locating an object within. Basically, people are
      able to search within one depth plane, ignoring the other. This affordance
      provides a distinct advantage to an operator who knows where (in that depth
      plane) to find the desired information. More recent research has also shown
      that
      information search times and accuracy using depth cues has several advantages
      over flat representations of the same data. It has been statistically shown
      that, when viewing layered information, attention can be focused on a selected
      layer without distraction from another. The importance of this is that
      information can be searched for, accessed and read quicker, when it is split
      across two levels of depth as opposed to having it all displayed on a single
      plane or side by side. Both of these research studies give strong arguments
      to
      support MLD technology for information processing of large
      datasets.
4
MLD
      Vertical Markets and Applications
In
      the
      relatively short time that PureDepth has made MLD technology commercially
      available, they have been deployed in a range of applications. Broadly speaking,
      MLD applications fall into five application categories: (1) Interactive
      Entertainment Systems; (2) Consumer Information Systems; (3) Topological Mapping
      Systems; (4) Monitoring and Analysis Systems; and (5) Layer-Based Information
      Visualization.
Interactive
      Entertainment Systems
1.
Gaming
The
      gaming industry is one of the most exciting areas for applying MLD technology
      and harnessing the unique capabilities available for maximum eye-catching value.
      MLD technology has the capability to greatly enhance gaming visuals by adding
      physical depth dimensions to create stunning effects. For example, a game may
      require players to break through layers of a labyrinth while at the same time
      teasing players with the opportunity to see a little of what may be waiting
      behind by use of the parallax between the visible layers. In this instance
      the
      game designer can induce the player to "peer" around objects on the front-most
      layer(s) to see obscured objects in the rear.
It
      is
      expected that much of the immediate and future development of MLD technology
      will be centered on refining both hardware and associated software and firmware
      for the enhancement of these effects. Gaming is not limited to desktop PCs
      and
      consoles and is rapidly gaining momentum in the portable and mobile phone
      markets. MLD technology, being scalable in size, has the potential to be the
      gaming display technology of choice and considerable research is being developed
      for the small portable display sector.
2.
Interactive
      Television
Television
      and computers are rapidly converging in technology to become the single
      multimedia center of the household. Subscriber-based systems such as TiVo and
      cable TV are providing more interactive-based entertainment and services (such
      as e-mail, downloadable games, and interactive shopping). These services are
      typically presented as overlaid or alpha-blended images on top of the video
      data
      stream, lending itself nicely to MLD technology.
5
Additionally,
      there is a strong research drive in developing automatic conversion of 2D images
      to 3D, especially in the movie industry. These are targeted for use in movie
      theatre environments and, in time, will trickle-down to the consumer level,
      as
      has happened for multi-speaker surround-sound systems. Obviously there will
      be a
      requirement for new display monitors capable of conveying this depth information
      and MLD technology is poised to be a major player in this market.
Consumer
      Information Systems
1.
Kiosk
      Applications
Kiosk
      applications, shopping mall information centers, vending machines,
      train/bus/flight ticket sales systems and the like are ideally suited to MLD
      technology due to the eye-catching "wow" factor. With the addition of a touch
      screen to an MLD monitor (the process is essentially the same as for other
      regular display systems), a whole new level of interaction become available.
      By
      leveraging the pressure sensitivity functionality of current touch technologies,
      navigation of depth becomes intuitive. Pressing harder becomes a natural gesture
      to "push" objects towards the rear layers, teasing the user to interact further
      with the content.
2.
Point-of-Sale
      Advertising
Point-of-sale
      advertising is very similar to kiosk applications in that the goal of the
      monitor is to entice the user to interact with the content, ultimately for
      purchase of a product or service. The uniqueness of MLD technology coupled
      with
      the "wow" depth factor immediately grabs the customer's attention, and holds
      their interest for longer than conventional displays.
Topological
      Mapping Systems
1.
Car
      & Marine Navigation
Since
      the
      availability of MLDs in the size range of in-car navigation systems, a number
      of
      parties have adopted an interest in developing applications to harness and
      exploit the unique features of MLD technology. Development work is currently
      being undertaken on functionality covering mapping, street navigation, GPS
      and
      radar linked marine navigation for defense, commercial and recreational use,
      using depth to de-clutter, discriminate and cluster related information together
      within a single view. This is especially important for portable GPS systems
      where there is a large amount of information to be conveyed and display
      real-estate is a premium.
2.
Air
      Traffic Control (ATC)
ATC
      applications show real-time displays of flight data being controlled. MLD
      technology is being utilized to preserve critical "live" data which would
      otherwise be hidden by dialogue box windows. MLDs also allow the reduction
      of
      clutter of non-ATC controlled aircraft within the same physical display area
      as
      commercial aircraft being controlled by ATC. Trials of MLD technology in ATC
      applications have resulted in a high level of acceptance by controllers due
      to
      the ease of viewing critical information and reduced clutter of non-critical
      data, whilst maintaining overall visibility at all times. MLD technology is
      proving sufficiently effective that consideration is being given to the
      replacement of very large scale precision displays with regular MLD
      monitors.
Monitoring
      and Analysis Systems
1.
Financial
Financial
      futures trading requires the monitoring of "to-the-second" movements in future
      values, where small changes in unit values can represent very large dollar
      values in transactions. Users must monitor a range of information, but are
      also
      required to perform other routine tasks such as communication via e-mail with
      clients. MLD monitors allow the traders to display real-time graphical
      information futures values "floating" above other working displays. If a small
      change in value of monitored information occurs, the trader can respond by
      immediately making an appropriate transaction. The alternative of a window
      obscuring the critical data is unacceptable, as is the alternative of requiring
      the trader to monitor an adjacent screen.
6
2.
Medical
The
      medical industry has a number of applications that are able to exploit the
      benefits of MLD technology. For example, a surgeon performing a laparoscopic
      surgical procedure requires an unobstructed view of the images sourced from
      the
      instruments. If another window was to appear in the area of activity, the result
      could be disastrous. The alternative of having the surgeon change his or her
      point of focus from one screen to another is not considered acceptable. However,
      with MLD technology the images presented to the surgeon can remain clear and
      uninterrupted regardless of new information being displayed, therefore allowing
      the surgeon to maintain their focus on the task at hand. New information,
      together with complimentary information relevant to the operation (such as
      blood
      pressure and pulse rate), can be displayed floating above the primary screen.
      The floating of the image clearly delineates the images being
      displayed.
Layer-Based
      Information Visualization
1.
Computer-Assisted
      Engineering Software
There
      are
      a range of practical engineering-based applications suited to MLD technology.
      These include such uses as circuit board design, CAD drawing, civil engineering
      and architecture. These applications work with inherently layered data and
      MLD
      technology can be deployed to be a physical representation of this data. A
      simple example to illustrate this is printed circuit design. Up to 20 layer
      boards are available and the design and navigation of this number of layers
      can
      be daunting. Using MLD technology, specific layers or tracks can be pulled
      to
      the front or pushed to the rear layers, allowing the designer to differentiate
      these features whilst retaining the spatial layering information.
2.
Web-Design
      / Graphical Content Creation
Graphical
      software packages inherently have a multi-layer environment in the form of
      toolbars, property windows and dialog boxes. These objects tend to obscure
      canvas working area, be it 2D photographic retouching, 3D modeling, or web
      page
      design. Typical solutions to overcome this problem include using larger displays
      (21" or greater) or multiple monitors, but these fall into the traps of losing
      focus on the work by having a larger search area to find the appropriate
      controls. Depth can provide an elegant solution by placing toolbars onto the
      front-most layer and the work canvas onto the rear. In this configuration,
      the
      controls and canvas are always in view without distracting one another,
      increasing productivity.
3.
