EON REALITY COMPANY OVERVIEW

Overview


Executive Summary

Founded in 1999, EON Reality is a privately held US corporation based in Irvine, California. The Company is the world's leading interactive three-dimensional visual content management software provider. Its software tools and applications give enterprises the ability to create realistic and authentic product experiences based on 3D visualization technology, which fosters a direct and intuitive interaction with real-world perspectives of a product in its designated, natural context. The Company’s software adds significant value to marketing, sales, training, and product planning operations by allowing the enterprise to effectively capitalize on existing investments in product lifecycle management (PLM). Utilizing 3D informatics increases product sales and marketing event retention, while reducing design, maintenance, service and training costs.

By using Rich 3D Computer Mediated Communication solutions EON generates Sensory (Visual, Audio & Touch) Exciting Interactive Experiences that more Effectively Transfers Information, Knowledge and facilitates Decisions. Eon’s vision is to become a global leader in 3D Sensory (sight, hearing, touch) Based Computer Mediated Communication that allows users to Experiences more.

The Company is in a strong growth phase and has during 2006 significantly expanded its operations in the area of Augmented Tele Presence (allows Mixed Reality Distance Communication) , Rich Media Publishing (launching during 2007 EonExperience world’s Largest Online Interactive 3D Experience Streaming Service & 3D Library) and Location Based Experiences ( launching the Experience & Discovery Center concept).

In addition to its headquarters in Irvine, EON has a development office in Gothenburg, Sweden and sales and support offices in Chicago, IL, Valencia, Spain, Lund, Sweden and Melbourne, Australia. The Company currently has resellers and support staff in more than 35 countries. It has distributed more than 200,000 personal edition licenses and has systems installations in more than 25 countries.

The Company’s underlying technology platform is based on more than eleven years of R&D and delivers complete 3D visualization and virtual reality features for Interactive Product Content Management (IPCM) and Simulation-Based Learning (SBL). EON offers cutting-edge visualization performance, seamless enterprise-level data exchange, and a highly flexible, scalable deployment publishing format and software architecture.

The global interactive 3D market has surged to US$43 billion in sales during 2003 and is expected to grow to US$77 billion by 2007. The growth reflects growing global acceptance of interactive 3D/VR as a mainstream technology in industry, education, training, and research. Within the broader 3D/VR market, the IPCM and SBL segments are expected to grow rapidly over the coming years, leveraging large repositories of existing 2D and 3D CAD assets while taking advantage of decreasing hardware costs for Interactive 3D and immersive installations. IPCM and SBL will continue to become a more integral part of PLM strategies.

The global interactive 3D market trends are especially strong in EON’s new growth areas which drive the demand for Rich Media Publishing and Location Based Experiences. Here are a few trend highlights that create a perfect storm scenario for an upcoming 3D Tsunami:
• IBM, Google & Microsoft are betting their future on “a 3D internet” being the Web 3.0 on line (see right)
• The Game Industry is fueling and setting the consumers 3D expectations with new technologies (such as Nintendo, Playstation 3)
• Companies, Academic Institutions and Consumers crave User generated experiences “a la YouTube” but in 3D and lack physical location based experiences that matches their expectations ( 3D, Interactive & Immersive)
• Hollywood is moving to the next step, eager to Embrace the EON 3D Experience (Universal Studio, MGM etc)
• Amusement parks like Disney are in discussions with EON for four new different 3D application projects
• TelePresence is now becoming mainstream – Cisco, HP, IBM are all launching TelePresence solutions that need EON’s tele-immersion technology component
• Hospitality, Retail Malls & Gambling Industry are in discussion with EON to create halve dozen 10 MUSD Experience and Discovery Centers based on 3D experiences (MGM, Arizona EDC, ICTVR, Singapore etc) and Global 1000: Boeing, DB, GE, Siemens are looking for 3D sponsoring opportunities


With its extensive technology and product base as well as its proven ability to deliver working ROI-based solutions and customer value, EON Reality is well positioned to immediately benefit from sales, marketing and support organizations' increased adoption of IPCM and SBL as well as address to the new markets. EON Reality can fully deliver on the requirements of market-driven organizations, and, with its products playing a central role in its customers' business processes, stands to maintain and further advance its leadership position in delivering the richest, most powerful IPCM and SBL applications available.

