Ellery, What do you mean you have not heard anything from the company recently? Here is what they told us two weeks ago.
Our Growth Strategy
Volumetric 3D Strategy
The Company plans to commercialize the CSpace volumetric 3D technology through customer funded research and development contracts and technology licensing agreements with companies like Boeing, Lockheed Martin, Siemens, and General Electric for high value applications like air traffic control, design visualization, and medical imaging. Although we do not have any definitive agreement in place that provides for such funding or licensing arrangements, we believe such companies would be interested in entering into such arrangements based on past and existing discussions our management has had with such companies. For example, Boeing provided letters of support for certain government grants that we have applied for, with the proviso in the letters that if the grant were to be awarded they would have an interest in working with us on the specific project. Representatives of Boeing have visited our facilities in Tulsa and viewed our original lab prototype and have indicated an interest in having our next level of prototype presented to their management group in St. Louis. We have no formal agreements or commitments from Boeing beyond these ongoing discussions. Lockheed Martin has inquired about our technology through the University of Oklahoma, however, we have no ongoing discussions taking place with the company. Mr. Aroesty, a director on our Board of Directors, sold a company to Siemens and believes we could use his contacts at Siemens to market our technologies. Furthermore, we have had general discussions with a number of similar companies, such as Honeywell, General Electric, ShuffleMaster, regarding our CSpace technology. It is our plan to hire a dedicated business development person with existing relationships and credibility with these and other similar companies and to leverage our management’s industry contacts to market our technologies to these companies. The above commercialization plan depends on our ability to convince potential customers that products based on our technology will meet their requirements and that the technical risk in developing products based on our technology will be acceptable to these potential customers. We are targeting high value applications that typically require products to be customized to the customer’s application. Since we understand the capabilities and limitations of CSpace better than potential customers, it is not unusual for this type of customer to ask the technology developer (in this case 3DIcon) to do most or part of the product development for or with the customer in exchange for funding by the customer. In 2013, we plan to solicit companies to enter into customer funded development contracts to develop our technology for or with those companies. Our goal is to generate sufficient funding from such arrangements that would meet or exceed the incremental costs of developing product prototypes for or with customers. If we are successful in completing the initial product prototypes, we anticipate generating licensing revenues from our CSpace technology begin in mid-2014. The Company believes that it has an experienced display industry and public company management team with a proven track record of successfully commercializing multiple display technologies to move our CSpace technology strategy forward.
Figure 2 - CSpace Architecture
In March of 2012 the Company implemented a new evolutionary, step-by-step commercialization strategy for the CSpace volumetric display technology. Under this strategy we are developing multiple staged prototypes (laboratory and trade show) with successively higher performance (brightness, resolution, and image size). Since then, we have made better than expected progress on the second laboratory prototype, which we call Lab Proto 2. Working off the CSpace architecture illustrated in Figure 2 above, Dr. Refai and Dr. Melnik have already increased brightness by 50 times (50x) that of Lab Proto 1 so that the images displayed by Lab Proto 2 can be easily seen in typical office lighting. Our technical team has also increased resolution by approximately five times (5x) that of Lab Proto 1.
Figure 3 - CSpace Timeline
Although Lab Proto 2 is a working prototype with significant improvements over Lab Proto 1, our technical team is also in the process of increasing the image size of Lab Proto 2 by a factor of eight (8x) and we hope to achieve such image sizes by October of 2012. In parallel, the technical team is redesigning the scanning subsystem that creates the Z-axis “slices” (or depth) and that redesign is expected to improve brightness by another factor of ten (10x). Taken together with the 50 times higher brightness already achieved, we expect, that once completed, Lab Proto 2 will be at least 500 times (500x) brighter than Lab Proto 1. Because of th e larger image size and the much higher brightness we expect to see much higher resolution as well.
Once Lab Proto 2 is complete, the Company plans to develop a third generation laboratory prototype, Lab Proto 3. The goals for Lab Proto 3 are to develop a lower cost and more scalable image chamber material (plastic or glass plus phosphor) and to use that new material to construct an even larger image chamber than we are building for Lab Proto 2. As illustrated in the CSpace Timeline (Figure 3 above), the Company plans to complete Lab Proto 3 by March of 2013 and believes that Lab Proto 3 should be the last laboratory prototype we will need to build.