Defense
      and Security
A
      substantial level of research on the differentiating features and benefits
      of
      MLD technology has been carried out within the US defense and security
      departments . In these scenarios, secure and non-secure data is typically
      compared and each computer system must be physically isolated so that there
      is
      no cross-contamination or leakage of data. In its simplest form, MLD displays
      allow electronic overlays of this information whilst still retaining the level
      of isolation required. From feedback within the respective US departments,
      it is
      likely that MLDs will become widely deployed in applicable defense and security
      applications.
7
Alternative
      Display Technologies
In
      order
      to put the competitive advantages and benefits offered by MLD technology into
      perspective, it is important to understand what alternatives are available
      in
      display technologies. MLD technology is revolutionary and has the potential
      to
      redefine the display market but this does not necessarily exclude the use of
      alternative displays in conjunction with MLD.
Single
      Layer Displays (SLD)
Programmers
      of applications utilizing SLD panels often attempt to provide an illusion of
      three dimensions by careful use of shading sections around windows and dialog
      boxes on screens. High-end gaming, CAD drawing and industrial design software
      packages have been developed with realistic surface rendering, lighting, shading
      and shadow effects together with photo-realistic perspective images in order
      to
      allow the viewers to "see" the three dimensional image, which can be manipulated
      and rolled around on the screen.
Encapsulating
      these images is the operating system graphical user interface (GUI) and this
      is
      based around the idea of layers of windows. The analogy stems from paper-based
      desktops where paper "layers" were stacked and overlaid upon one another. By
      merely stacking windows layer upon layer, without an intuitive method to
      discriminate between each one, decreases the usability of the GUI. Software
      techniques such as virtual desktops and transparent layers (alpha-blending)
      attempt to resolve this issue, however they still are just simulations of the
      layer metaphor and do not have an effective discriminator.
MLD
      technology provides depth as an effective discriminator between layers, as
      it
      leverages off what is already hard-wired into the human visual system. MLD
      technology does not replace user interface techniques—it is a direct realization
      of the interface technique. MLD technology brings a new dimension of depth
      and
      enriches data semantically as there is a separate distinct channel of
      information carried over and above color and spatial cues.
3D
      Stereoscopic Displays
Comparisons
      between MLD and 3D stereoscopic displays are inevitable as both aim to convey
      depth information. With 3D stereoscopic displays the aim is to provide a full
      volumetric representation of an object, one with infinite depth, by presenting
      different pre-rendered images to each eye to simulate depth. MLD technology
      aims
      to present discrete layers with a degree of spatial separation, to present
      real
      depth. This distinction must be stressed.
At
      present, current technologies attempting to give the illusion of 3D have some
      significant drawbacks, including: the use of special lenses or a head mounted
      display systems and/or head tracking systems; a very narrow 'sweet-spot' of
      viewing angle; considerable loss of color tones, brightness and resolution;
      and
      the possibility of a viewer's eyes becoming tired or the viewer become nauseous
      after a short period of time. MLDs overcome some of these inherent problems
      by
      having real depth, as the brain is not tricked into believing depth exists
      in
      the image.
Competing
      Technology
The
      main
      source of competition for PureDepth does not come from companies utilizing
      the
      same technology, but rather from companies utilizing alternate '3D' solutions.
      These competitors can be divided into three main groups: (1) the layered
      technologies, (2) autostereoscopic displays and (3) glasses based stereoscopic
      displays.
8
Layered
      Technologies
Foremost
      among the layered technologies are the volumetric projector televisions. These
      comprise a series of ultra thin PDLC LCDs. Contrary to the LCDs used in standard
      screen technologies, PDLCs have bubbles of liquid crystal randomly spread
      through the PDLC matrix. Each LCD layer can be made white or transparent through
      the application of electric voltage through it. A projector is placed behind
      the
      series of LCDs and projects an image on to each of the LCD plates. The LCD
      plates are turned on and off sequentially at a predetermined rate to create
      an
      image. If timed properly, a composite picture can be displayed by the image
      on
      each LCD forming a slice of the 3D composite.
While
      at
      first blush the PDLC technology appears to be similar to the PureDepth
      technology, it is in fact quite different. First, the PDLC unit is large,
      requiring a layering of numerous screens together with a rear projection unit.
      Additionally, with PDLCs there are often issues with picture quality, generally
      caused by the bleeding of the image projected on one LCD plate onto other LCD
      plates. Finally, the PDLC unit is, unsurprisingly, expensive.
Autostereoscopic
      Technologies
Autostereoscopic
      technologies, such as Sharp's 3D display, are another competing technology. This
      technology works by directing slightly different images to a viewer's left and
      right eye. In the Sharp display, this is achieved through the use of a
      lenticular lens which directs synchronized alternate strips of imaging to each
      eye.
With
      this
      technology, there is an optimum viewing position, or "sweet spot," from which
      the viewer best achieves the 3D effect. The significant drawback of this
      technology is that if the viewer is not seated in the sweet spot, he or she
      will
      not observe a 3D effect. Additionally, some users will become nauseous due
      to
      the lenticular lens.
Recently,
      Philips has demonstrated an autostereoscopic switchable 2D/3D display. The
      display includes an LCD together with a switchable LC filled lenticular lens.
      This technology overcomes, to a certain extent, the issues that exist with
      the
      Sharp display. Philips has substantially overcome their uniformity issue with
      a
      combination of slanting the lenticular lens together with good lens design.
Glasses
      Based Stereoscopic Technologies
Glass
      based stereoscopic technologies change the polarity of the image directed to
      each eye. The viewer wears glasses of complementary polarity which cause each
      eye to see a slightly different image, resulting in the appearance of a 3D
      image. As with the autostereoscopic display technologies, the image communicated
      to the device must be synchronized with the polarity.
This
      technology overcomes some of the difficulties with the autostereoscopic
      technologies. However, it also has drawbacks. Most significantly, viewers are
      required to wear the glasses to achieve the 3D effect.
Competition
      Summary
In
      summary, competition consists of either similar technologies (e.g. dedicated
      partition screens), 3D monitors (e.g. from Sharp and other manufacturers),
      alternative solutions (e.g. two or more physical displays), and single layer
      displays as a commodity product.
9
Customers
The
      key
      customers for PureDepth technology will include: (1) LCD manufacturers; (2)
      Navigation solutions (e.g. in-car, marine, avionics); (3) Defense and Homeland
      Security; (4) Medical Visualization and Diagnostics; (5) Casino Gaming; and
      (6)
      Mobile and Handheld device manufacturers.
PureDepth
      has already established business relationships with all of these markets, with
      the exception of the Mobile and Handheld device segment, which the Company
      intends to launch in the near future. Due to the confidentiality of the
      agreements, the actual customer names cannot be disclosed at this time, with
      the
      exception of DRS Technologies, Inc. ("DRS"), one of the largest U.S. defense
      contractors (see www.puredepth.com for press release information).
Suppliers
Key
      suppliers for PureDepth will be large LCD manufacturers as well as contract
      manufacturers for integration and final assembly. In addition, large integrators
      such as DRS for the defense industry, will be the manufacturing integrator
      and
      license the technology and processes from PureDepth. PureDepth has established
      contract manufacturing relationships in the United States and Asia.
INTELLECTUAL
      PROPERTY AND LICENSE AGREEMENTS
Our
      goal
      is to obtain, maintain and enforce patent protection for our products,
      formulations, processes, methods and other proprietary technologies, to preserve
      our trade secrets, and to operate without infringing the proprietary rights
      of
      other parties, both in the US and in other countries. Our policy is to actively
      seek the broadest possible intellectual property protection for our product
      candidates through a combination of contractual arrangements and patents, both
      in the US and abroad.
Intellectual
      Property and Patents
PureDepth
      has maintained a rigorous intellectual property ("IP") strategy since inception.
      The strategy has ensured the core technology developed by PureDepth is protected
      and simultaneously limits the ability, of competitors to operate in the market.
      PureDepth's IP portfolio includes an extensive range of defensive and offensive
      patents, trademarks and designs. The main focus of the portfolio relates to
      the
      MLD technology together with improvements and components. In addition, the
      portfolio includes applications directed at software for use with a MLD. A
      detailed listing of the intellectual property portfolio is available upon
      request.