Here is a summary of EON’s business areas and where you are headed:










BUSINESS CONSIDERATIONS

BLUE CHIP CUSTOMER BASE. EON’s large customer base includes a broad cross-section of Global 1000 companies. The Company’s customer base is indicative of the applicability of 3D solutions across industries:

• Aerospace: Boeing, Airbus, Bombardier, Cessna, Lufthansa
• Automotive: Toyota, Suzuki, Paccar
• Retail/Consumer: Office Depot, Absolut, Philip Morris
• Medical: GE Healthcare, Stryker, Orthoclear
• Consulting/Engineering: Bechtel, Deloitte & Touche
•


BROAD MARKET ACCEPTANCE. EON Reality solutions have gained broad market acceptance among corporate and academic customers, as well as among consumers. The Company has installed systems in more than 25 countries in Europe, Asia, the Middle East and North America. In addition to the Global 1000 customers referred to above, the Company’s customers include 180 institutions of higher education. EON has sold more than 200,000 personal edition licenses of its software and its 3D browser plug-in has been downloaded over 36 million times.

RAPID, PROFITABLE GROWTH. For the calendar year 2006, EON Reality projects $17 Million Gross revenue with estimated 1.7 MUSD EBITDA, representing rates of 96% and 529% over 2005 net revenue and EBITDA. The Company projects revenues of $30 MUD Gross, 18 MUSD Net in 2007 with EBITDA of 4 MUSD.

UNIVERSAL COMPATIBILITY. The Company’s 3D visualization tools are able convert data from 120 formats of which 55 different CAD formats into 3D objects, which allows users an unprecedented level of access to 3D while making the visualization process simple enough that a novice user can create 3D objects. EON products are also able to output to a variety of competing 3D technologies (for example, stereoscopic displays, holographic displays, or immersive rooms) in order to provide flexibility to clients and to deploy 3D campaigns quickly and easily. EON products manage every step of the 3D content chain, which provides end-users with an integrated, intuitive solution. EON’s underlying technology platform, based on more than eleven years of R&D, has unmatched capabilities to import 2D data, render virtual reality visualization in multiple publishing formats, deploy data through a proprietary enterprise-level server system, and integrate into proprietary enterprise workflow automation applications.

LARGE RAPIDLY GROWING MARKET. According to Insight Media, the global interactive 3D market was $43 billion in 2003 and is expected to grow to $77 billion in 2007. Sales of 3D displays are projected to grow from 2 million units in 2003 to 8 million units in 2010. As hardware technologies continue to improve, new market applications for interactive 3D will rapidly emerge. Leading these developments, EON has already created footholds in a variety of industries. While the overall 3D market is still in its early stages, the IPCM and SBL segments have demonstrated immediate revenue potential. IPCM has found considerable traction particularly in the sales and marketing operations of heavy manufacturers (aerospace, automotive, defense) and other industries (construction, engineering, commercial development) where complex products are not easily presented to buyers. The teaching potential of SBL has been validated by the adoption of EON’s products in many colleges and universities worldwide. Over 120 institutions of higher education, as well as many commercial enterprises, utilize EON to instruct and train their students and employees. EON is singularly positioned for continued growth as demand for IPCM and SBL solutions continues to increase across multiple markets.

WELL-POSITIONED TO TAP FUTURE 3D MARKETS. The Company has identified additional markets in 3D that offer very large growth opportunities. Within Rich Media Publishing area EON will be launching during 2007 EonExperience, which is expected to become the world’s Largest Online Interactive 3D Experience Streaming Service & 3D Library. Within Location Based Experiences EON has already launched the Experience & Dicovery Center, a 10 MUSD solution per location and within Augmented Tele-Presence EON has launched during 2006 a range of new products that allow Mixed Reality Distance On line Communication. These solutions have already gained traction and will continue to grow as general adoption of 3D continues. EON’s advanced software is capable of taking advantage of new markets, and will easily integrate into new 3D presentation functions as they become more widespread.

PRODUCTS ADDRESS BROAD USER BASE. EON’s mix of authoring and application tools was created to address any level of user sophistication. Its most basic application utilizes an easy-to-use, graphical interface that novice users can manage, while it also offers a Software Development Kit that lets those with programming knowledge author their own applications and 3D tools.

FULL SUITE OF SOFTWARE PRODUCTS. EON’s solutions are comprised of authoring tools, applications, and server software. The EON system addresses 3D imagery on multiple levels of the stack, providing an easy to use, integrated solution.

MARKET LEADER IN INTERACTIVE 3D SOFTWARE MARKET. EON’s unique 3D authoring tools and visualization solutions are years ahead of competitors in high-growth segments of the interactive 3D software market such as Interactive Product Content Management and Simulation-Based Learning. The Company’s engineers have contributed over 140 man-years of software development, and EON’s large investments in R&D and leading position in the market will continue to provide it with a significant competitive advantage.