We believe that Lab Proto 3 will enable the Company to credibly engage with potential customers and secure customer funded development contracts to develop even larger and higher resolution product prototypes. If we are successful in securing customer funded development contracts, we anticipate the development of various product prototypes, the first of which we have been calling the Trade Show Prototype. It is likely that in exchange for funding of the Trade Show Prototype, our initial customer will require an exclusive license to the technology in a particular field of use (e.g. civilian air traffic control). The Company believes that any such exclusive license will be based on a set period of time during product and/or market development and based on performance thereafter. Failure by the customer to meet agreed upon performance criteria would most likely result in the license becoming non-exclusive. Any such exclusive license agreement would preclude the Company from working with other customers in that field of use during the period of the exclusive license. The Company does not believe that this strategy for funding the Tradeshow Prototype will significantly impact the revenue potential of the technology given the number of potential applications (fields of use). If successfully developed, the Trade Show Prototype, which is illustrated as an artist concept in Figure 4 below, will be fully packaged and portable so that it can be used for trade shows and on-site customer demonstrations. We believe that the Trade Show prototype will enable the Company to market and secure licensing agreements with large government contract ors and large medical or industrial products companies. The Company plans to hire a full time business development person with existing management relationships with potential CSpace customers in order to secure these customer funded development contracts and technology license agreements.
Figure 4 - Artist Concept Of CSpace Trade Show Prototype
Flat Screen 3D Strategy
In order to generate revenue sooner than the CSpace technology will allow, the Company plans to use stock to purchase small private companies that will provide it with significant advantages and immediate revenue in the $15B digital signage market.
Since March of 2012, the Company has been evaluating a number of second-generation glasses-free flat screen 3D display technologies and the companies that are developing these technologies. Our goal was to identify a new technology that could deliver significantly better performance (3D impact and image quality) than current large area multiple-viewer glasses-free 3D flat screen displays without compromising resolution and brightness, as do current displays. The ideal company would also have a great technical team, a broad patent portfolio, and a credible technology roadmap to ensure that these competitive advantages are sustainable into the future.
As a result of the above evaluation process, the Company has recently signed a non-binding Letter of Intent to acquire Dimension Technologies, Inc. (DTI) www.dti3d.com located in Rochester, NY. Based on our analysis to date, DTI appears to meet all of our requirements and in addition appears to be reasonably self-sufficient since its founding primarily due to its continued success at securing government funded research grants. The DTI management team also recognizes the value of the display industry veterans that make up the core of the 3DIcon management team. Please keep in mind that while the Letter of Intent does detail some terms of the acquisition, it is subject to the completion of an audit of DTI’s financial statements and confirmatory due diligence by both parties and therefore is not legally binding. Over the next 60-90 days it is our intent to complete that due diligence and once completed to our satisfaction, we intend to consummate the acquisition as soon as possible.
The DTI acquisition or another similar acquisition, if completed, will be the cornerstone of our flat screen 3D display business just like CSpace is the cornerstone of our volumetric 3D display business. Given how far along DTI is in developing products, we estimate that initial products based on their technology can be delivered to market in approximately 12 months. If the acquisition is completed, we intend to make and sell products based on the DTI technology for commercial and industrial markets (e.g. digital signage) and license the DTI technology to large Asian display companies for use in consumer products like televisions, desktop monitors, laptop computers, tablets, and smart phones.
In addition to the above flat screen 3D display company acquisition, the Company has begun initial discussions with candidates for a complimentary acquisition: a digital signage content company. This acquisition will provide immediate revenue and complement / drive demand for and showcase the capabilities of the flat screen 3D displays that could be developed if we acquire DTI. Based on primary market research conducted by the Company, the lack of high quality content (in particular advertising) is currently and has been the top adoption barrier for companies considering the deployment of digital signage. This is particularly true for 3D digital signage content where there are very few digital signage focused content companies (creative firms) that have experience in creating high quality 3D content. It is our intent to acquire one of the top private 2D digital signage content companies and then to develop 3D content creation capabilities within that company. We believe that high quality 3D content tailored to the 3D displays of DTI will drive demand for these displays and at the same time provide the Company with an annuity revenue stream tied to the 3D displays.
Currently, we do not have any agreements in place that would allow entry into the flat screen segment of the glasses-free 3D display industry or digital signage industry and no assurances can be made that such an agreement will ever be consummated. However, even if any acquisitions or partnerships are consummated, no assurances can be made that the Company could successfully bring to market such technologies.