Hardware
      Technology Patents
PureDepth's
      family of patents were filed to protect PureDepth's core technology and the idea
      of providing an image with depth rather than a true 3D image. The base patent
      relating to the MLD technology was originally filed as a PCT application in
      July
      1998. Subsequently, the application has entered the national phase in thirteen
      territories, notably including the major markets of Europe, United States and
      Japan. The patent covers having two or more layers arranged such that one can
      look through the front most layer(s) and see the images displayed on the layers
      behind it and includes the use of a diffuser to overcome Moire interference.
      The
      patent has been granted in New Zealand, Japan, Canada, Singapore and the
      USA.
The
      patent portfolio is not limited to one method of eliminating Moire interference.
      Additional hardware patents have been granted which offer protection of MLD
      technology beyond the original scope of the base patent. Other patent
      applications filed address embedded hardware and end-user applications. These
      include an MLD PDA and in-car viewing applications. Broader applications address
      the use of MLDs, such as an MLD interfaced to a computing device.
10
Software
      Technology Patents
The
      patent applications filed which relate to software technology address the
      control or use of MLD technology and the integration of the technology into
      existing software programs. The protected control or use software allows users
      to allocate screen objects to specific layers within the optical stack, either
      on an object by object basis, region basis, or as an automated process based
      on
      image analysis and modification. In addition, software is used to control the
      characteristics of an object (control, color, brightness etc), and those
      spatially adjacent in the depth axis, to enhance the viewing
      experience.
The
      integration software seeks to include additional features in currently available
      software. The use of a MLD in an instrumentation application, for example,
      allows an alert to be by way of an object flashing from back to front screens
      rather than by a change of color or a noise. The software applications are
      also
      forward looking envisaging learning applications for the MLD where related
      information is displayed on front and back screens to reinforce a
      message.
License
      of Intellectual Property from the BASS Group
In
      December 2001, Deep Video Imaging Limited entered into an agreement with BASS
      Group, a Florida limited liability company ("BASS Group") and John Bass and
      Robert Bass to acquire the right to use certain technology protected by patents
      granted in the USA. These rights have since been assigned to PDL. PDL is
      required to pay BASS Group approximately $175,000 per year through 2010 in
      consideration of this intellectual property. Currently, the Company owes BASS
      Group an aggregate of approximately $850,000. Pursuant to the agreement with
      BASS Group, the Company may be required to reassign the intellectual property
      to
      BASS Group in the event of certain defaults, including failure to pay pursuant
      to the agreement.
Other
      Intellectual Property Rights and Protection
We
      depend
      upon the skills, knowledge and experience of our scientific and technical
      personnel, as well as those of our advisors, consultants and other contractors,
      none of which is patentable. To help protect our proprietary know-how, which
      is
      not patentable, and for inventions for which patents may be difficult to
      enforce, we currently rely and will in the future rely on trade secret
      protection and confidentiality agreements to protect our interests. To this
      end,
      we, as a matter of general practice, require our employees, consultants,
      advisors and other contractors to enter into confidentiality agreements that
      prohibit the disclosure of confidential information and, where applicable,
      require disclosure and assignment to us of the ideas, developments, discoveries
      and inventions important to our business.
DESCRIPTION
      OF PROPERTY
PureDepth's
      corporate office is located at Twin Dolphin Drive, Redwood Shores, California.
      The Company intends, however, to relocate to new premises, also in Redwood
      Shores. The proposed lease for the new space covers approximately 2,400 square
      feet for $5,000 per month under a two-year lease agreement expiring in May
      2008.
PureDepth
      also leases premises in New Zealand which houses its Research and Development
      and Rapid Prototyping units. These premises are located at 24 Morrin Road,
      Panmure, Auckland. The lease for these premises covers approximately 5,750
      square feet for $4,048 per month under a three-year lease agreement expiring
      in
      October 2008 (subject to certain rights of renewal).
11
LEGAL
      PROCEEDINGS
The
      Company is not currently involved in any material legal
      proceedings.
CAUTIONARY
      NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
      report certain statements that are "forward-looking statements" under Section
      27A of the Securities Act and Section 21E of the Securities Exchange Act of
      1934, as amended, and includes, among other things, discussions of our business
      strategies, future operations and capital resources. Words such as, but not
      limited to, "may," "likely," "anticipate," "expect" and "believes" indicate
      forward-looking statements.
Forward-looking
      statements are included in the section of this report entitled "Description of
      PureDepth Business." Although we believe that the expectations reflected in such
      forward-looking statements are generally reasonable, we cannot assure you that
      such expectations will ultimately prove to be correct. Generally, these
      statements relate to our business plans and strategies, projected or anticipated
      benefits or other consequences of market conditions and opportunities, business
      plans or strategies, projections involving anticipated sales and revenues,
      expenses, projected future earnings and other aspects of operational results.
      All phases of our operations are subject to a number of uncertainties, risks
      and
      other influences, most of which are outside our control, and any one or
      combination of which could materially and adversely affect the results of our
      operations, and also, could affect whether any such forward-looking statements
      contained herein ultimately prove to be accurate. Important factors that could
      cause actual results to differ materially from our current expectations are
      summarized in the following section captioned "Risk Factors."
RISK
      FACTORS
The
      purchase of shares of our common stock is very speculative and involves a very
      high degree of risk. Accordingly, an investment in the Company is suitable
      only
      for the persons who can afford the loss of their entire investment. Investors
      should carefully consider the following risk factors, as well as other
      information set forth herein, in making an investment decision with respect
      to
      our securities.
Risks
      Related to our Industry:
We
      operate in a highly competitive environment and we may not be able to sustain
      our current market position.
MLD
      technology has a number of competitive alternatives, including layered and
      autostereoscopic technologies. Some of our competitors may currently, or at
      some
      point in the future, will have greater financial, sales and marketing,
      manufacturing, research and development or technological resources than we
      do.
      Additionally, our competitors may be able to manufacture competitive products
      on
      a larger scale or with greater cost efficiencies than we do. Any price erosion
      resulting from competition may materially adversely affect our financial
      condition and results of operations.
12
Our
      ability to compete successfully also depends on factors both within and outside
      our control, including product pricing, performance and reliability, successful
      and timely investment and product development, success or failure of our
      end-brand customers in marketing their brands and products, component and raw
      material supply costs, and general economic and industry conditions. We cannot
      provide assurance that we will be able to compete successfully with our
      competitors on these fronts and, as a result, we may be unable to sustain our
      current market position.
We
      may experience declines in the average selling prices of our MLDs.
The
      average selling prices of our MLDs are expected to continually decline over
      time
      as a result of, among other factors, technology advances, cost reductions and
      increased competition. Although we may be able to take advantage of the higher
      selling prices typically associated with new products and technologies we may
      bring to market, we cannot provide assurance that we can maintain these prices
      in the face of market competition. If we are unable to effectively anticipate
      and counter the price erosion that accompanies our products, or if we are unable
      to reduce our manufacturing costs, our profit margins will be negatively
      affected.
Governmental
      regulation may limit our activities or increase our costs of
      operations.
Our
      business and operations are subject to various forms of government regulation
      in
      countries in which we do business, including required business/investment
      approvals, as well as export regulations based on national security or other
      reasons and other export/import regulations such as tariffs. In addition,
      commercial, antitrust, patent, consumer, taxation, exchange control and
      environment/recycling laws and regulations also apply. If we are unable to
      comply with these regulations, they can serve to limit our activities. In
      addition, compliance with these regulations could result in increased costs.
      Accordingly, these regulations could adversely affect our results of operations.
Risks
      Relating to our Business and Company:
We
      are not currently profitable and may never become
      profitable.