COST EFFECTIVE SALES AND MARKETING TOOLS. 3D display is a proven marketing technique that effectively increases advertising ROI. EON’s products have successfully been deployed in trade shows, kiosks, showrooms, and other recreational facilities. Utilizing 3D displays significantly enhances foot traffic and mindshare, and is particularly useful in helping consumers visualize products that are not physically available.

MARKET-LEADING MANAGEMENT TEAM. The Company’s management has a combined 260 years of experience in 3D computer graphics, real-time algorithms and Virtual Reality technologies and are recognized as leading innovators in their respective fields. The Company’s management is at the forefront of establishing standards for the evolving 3D industry and was behind the creation of the first consortium of software and hardware providers for the 3D industry. In addition to EON, the consortium consists of NVIDIA, Christie Digital and HP. Microsoft is a license and Technology Partner and IBM is the process of becoming a full IDC consortium Member.



OVERVIEW
COMPANY OVERVIEW


EON Reality, Inc. (“EON” or the “Company”) is the world's leading interactive visual content management software provider. By using EON software solutions, companies can effectively capitalize on existing investments in Product Lifecycle Management (PLM) to increase sales, communicate product functionality more effectively, and decrease the cost of service, training and technical support.

The Company’s customers include: Office Depot, Suzuki, Audi, Nokia, Dell, Bank of America, RTKL, Samsung, Siemens, John Deere, Atlas Copco, Toyota, Tetra Pak, Boeing, Bombardier, Intel, Peterbilt, Lexus, Shimano, Audi, Bechtel Corp., Eastman Kodak, Maytag, BP, GE Healthcare, Lufthansa Technik, and Parsons Brinkerhoff.

EON Reality’s software has broad applicability across multiple segments of the interactive 3D market, the two largest of which are Interactive Product Content Management (“IPCM”) and Simulation-Based Learning (“SBL”).

IPCM, EON’s largest market at present, has emerged in the wake of the mass adoption of computer-aided design (CAD) and product lifecycle management (PLM) technology in recent decades. While CAD and PLM facilitate the engineering and design of large, complex products and buildings such as airplanes, trucks, and power plants, their 2D design content is fundamentally limited. This data is linear, non-interactive, and cannot be used in many emerging 3D visualization contexts such as the Internet, laptops, auto stereo displays, multi-wall environments, and 3D stereoscopic screens.

IPCM takes static 2D data and brings it to life, transforming it into interactive 3D content for communicating sales, technical information, marketing highlights and complex support procedures. It can efficiently take data from a single source and repurpose it in a variety of display contexts, such as the Internet, on a billboard, on a large screen in a tradeshow, or in an immersive room. IPCM allows enterprises to capitalize on investments in engineering design to increase sales productivity, and to reduce documentation, support and training costs.

Moreover, IPCM enables a host of applications that integrate 3D visualization into sales, marketing, and training workflow. For example, a 3D visualization and sales tool such as EON Sales Assistant offers 3D product configuration coupled with a financial estimation engine, sales performance tracking, and customized marketing material production.

To provide a visual example of IPCM, the images on the next page depict EON’s IPCM application for Paccar/Peterbilt, a multinational truck manufacturer. In this case, IPCM created virtual exploration of configuration options to enable truck customization. IPCM took existing 2D design data and created a new level of sales interactivity in a market where every customer demands customization.


EON Sales Assistant application for Paccar / Peterbilt.

EON’s second largest market is Simulation-Based Learning (“SBL”). SBL represents the next evolutionary stage of e-learning, where learning is conducted with a computer and benefits from the interactivity of an online environment. While e-learning has heretofore depended on visualization in 2D, SBL creates interactive 3D visualization applications for educational experiences that dramatically enhance learning and knowledge transfer. The SBL market ranges from education for community colleges and technical education programs to training for plant maintenance, product support, and other visual applications.

A visual example is depicted in the picture below, in which SBL facilitates training for a nuclear power plant in South Korea. A visual configurator allowed students to rotate any location inside the plant on any axis to view from any angle, zoom in on key features and detail, pan across the screen to highlight features, and interact with components in their natural environment. In this example, SBL dramatically improved productivity and reduced costs by 90% compared to past training that relied on static, 2D images and materials that lacked visual interactivity.













The EON technology solution is comprised of an underlying platform of authoring tools that supports a growing line of end-user applications. The authoring tools allow users to create 3D content and interactive applications, which can then be used to manipulate and display 3D data. The applications provide specialized business, marketing and product design functionality.