We
      have a
      history of losses and expect to incur substantial losses and negative operating
      cash flow for the foreseeable future, and we may never achieve or maintain
      profitability. Even if we succeed in developing and commercializing one or
      more
      product candidates, we expect to incur substantial losses for the foreseeable
      future and may never become profitable. We expect also to continue to incur
      significant operating and capital expenditures and anticipate that our expenses
      will increase substantially in the foreseeable future.
We
      also
      expect to experience negative cash flow for the foreseeable future as we fund
      our operating losses and capital expenditures. As a result, we will need to
      generate significant revenues in order to achieve and maintain profitability.
      We
      may not be able to generate these revenues or achieve profitability in the
      future. Our failure to achieve or maintain profitability could negatively impact
      the value of our securities.
We
      have a limited operating history upon which to base an investment decision.
The
      Company and its subsidiaries each have a limited commercial operating history.
      These operations provide a limited basis for investors to assess our ability
      to
      successfully compete in our industry and generate revenues. This limited history
      also limits the ability of investors to assess the advisability of investing
      in
      our securities.
13
We
      may not successfully manage our growth.
Our
      success will depend upon the expansion of our operations and the effective
      management of our growth, which will place a significant strain on our
      management and on our administrative, operational and financial resources.
      To
      manage this growth, we must expand our facilities, augment our operational,
      financial and management systems and hire and train additional qualified
      personnel. If we are unable to manage our growth effectively, our business
      may
      be harmed.
If
      we are unable to hire additional qualified personnel, our ability to grow our
      business may be harmed.
We
      will
      need to hire additional qualified personnel with expertise in software
      development, testing, research, technology development and manufacturing, as
      well as sales and marketing. We compete for qualified individuals with numerous
      companies. Competition for such individuals is intense, and we cannot be certain
      that our search for such personnel will be successful. Attracting and retaining
      qualified personnel will be critical to our success.
If
      we are unable to innovate and to develop attractive new products, our future
      growth and profitability may be adversely affected.
We
      will
      derive a substantial portion of our estimated revenues from the incorporation
      of
      the MLD
TM
technology into innovative new products for sale (hereinafter referenced to
      generically as "products"). We expect that sales of our new products will in the
      future account for a substantial portion of our revenues, and we expect our
      future growth and profitability to rely primarily on the continued development
      and sale of innovative new products.
While
      we
      believe that we are capable of continuing to develop innovative and attractive
      new products, the industry in which we operate is characterized by rapid
      changes, including technological changes. The process of developing and
      marketing new products is inherently complex and uncertain, and there are a
      number of risks, including the following:
·
we
                may be unable to obtain adequate funding and resources necessary
                for
                investments in new products and technologies;
·
our
                long-term investments and commitment of significant resources may
                not
                result in successful new products or
                technologies;
·
we
                may not be able to anticipate successfully the new products and
                technologies which will gain market acceptance and that such products
                can
                be successfully marketed;
·
our
                newly developed products or technologies may not be successfully
                protected
                as proprietary intellectual property rights;
·
our
                products may become obsolete earlier than expected due to rapid
                advancements in technology and changes in consumer preferences;
                or
·
a
                delay in commercializing new technologies now under development may
                prevent us from keeping up with market demand. For example, if we
                lag
                behind our competitors in the commercialization of active-matrix
                full-color OLED displays, we may not secure a significant share of
                this
                market.
14
Our
      failure to anticipate adequately changes, in the industry and the market, and
      to
      develop attractive new products, including any of the risks described above,
      may
      reduce our future growth and profitability.
Our
      financial condition may be adversely affected if we cannot introduce new
      products to adapt to rapidly evolving customer needs on a timely basis.
New
      products are developed in anticipation of future demand. Our success will depend
      greatly on our ability to respond quickly to emerging customer requirements
      and
      to develop new products in anticipation of future demand. Any delay in our
      development of commercially successful products with reliable quality and
      advanced features may adversely affect our business.
The
      success of a new product also depends on other factors such as close cooperation
      with our partners and customers to gain insights into their product needs and
      to
      understand general trends in the market. If we are unable to work together
      with
      our partners and customers, and their respective suppliers, or to sufficiently
      understand their respective needs and capabilities, we may not be able to
      introduce new products in a timely manner, which may have a material adverse
      effect on our financial situation.
We
      plan
      to continue to expand our operations to meet the growing demand for new
      applications in the markets in which we participate. Because many products,
      such
      as televisions, mobile phones and personal digital assistants in our consumer
      market, are expected to be marketed to a diverse group of end users with
      different specifications, functions and prices, we may be required to vary
      our
      sales and marketing strategies to successfully promote our products. We cannot
      provide assurance that our expansion strategy for these products will be
      successful.
Our
      results of operations depend on our ability to keep pace with changes in
      technology.
Advances
      in technology typically lead to rapid declines in sales volumes for products
      made with older technologies and may lead to these products becoming less
      competitive in the marketplace, or even obsolete. As a result, we will likely
      be
      required to make significant expenditures to develop or acquire new process
      and
      product technologies. Also, our ability to manufacture our products by utilizing
      advanced process technologies to increase production yields at low production
      cost will be critical to our sustained competitiveness. We cannot provide
      assurance that we will be able to continue to successfully develop new products
      through our research and development efforts or through obtaining technology
      licenses, or that we will keep pace with technological changes in the
      marketplace.
Our
      revenues depend on continuing demand for consumer electronics products with
      MLD
      panels. Our sales may not grow at the rate we expect if consumers do not
      purchase these products.
The
      introduction of alternative display panel technologies, including those
      currently under development by our competitors and us, may erode future sales
      of
      MLD panels, which may have a material adverse effect on our financial condition
      and results of operations.
15
Economic
      conditions may adversely affect our sales and
      profitability.
Demand
      for consumer electronics products, which is forecast to account for a
      significant proportion of our worldwide operating revenue, may be affected
      by
      general economic trends in the countries or regions in which our products are
      sold. Purchases of our products are, to a significant extent, discretionary.
      Similarly, demand for our business use products and for components we
      manufacture that go into products of third parties is affected by general
      economic trends in the various markets in which we sell our products. Economic
      downturns and resulting declines of demand in our major markets, including
      Australia, North America, Europe and Asia, may thus adversely affect our sales
      and profitability.
We
      will have significant capital requirements in connection with our business
      strategy and if capital resources are not available we may not be able to
      implement our strategy and future plans.
In
      connection with our strategy to increase the research and development of our
      MLD
      technology, we estimate that we will incur significant expenditures. These
      capital expenditures will be made well in advance of any additional sales that
      will be generated from these expenditures. However, in the event of adverse
      market conditions, or if our actual expenditures far exceed our planned
      expenditures, our external financing activities combined with our internal
      sources of liquidity may not be sufficient to effect our current and future
      operational plans, and we may decide not to expand capacity.
The
      failure to obtain sufficient financing on commercially reasonable terms to
      complete our expansion plans could delay or derail our ability to pursue our
      business strategy, which could materially and adversely affect our business
      and
      results of operations.
Our
      MLD manufacturing processes are complex and periodic improvements to increase
      efficiency can expose us to potential disruptions in
      operations.
The
      manufacturing process for MLD products is highly complex, requiring
      sophisticated and costly equipment that is periodically modified and updated
      to
      improve manufacturing yields and product performance, and reduce unit
      manufacturing costs. These updates expose us to the risk that from time to
      time
      production difficulties will arise that could cause delivery delays, reduced
      output or both. We cannot provide assurance that we will not experience
      manufacturing problems with our manufacturing partners in achieving acceptable
      output, product delivery delays or both as a result of, among other factors,
      construction delays, difficulties in upgrading or modifying existing production
      lines or ramping up new plants, difficulties in changing manufacturing line
      technologies or delays in equipment deliveries, any of which could constrain
      our
      capacity and adversely affect our results of operations.
If
      we are unable to successfully manage the risks inherent in our international
      activities and our overseas expansion, our results of operations and production
      capacity could be adversely affected.
A
      substantial portion of our manufacturing and marketing activity will be
      increasingly conducted outside of the United States and New Zealand, including
      in Asia. There are a number of risks inherent in doing business in such overseas
      markets, including the following:
·
unexpected
                legal or regulatory changes;
·
unfavorable
                political or economic factors;
·
difficulties
                in recruiting and retaining personnel;
16
·
labor
                disputes including strikes;
·
less
                developed technological infrastructure, which can affect our production
                or
                other activities or result in lower customer acceptance of our products
                and services;
·
potentially
                adverse tax consequences; and
·
social,
                political or economic turmoil due to terrorism, war, or other
                factors.
Product
      defects resulting in a large-scale product recall or successful
      product-liability claims against us could result in a significant cost or a
      negative impact on our reputation and adversely affect our business results
      and
      financial condition.
We
      manufacture various products in accordance with internationally accepted
      quality-control standards. We cannot be certain, however, that all of our
      products are defect-free and may not be recalled at some later date.
      Furthermore, although we maintain insurance against product-liability claims,
      we
      cannot be certain that such insurance can adequately satisfy the liabilities
      ultimately incurred. In addition, insurance may not continue to be available
      on
      terms acceptable to us. A large-scale product recall or a successful
      product-liability claim against us could result in significant costs or have
      a
      negative impact on our reputation, which may in turn lead to a decrease in
      sales, adversely affecting our results of operations.
We
      may be unable to successfully execute our expansion strategy or manage and
      sustain our growth on a timely basis, if at all, and, as a result, our business
      may be harmed.
We
      have
      experienced, and expect to continue to experience, rapid growth in the scope
      and
      complexity of our operations. This growth may strain our managerial, financial,
      manufacturing and other resources. We may experience manufacturing difficulties
      with our partners in starting new production lines. In addition, failure of
      our
      manufacturing partners to keep up with our competitors in future investments
      in
      manufacturing capacity would impair our ability to effectively compete within
      the industry. Failure to obtain intended economic benefits from research and
      development expansion projects could adversely affect our business, financial
      condition and results of operations.
If
      we cannot maintain high capacity-utilization rates, our profitability will
      be
      adversely affected.
The
      production of panels incorporating our MLD technology entails high fixed costs
      resulting from considerable expenditures for the construction of complex
      fabrication and assembly facilities and the purchase of costly equipment. We
      aim
      to maintain high capacity utilization rates so that we can allocate these fixed
      costs over a greater number of panels produced and realize higher gross margins.
      However, we cannot provide assurance that we will be able to sustain our
      capacity utilization rates in the future.
We
      and our manufacturing partners depend on a limited number of third party
      suppliers for key raw materials, components and manufacturing equipment, and
      any
      disruption in their supply will negatively affect our business.
Our
      production operations depend on obtaining adequate supplies of quality raw
      materials and components on a timely basis. As a result, it is important for
      us
      to control our component and raw material costs and reduce the effects of
      fluctuations in price and availability. In general, we source most of our raw
      materials as well as key components of MLD products such as the LCDL panels,
      CCFL tubes and interstitial components, from two or three suppliers for each
      key
      component. We may experience shortages in the supply of these and other
      components or raw materials as a result of, among other things, anticipated
      capacity expansion in the MLD and competitive industries. Our results of
      operations would be adversely affected if we were unable to obtain adequate
      supplies of high quality raw materials or components in a timely manner or
      make
      alternative arrangements for such supplies, or if there were significant
      increases in the costs of raw materials or components that we could not pass
      on
      to our customers.
17
Our
      results of operations are subject to exchange rate fluctuations.
Our
      sales
      and purchases of raw materials and expenditures on capital equipment are
      denominated mainly in U.S. dollars, and to a lesser extent, New Zealand dollars
      and certain Asian currencies. Accordingly, fluctuations in exchange rates,
      in
      particular between the U.S. dollar and other currencies will affect our gross
      profit and pre-tax income.
Our
      business relies on patent rights and our patent rights may be narrowed in scope
      or found to be invalid or otherwise unenforceable.
Our
      success will also depend, to a significant extent, on our ability to obtain,
      defend and enforce our patent rights worldwide. The coverage claimed in a patent
      application can be significantly reduced before a patent is issued.
      Consequently, we cannot provide assurance that any of our pending or future
      patent applications will result in the issuance of patents. Patents issued
      to us
      may be subjected to further proceedings limiting their scope and may not provide
      significant proprietary protection or competitive advantage. Our patents also
      may be challenged, circumvented, invalidated or deemed unenforceable. In
      addition, because patent applications in various countries publish at different
      times, the difficulty in monitoring patent applications filed by other parties
      in multiple countries, and because publication of discoveries in scientific
      or
      patent literature often lags behind actual discoveries, we cannot be certain
      that we were the first creator of inventions covered by pending patent
      applications, that we or any of our licensors will be entitled to any rights
      in
      purported inventions claimed in pending or future patent applications, or that
      we were the first to file patent applications on such inventions.
Furthermore,
      pending patent applications or patents already issued to us may become subject
      to dispute, and any dispute could be resolved against us. For example, we may
      become involved in re-examination, reissue or interference proceedings and
      the
      result of these proceedings could be the invalidation or substantial narrowing
      of our patent claims. We also could be subject to court proceedings that could
      find our patents invalid or unenforceable or could substantially narrow the
      scope of our patent claims. In addition, depending on the jurisdiction,
      statutory differences in patentable subject matter may limit the protection
      we
      can obtain on some of our inventions.
Failure
      to protect our intellectual property rights could impair our competitiveness
      and
      harm our business and future prospects.
We
      believe that developing new products and technologies that can be differentiated
      from those of our competitors is critical to the success of our business. We
      intend to take active measures to obtain international protection of our
      intellectual property by obtaining patents and undertaking monitoring activities
      in our major markets. However, we cannot assure that the measures we are taking
      will effectively deter competitors from improper use of our proprietary
      technologies. Our competitors may misappropriate our intellectual property,
      disputes as to ownership of intellectual property may arise and our intellectual
      property may otherwise become known or independently developed by our
      competitors.
18
If
      we infringe the rights of third parties we could be prevented from selling
      products, forced to pay damages, and defend against litigation.
If
      our
      products, methods, processes or other technologies infringe the proprietary
      rights of other parties, we could incur substantial costs and we may have
      to:
·
obtain
                licenses, which may not be available on commercially reasonable terms,
                if
                at all;
·
abandon
                an infringing implementation or
                product;
·
redesign
                our products or processes to avoid
                infringement;
·
stop
                using the subject matter claimed in the patents held by
                others;
·
pay
                damages; or
·
defend
                litigation or administrative proceedings which may be costly whether
                we
                win or lose, and which could result in a substantial diversion of
                our
                valuable management resources.
We
      rely upon trade secrets and other unpatented proprietary know-how to maintain
      our competitive position in our industry, and any loss of our rights to, or
      unauthorized disclosure of, our trade secrets or other unpatented proprietary
      know-how could negatively affect our business.
We
      also
      rely upon trade secrets, unpatented proprietary know-how and continuing
      technological innovation in our business. We typically enter into
      confidentiality agreements with each of our employees and consultants upon
      the
      commencement of an employment or consulting relationship, whereby each employee
      or consultant agrees to maintain the confidentiality of trade secrets and
      certain other Company information on a perpetual basis. However, we cannot
      assure the enforceability of these types of agreements, or that they will not
      be
      breached. We also cannot be certain that we will have adequate remedies for
      any
      breach. The disclosure of our trade secrets or other know-how as a result of
      such a breach could adversely affect our business. Disputes may arise concerning
      the ownership of intellectual property or the applicability or enforceability
      of
      our confidentiality agreements, and there can be no assurance that any such
      disputes would be resolved in our favor. Further, others may acquire or
      independently develop similar technology, or if patents are not issued with
      respect to products arising from research, we may not be able to maintain
      information pertinent to such research as proprietary technology or trade
      secrets and that could have an adverse effect on our competitive position within
      the industry.