The Company’s suite of products provides a comprehensive 3D data management solution. The technology platform is based on more than eleven years of R&D, and delivers complete virtual reality features, with top-of-the-range visualization performance, seamless enterprise-level data exchange, as well as a highly flexible, scalable deployment publishing formats and software architecture.

Current limitations on 3D adoption are not due to a lack of display technology, but rather a lack of readily available 3D content. The Company’s technology enables users to rapidly turn existing 2D data into 3D products, and its versatility allows clients to display these images via a wide variety of 3D display technologies.

EON’s key differentiators include:

Scalability: The software can display 3D imagery across multiple publishing formats, such as immersive 3D stereo displays, kiosks, and websites

Simple Data Transfer: Over 120 native formats, including 55 CAD formats, are supported by EON’s software, enabling seamless conversion from 2D to 3D

High Visual Quality: Bordering on reality, which features pixel/vertex shaders, real-time reflections, shadows, light maps, and other advanced visual characteristics

Fast Development: Complex simulation scenarios and configurators can quickly be created based on visual programming

Realistic Representations: Humans and mobile objects’ movements resemble reality

Physics-Based Simulation: Objects and system behavior are modeled using calculations based on natural laws

Large Data capacity: Users can access large quantities of data through dynamic download and unload


EON PRODUCTS





Authoring Tools

EON’s authoring tools product line offers three solutions to address different levels of user sophistication. The Company’s authoring and application products have been validated by substantial user adoption, and its long track record of success in the marketplace has enabled EON to refine its product offerings and position itself as the technology and market leader in 3D visualization software. Importantly, the Company’s products are able to convert over 120 2D design formats into 3D images. EON’s authoring tools and back-end software form a comprehensive platform that enables users to create, display, and manipulate 3D content.

EON Studio
EON Studio is the Company’s standard product offering. Operating EON Studio requires no programming experience, and it rapidly and easily develops interactive 3D applications. Studio has been deployed in marketing operations to give consumers visual access to products that they would otherwise not be able to see. For example, it allows a user to compare how a car would look with a variety of features, colors, or accessories.

EON Professional
Professional supports over 120 native CAD and 3D/2D formats and allows users to create more complex simulations. The solution allows users to create content with a higher level of realism using real-time visual effects, and install plug in modules to simulate more advanced conditions. For instance, a physics module allows users to simulate complex mechanical systems in real time, and a human module provides moving humans for EON applications. EON Professional allows users to create both IPCM and SBL applications tailored to specific functional needs.

EON SDK
The Company’s Software Development Kit is based on the .net architecture and enables the creation of custom EON features. Using Microsoft Visual C++, developers can create customized EON Studio modules and nodes that can be license-protected.


Applications

The Company’s applications support marketing, sales, and product design activities. EON’s software suite enables companies to effectively capitalize on existing investments in PLM to increase product sales, increase marketing event retention and reduce maintenance, service and training costs. The software features a realistic and authentic product experience with a high level of interactivity, simulation realism, and rendering quality optimized for high performance on today’s standard PCs and Internet. This fosters a direct and intuitive interaction based on movement tracking, immediate visual and movement feedback, and visualization of environmental data. The suite goes beyond traditional sales, marketing and support tools by offering a real-world perspective of a product in its designated, natural context. These applications allow users to take advantage of 3D in order to enhance both ICPM and SBL systems.

EON Sales Assistant
EON Sales Assistant is a complete sales and configuration authoring tool that creates a visually driven sales process coupled with financial estimation engine, sales performance tracking, and quote and customized brochure generation capabilities. The product enables a customer to select and configure a product of their choice in full 3D, allowing them to interact with a product by zooming, rotating, panning, and adding or removing accessories.

EON Planner
Planner is an application framework that allows customers to visualize their complete product environment and appropriate configuration of products. The framework is comprised of CAD import/export functions, a 3D product catalogue, 2D/3D layout, distance measurement, configuration and layout planning, and generation of bills of materials and quotes.

Raptor
Raptor is an Internet browser plug-in that allows web developers and web page viewers to display and interact with 3ds Max content in real-time. Since its introduction in 1999, Raptor has been downloaded over 36 million times.

EONExperience
EONExperience is an online Interactive 3D Experience streaming service and library that allows users to experience and share 3D Experiences. The rising popularity of 3D, internet-based gaming like Linden Lab’s “Second Life” represents a significant growth opportunity that leverages EON’s core competencies. EONExperience’s capabilities allow users to quickly create and search for 3D objects in order to interact in an internet-based 3D environment. The Company’s existing authoring tools and applications will allow corporate clients the ability to integrate their existing 3D marketing collateral into the EONExperience environment.