We
      rely on key engineers, senior management and other personnel, and the loss
      of
      the services of any such personnel or the inability to attract and retain
      suitable replacements may negatively affect our business.
Our
      success depends to a significant extent upon the continued service of our
      research and development and engineering personnel, and on our ability to
      continue to attract, retain and motivate qualified researchers and engineers,
      especially during periods of rapid growth. In particular, our focus on leading
      the market in introducing new products and advanced manufacturing processes
      has
      meant that we must aggressively recruit engineers with expertise in cutting-edge
      technologies.
19
We
      also
      depend on the services of experienced key senior management, and if we lose
      their services, it would be difficult to find and integrate replacement
      personnel in a timely manner, or at all.
The
      loss
      of the services of any of our key research and development and engineering
      personnel or senior management without adequate replacement, or the inability
      to
      attract new qualified personnel, could result in delays in product development,
      loss of customers, partners and sales, and a diversion of management resources,
      each of which could have a material adverse effect on our
      operations.
Because
      we became public by means of a triangular merger, we may not be able to attract
      the attention of major brokerage firms.
Additional
      risks may exist since we became public through a triangular merger transaction.
      Security analysts of major brokerage firms may not provide coverage of the
      Company since,
because
      we became public through a merger,
there is
      no incentive to brokerage firms to recommend the
purchase
of its
      common stock. No assurance can be given that brokerage firms will want to
      provide analyst coverage of our Company in the future.
We
      are subject to Sarbanes-Oxley and the reporting requirements of federal
      securities laws, which can be expensive.
As
      a
      public reporting company, we are subject to Sarbanes-Oxley Act and the
      information and reporting requirements of the Securities Exchange Act of 1934
      and other federal securities laws. The costs of compliance with Sarbanes-Oxley
      and of preparing and filing annual and quarterly reports and other information
      with the SEC, and furnishing audited reports to shareholder, will cause our
      expenses to be higher than they would be if PureDepth Inc. had remained
      privately held and did not consummate the merger transaction with the
      Company.
Our
      common stock trades only in an illiquid trading market.
Trading
      of our common stock is conducted on the over-the-counter bulletin board. This
      has an adverse effect on the liquidity of our common stock, not only in terms
      of
      the number of shares that can be bought and sold at a given price, but also
      through delays in the timing of transactions and reduction in security analysts'
and the media's coverage of our Company and its common stock. This may result in
      lower prices for our common stock than might otherwise be obtained and could
      also result in a larger spread between the bid and asked prices for our common
      stock.
There
      is not now, and there may never be, an active market for shares of our common
      stock.
In
      general, there has been very little trading activity in shares of the Company's
      common stock. The small trading volume will likely make it difficult for our
      stockholders to sell their shares as and when they choose. Furthermore, small
      trading volumes generally depress market prices. As a result, our shareholders
      may not always be able to resell shares of our common stock publicly at the
      time
      and prices that they feel are fair or appropriate.
Because
      it is a "penny stock," shareholders may have difficulty selling shares of our
      common stock.
Our
      common stock is a "penny stock" and is therefore subject to the requirements of
      Rule 15g-9 under the Securities and Exchange Act of 1934. Under this rule,
      broker-dealers who sell penny stocks must provide purchasers of these stocks
      with a standardized risk- disclosure document prepared by the Securities and
      Exchange Commission. Under applicable regulations, our common stock will
      generally remain a "penny stock" until and for such time as its per-share price
      is $5.00 or more (as determined in accordance with SEC regulations), or until
      we
      meet certain net asset or revenue thresholds. These thresholds include the
      possession of net tangible assets (i.e., total assets less intangible assets
      and
      liabilities) in excess of $2,000,000 in the event we have been operating for
      at
      least three years or $5,000,000 in the event we have been operating for fewer
      than three years, and the recognition of average revenues equal to at least
      $6,000,000 for each of the last three years. We do not anticipate meeting any
      of
      the foregoing thresholds in the foreseeable future.
20
The
      penny-stock rules severely limit the liquidity of securities in the secondary
      market, and many brokers choose not to participate in penny-stock transactions.
      As a result, there is generally less trading in penny stocks. In sum, our
      shareholders may not always be able to resell shares of our common stock
      publicly at the time and prices that they feel are fair or
      appropriate.
We
      have never paid dividends and do not intend to do so for the foreseeable
      future.
We
      have
      never paid dividends on our capital stock and we do not anticipate that we
      will
      cause the Company to pay any dividends after the merger, for the foreseeable
      future. Accordingly, any return on an investment in our Company will be
      realized, if at all, only when an investor sells shares of our common
      stock.
The
      Company may have material liabilities of which our management is not
      aware.
Although
      PureDepth Inc. conducted a due-diligence review of the financial condition
      and
      legal status of Diamond One, the Company may have material liabilities related
      to its existence and operations prior to the merger that our new management
      has
      not yet discovered. Further, although the Merger Agreement contains customary
      representations and warranties from the Company concerning its assets,
      liabilities, financial condition and affairs, the business of PureDepth and
      our
      shareholders may have no recourse against the Company, or any of its former
      or
      current owners or principals, in the event those representations and warranties
      prove to be untrue. In connection with the Merger Agreement, we entered into
      an
      Option Agreement pursuant to which we may determine to sell, to the former
      principals of Diamond One, the business that Diamond One conducted prior to
      the
      merger (the sale of jewelry and precious gems and stones). That Option Agreement
      contains a covenant in favor of the Company whereby the former principals of
      Diamond One have agreed to indemnify the Company for liabilities arising in
      connection with such business, as conducted prior to and after the merger.
      Nevertheless, the covenantors may not be able to perform their indemnification
      obligations, should any arise.
21
MANAGEMENT
At
      the
      effective time of the merger, the Company's board of directors was reconstituted
      by the appointment of David Hancock, Fred Angelopoulos and Mark Kalow as
      directors (of whom Messrs. Hancock and Angelopoulos were directors of PureDepth,
      Inc. immediately prior to the merger), and the resignations of Troy Fullmer
      and
      Robert Chramosta from their roles as directors of the Company. The Company's
      executive management team was also reconstituted at the effective time of the
      merger by the resignations of Messrs. Fullmer and Chramosta, and the appointment
      of Frederick Angelopoulous as the Company's Chief Executive Officer and
      President, and Kristin Bowman as the Company's Chief Operating Officer,
      Secretary and acting Chief Financial Officer.
The
      following table sets forth the name and position of each of the Company's
      directors and executive officers after the merger.
Name
Age
Positions
Fred
                Angelopoulos
Chief
                Executive Officer, President
and
                Director
Kristin
                Bowman
43
Chief
                Operating Officer, Secretary and
acting
                Chief Financial Officer
David
                Hancock
62
Chairman
Mark
                Kalow
51
Director
and
                Chairman of the Audit
                Committee
The
      biographies of the directors and officers listed above are set forth below,
      all
      of whom began serving the Company in their respective positions as of the
      effective time of the Merger:
Fred
      Angelopolous has served as the Chief Executive Officer of PureDepth, Inc. since
      April 2005. Prior to that, he served as the PureDepth Group's Vice President of
      Global Sales and General Manager for the Americas from May 2004 to April 2005.
      From 1998 to 2002, Mr. Angelopolous served as the Chief Executive Officer of
      Pulse Entertainment, where he helped secure over $45 million in venture funding
      for that company and established partnerships with companies such as Warner
      Bros., NBC, IBM, SBC and BMG Music Group, helping Pulse be named among Red
      Herring's Top 100 Private Companies in the World in 2001. From 1994 to 1998, he
      served as Senior Vice President of Sales for Hitachi PC. In 2001, Mr.
      Angelopolous was named one of the ten most influential people in the prior
      ten
      years by Animation Magazine.
David
      Hancock has served
in
      various roles for
PureDepth, Inc. (and its predecessor)
from
2002
to
      April
      2005, including
Chief Executive Officer
,
      Director and Executive Chairman. Mr. Hancock has been a director of PureDepth,
      Inc. since April 2005, and became Chairman in January 2006.
From 2000
      until 2002, Mr. Hancock served as an executive of Presenter Inc. Prior to that,
      he served as the Chief Executive Officer of Hitachi PC from January 1996 to
      September 1999. From January 1995 to December 1995, Mr. Hancock served as Chief
      Executive Officer of Velocity Corporation. Mr. Hancock also has served in
      executive positions for a number of other entities, including Apple Computer
      Corp., Gillette International and PaperMate USA.
Kristin
      Bowman has served as the Chief Operating Officer of PureDepth, Inc. since April
      2005. Prior to that, Ms. Bowman served as the PureDepth Group's Vice President
      of Business Operations from September 2004 until April 2005. After working
      extensively in corporate and investment financing law in both New Zealand and
      London, Ms. Bowman was a partner of a 150-year-old leading New Zealand law
      firm
      in their Business and Taxation Team from 2001 until 2004. She served as General
      Counsel for a then newly listed entity, Auckland International Airport Limited,
      from 1999 to 2001. Ms. Bowman serves on the Board of Soccer New Zealand. Ms.
      Bowman received a First Class Honours degree in law from New Zealand's
      International University, Auckland University, and continues to hold a current
      practicing certificate as a barrister and solicitor of the Supreme Court of
      New
      Zealand.
22
Mark
      Kalow specializes in business and financial analysis and the commercialization
      of intellectual property for high technology companies. His current engagements
      include serving on the board of directors and audit committees of PhotoWorks
      (online photography) [NASDAQ: FOTO]; LSF Network (e-marketing services); and
      Delean Imaging (pattern recognition applications). Previously, Mr. Kalow was
      a
      Managing Director for the Venture Capital division of Trans Cosmos USA. Trans
      Cosmos is a major Japanese IT services company and strategic investor in US
      rich
      media, CRM and e-marketing companies. Mr. Kalow was formerly co-founder and
      COO/CFO of Live Picture Inc. (LPI), where he managed multiple financings
      totaling over $60 million, two acquisitions and, as CEO, the sale of the Company
      to MGI Software. LPI's imaging and Internet products won over 30 industry awards
      and its technology and products and technologies were licensed to industry
      leaders such as H-P, Canon, Kodak, FujiFilm and many others.  Mr. Kalow
      holds a S.B. degree from the Massachusetts Institute of Technology (MIT) and
      an
      MBA with a concentration in Financial Management from the University of
      Chicago.
EXECUTIVE
      COMPENSATION
Summary
      Compensation Table
The
      following table sets forth the cash and non-cash compensation for awarded to
      or
      earned by (i) each individual serving as chief executive officer of PureDepth,
      Inc. since its incorporation in April 2005; and (ii) each other individual
      that
      served as an executive officer of PureDepth, Inc. at the conclusion of the
      year
      ended December 31, 2005 and who received in excess of $100,000 in the form
      of
      salary and bonus during such year.
Annual
                  Compensation
Name
                  and Principal Position
Year
Salary
                  ($)
Bonus
                  ($)
Fred
                  Angelopoulos,
Chief
                  Executive Officer
(1)
                  (2)
2005
$
203,333
$
25,000
Kristin
                  Bowman,
Chief
                  Operating Officer, Secretary and acting Chief Financial Officer
(3)
                  (4)
2005
$
115,000
$
15,000
David
                  Hancock
Director
                  and former President of PureDepth Group
(5)
2005
$
100,000
-0-
23
(1)
Mr.
                Angelopoulos became the Chief Executive Officer of PureDepth, Inc.
                in
                April 2005. He began serving as the Chief Executive Officer and President
                of Diamond One, Inc. at the closing of the merger transaction on
                March 31,
                2006.
(2)
Prior
                to the merger effected on March 31, 2006, Mr. Robert Chramosta served
                as
                the Company's Chief Executive Officer and President. During each of the
                last three fiscal years (ended January 31, 2006, 2005 and 2004),
                Mr.
                Chramosta received no cash compensation for services rendered to
                the
                Company in those capacities.
(3)
Ms.
                Bowman became the Chief Operating Officer, Secretary and acting Chief
                Financial Officer of PureDepth, Inc. in April 2005. She began serving
                in
                those roles for Diamond One, Inc. at the closing of the merger transaction
                on March 31, 2006.
(4)
Prior
                to the merger effected on March 31, 2006, Mr. Troy Fullmer served
                as the
                Company's Chief Financial Officer and Secretary. During fiscal 2005 (ended
                January 31, 2006), Mr. Fullmer received cash compensation totaling
                $29,300
                for services rendered to the Company. For each of fiscal 2004 and
                2005
                (ended January 31, 2005 and 2004, respectively), Mr. Fullmer received
                cash
                compensation totaling $24,000.
(5)
Mr.
                Hancock
returned
                as
Chairman of the Board in
January
                2006,
but does not serve as an officer of the Company. Mr.
                Hancock previously served as the
Chief
                Executive Officer and Executive Chairman of the
predecessor
                PureDepth Group
through
                to the end of January 2005. Between January 2005 and January 2006,
                Mr.
                Hancock held the position of Director.
Employment
      and Change-in-Control Agreements
PureDepth
      or its subsidiaries are parties to current employment agreements with Messrs.
      Hancock and Angelopoulos and Ms. Bowman. Under those respective agreements,
      Mr.
      Hancock is paid $100,000 per year, Mr. Angelopoulos is paid approximately
      $203,000 per year, and Ms. Bowman is paid $115,000 per year. Under all of the
      employment agreements, the executives have agreed to standard confidentiality
      and assignment-of-inventions covenants. In addition, all of the employment
      agreements provide that the executive will not compete with PureDepth nor
      solicit any employee, consultant or contractor of PureDepth for a period of
      six
      months after any termination of employment.
Under
      PureDepth's agreements with Mr. Angelopoulos and Ms. Bowman, in the event either
      executive is constructively terminated due to a reorganization (or certain
      other
      similar situations) the executive will be entitled to the greater of (i) four
      months of base salary or (ii) any payments, benefits or the net value of any
      incentives that the executive has become entitled to in connection with certain
      transactions.
Director
      Compensation
During
      2005, PureDepth, Inc. agreed to pay Mr. Hancock approximately $100,000 per
      year.
      PureDepth, Inc. had previously granted Mr. Hancock a stock option to purchase
      the equivalent of 1,011,380 shares of Company common stock at an exercise price
      of $0.28382 per share in consideration of his
numerous
services as a director to the PureDepth Group
and
      prior
      roles as Chief Executive Officer and Executive Chairman
pursuant
      to his written
      consultancy agreement with the Company.
Other
      than pursuant to current salaries for their executive positions with the
      Company, if applicable, no other directors are currently compensated by the
      Company in consideration of their service as a director.
On
        March
        31, 2006, PureDepth issued Mark Kalow, a director, an option to purchase
        101,708
        shares of PureDepth common stock as an inducement to join the Board. This
        option
        will be converted pursuant to the Merger into an option to purchase 232,933
        shares of the Company's Common Stock at an exercise price of $0.43664 per
        share.
24
SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As
      of the
      close of business on April 4, 2006, the Company had outstanding two classes
      of
      voting securities—common stock, of which there were 6,255,400 shares
      outstanding, and Series A Preferred Stock, of which there were 230,869 shares
      outstanding. Each share of common stock is entitled to one vote on all matters
      put to a vote of our stockholders. Each share of Series A Preferred Stock is
      entitled to vote on an as-if-converted basis (i.e., 229.021 votes).
The
      following table sets forth the number of common shares, and percentage of
      outstanding common shares, beneficially owned as of April 4, 2006,
      by:
·
each
                person known by the Company to be the beneficial owner of more than
                5% of
                the Company's outstanding common
                stock
·
each
                director
·
each
                executive officer named in the Summary Compensation Table included
                in this
                report, and
·
all
                current executive officers and directors as a
                group.
Unless
      otherwise indicated, the address of each of the following persons is 303 Twin
      Dolphin Drive, 6th Floor, Redwood City, California 94065, and each such person
      has sole voting and investment power with respect to the shares set forth
      opposite his or her name.
Shares
                of
Percentage
                of
Common
                Stock
Common
                Stock
Name
                and Address of Beneficial Owner
Beneficially
                Owned (#)
(1)
Beneficially
              Owned (%)
Fred
                Angelopoulos
(2)
2,960,477
4.8
%
David
                Hancock
(3)
2,022,760
3.4
%
Kristin
                Bowman
(2)
24
                Morrin Road
Panmure,
                Auckland
New
                Zealand
1,989,892
3.3
%
Mark
                Kalow
(2)
232,933
*
All
                executive officers and directors
as
                a group
(4)
7,206,062
11.0
%
K
                One W One Limited
(5)
c/o
                BDO Spicers,
120
                Albert Street,
Auckland,
                New Zealand
37,548,700
61.7
%
Vision
                Opportunity Master Fund, Ltd.
317
                Madison Avenue, Suite 1220
New
                York, NY 10017
4,580,420
7.5
%
*
      Less
      than 1%
25
(1)
Beneficial
                ownership is determined in accordance with the rules of the SEC,
                and
                includes general voting power and/or investment power with respect
                to
                securities. Shares of common stock issuable upon exercise of options
                or
                warrants that are currently exercisable or exercisable within 60
                days of
                the record rate, and shares of common stock issuable upon conversion
                of
                other securities currently convertible or convertible within 60 days,
                are
                deemed outstanding for computing the beneficial ownership percentage
                of
                the person holding such securities but are not deemed outstanding
                for
                computing the beneficial ownership percentage of any other
                person.
(2)
Consists
                of shares issuable upon the exercise of stock options that are currently
                exercisable.
(3)
Includes
                1,011,380 shares issuable upon the exercise of stock options that
                are
                currently exercisable.
(4)
Includes
                Messrs. Angelopoulos, Hancock, Kalow and Ms. Bowman.
                Includes 6,194,682 shares issuable upon exercise of stock options
                held by the executive officers and directors, all of which are currently
                exercisable.
(5)
Includes
                1,768,697 shares that are issuable upon exercise of warrants that
                are
                currently exercisable.
(6)
Includes
                2,290,210 shares that are issuable upon exercise of warrants that
                are
                currently exercisable.
DESCRIPTION
      OF SECURITIES
Our
      authorized capital consists of 60,000,000 shares of common stock and 10,000,000
      shares of preferred stock. As of April 4, 2006, we had 6,255,400 shares of
      common stock outstanding, held by approximately 110 holders of record. Our
      common stock is listed for trading on the over-the-counter bulletin board under
      the symbol "DMDO.OB." We have one class of preferred stock, denominated "Series
      A Preferred Stock," outstanding. As of the date of this report, we had 230,869
      shares of our Series A Preferred Stock outstanding held by approximately 90
      holders of record. The Series A Preferred Stock is not listed for public
      trading.
All
      shares of our common stock have equal voting rights and are entitled to one
      vote
      per share in all matters to be voted upon by our shareholders. The shares of
      common stock do not entitle their holders to any preemptive, subscription,
      conversion or redemption rights, and may be issued only as fully paid and
      non-assessable shares. Cumulative voting in the election of directors is not
      permitted; which means that the holders of a majority of the issued and
      outstanding shares of common stock represented at any meeting at which a quorum
      is present will be able to elect our entire board of directors if they so
      choose. In that event, the holders of the remaining shares of common stock
      will
      not be able to elect any directors. In the event of our liquidation, each
      shareholder is entitled to receive a proportionate share of the assets available
      for distribution to shareholders after the payment of liabilities and after
      distribution in full of preferential amounts, if any, to be distributed to
      holders of our preferred stock. Holders of shares of common stock are entitled
      to share pro rata in dividends and distributions with respect to the common
      stock when, as and if declared by our board of directors out of funds legally
      available for dividends. This is after requirements with respect to preferential
      dividends on, and other matters relating to, the preferred stock, if any, have
      been met. We have not paid any dividends on our common stock and intend to
      retain earnings, if any, to finance the development and expansion of our
      business. Future dividend policy is subject to the discretion of the board
      of
      directors. All shares of our common stock issued and outstanding are fully
      paid
      and non-assessable.
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Shares
      of
      preferred stock may be issued from time to time in one or more series as may
      be
      determined by our board of directors. The voting powers and preferences, the
      relative rights of each such series and the qualifications, limitations and
      restrictions of each series will be established by the board of directors,
      except that no holder of preferred stock will have preemptive rights. We have
      designated 1,000,000 shares of our preferred stock as "Series A Preferred
      Stock." Upon a liquidation of the Company, the Series A Preferred Stock
      does not have a liquidation preference. Nevertheless, it does have priority
      distribution rights in the event that dividends are declared, as well as other
      rights accorded preferred stock under applicable law. The Series A
      Preferred Stock does not provide its holders with any preemptive rights, rights
      of first refusal, or director-appointment rights. The Series A Preferred
      Stock grants its holders the right to vote on all matters submitted to a vote
      of
      Company shareholders on an as-if-converted basis. All outstanding shares of
      Series A Preferred Stock will automatically convert into shares of our
      common stock on a 229.021-for-1 basis after the filing of articles of amendment,
      approved by our shareholders as required under applicable law, increasing the
      number of shares of common stock that the Company is authorized to
      issue.
The
      transfer agent and registrar for our common stock is Republic Stock Transfer,
      Inc., 5105 DTC Parkway, Suite 425, Greenwood Village, Colorado
      80111.
Item
      3.02. Unregistered Sales of Equity Securities.
As
      disclosed under Item 2.01 above and in connection with the merger transaction
      discussed therein, the Company issued an aggregate of 230,869 shares of Series
      A
      Preferred Stock to the former holders of capital stock of PureDepth, Inc.,
      a
      California corporation, and other securities having the right to purchase
      approximately 30,557,857 shares of our common stock, all of which were
      unregistered. For these issuances, the Company relied on the exemption from
      federal registration under Section 4(2) of the Securities Act of 1933. The
      Company relied on this exemption based on the fact that there were approximately
      90 shareholders of PureDepth, Inc. who were recipients of such unregistered
      shares in connection with the merger, all of whom, either alone or through
      a
      purchaser representative, had knowledge and experience in financial and business
      matters such that each was capable of evaluating the risks of the investment,
      and had access to information regarding PureDepth, Inc., Diamond One, Inc.
      and
      the merger transaction.
Item
      5.01. Changes in Control of Registrant.
The
      disclosures set forth in Item 2.01 above are hereby incorporated by reference
      into this Item 5.01.
Item
      5.02. Departure of Directors or Principal Officers; Election of Directors;
      Appointment of Principal Officers.
The
      disclosures set forth in Item 2.01 regarding the reconstitution of the Company's
      board of directors, the resignation of the Company's Chief Executive and Chief
      Financial Officers, and the appointment of new Chief Executive and Chief
      Financial Officers, are hereby incorporated by reference into this Item
      5.02.
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Item
      9.01. Financial Statements and Exhibits.
(a)
As
      a
      result of the merger transaction described in this report, the registrant will
      file audited financial statements of PureDepth, Inc. by amendment, as permitted
      by Item 9.01 of Form 8-K.
(b)
As
      a
      result of the merger transaction described in this report, the registrant will
      file certain
pro
      forma
financial information by amendment, as permitted by Item 9.01 of Form
      8-K.
SIGNATURE
Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned hereunto
      duly authorized.
DIAMOND
                ONE,
                INC.:
(
Registrant
)
Date: April
                6, 2006
By:
/s/ Kristin
                Bowman
Kristin
                Bowman
Chief
                Operating Officer, Secretary and
acting Chief Financial
                Officer
28