For a detailed Description of other EonExperience Products please see appendix 2


Dali (Release in Q1 2007)
Dali is EON’s latest 3D content editing tool, optimized for use with the Windows Vista operating system. The latest kernel offers an intuitive interface and access to a large web-based 3D repository of items that will allow all levels of users to create rich 3D content. The product harnesses EON’s leading-edge technologies and combines them in a user-friendly, web-connected application that will extend the ease of use of 3D imagery. It features advanced functionality such as visual search of objects and components, a 3D object and environment library, 3D sound, configuration and interaction, and animation.



Sample Integration of EON Reality with Enterprise System. EON’s software offerings span multiple layers of the stack to provide a complete, integrated solution to 3D visualization and workflow management.

Displays



For a detailed Description of other EON Products please see appendix 1

EON’s software offerings are compatible with virtually all methods of 3D display. The Company’s technology is distinguished not only by its ability to convert over 120 different 2D formats into 3D objects, but also by its ability to display these objects through many commercially available technologies. EON software can export 3D images to multiple formats, including PDF, as well as to a wide range of digital display devices. Its solutions integrate with advanced display technologies that allow users to have interactive, immersive 3D experiences. EON is revolutionizing the interactive screen displays for signage and billboard market by providing an unprecedented level of interaction with displayed media.

EON’s software was designed to optimize 3D experiences on current and next-generation displays. 3D display technology varies widely in method and visual quality, but the Company has integrated its software with many technologies to provide a comprehensive line that allows clients to utilize the best display technology for their specific needs. EON’s advanced display solutions are able to enhance a broad array of business processes, sales and marketing activities, communications, and teaching procedures.





EON 3D & Holographic Display Solutions EON Immersive Large Display Solutions

EON Artificial-I
• Auto stereoscopic – no eyewear is required
• Multiple viewers at a time
• Switchable between 3D and 2D modes
• Enhanced graphics engine for high quality 3D effect
• Fully interactive real-time 3D experience

EON Icatcher
• Immersive stereoscopic display solution that uses LCD or DLP projectors together with EON software
• Intuitive, real-time interaction
• Realistic 3D imagery that is responsive to the user's action

EON I-Crystal & EON I- Presence
• EON I-Crystal is a Holographic Communications Display where 3D objects float in space
• Tele-Presence device that combines video and VR
• Videoconferencing option for remote meetings integrated with system
EON Concave
• Immersive, concave stereoscopic display that uses LCD or DLP projectors together with EON software
• Intuitive, real-time interaction with front or rear projected single or multiple screens
• Realistic 3D imagery that is responsive to the user's action, and can display multiple objects or a full environment.


EON Touchlight™
• Touch-screen technology that enables natural and intuitive bare-hand interaction with 3D objects
• High bandwidth surface for gesture-based interaction

EON ICUBE
• Multi-sided immersive environment (3, 4 or 6 walls)
Full sensory experience utilizes virtual imagery and 3D sound
• Objects float in 3D space and can be touched and manipulated by users in real-time
• Immersive content creation and deployment is easy enough to be used by non-programmers


EON Server

The EON Server is a modular server-based service for distribution and tracking of EON content over the Internet or for managing large product repositories. The server combines two systems based on proprietary, patented technologies: EON Dynamic Load, which is designed to handle the distribution of large files, and EON Track, which tracks user interaction with databases, to allow users to rapidly distribute the large amounts of digital data required to support 3D visualization. The EON Server’s monitoring capabilities enable the tracking of user interaction data and database information usage.



EON SOLUTIONS

There is substantial market demand for a more effective medium to convey product information for marketing, sales, merchandising, support, service and training. While manufacturers, distributors and retailers in all industry segments each have unique requirements, all have a common need for improved and integrated communication tools. The EON Product solution works for manufacturers, distributors, retailers, and any organization that provides product support, service and training.

Sales

Companies choose the interactive 3D solution from EON Reality to expand sales by bringing their products to life and by giving users the opportunity to visualize the complete product combinations and to interact with them. Through the use of EON Reality's solutions an end-user can:

• See and explore a product in 3D from any angle or zoom perspective;
• Try in real time the product's functionality as well as interact with and configure its features;
• Buy the product in the selected configuration and obtain service and support information after the purchase.

EON Reality's solutions help manufacturers in the sales process by augmenting product specifications and information available throughout their distribution chain. For OEM's with large, complex components, EON’s sales solution helps customers and distributors visually understand configuration options and technical specifications. In addition, product development cycles are shortened as EON objects can be used to pre-sell products before full production begins. And companies can enhance their marketing power on the web with better visual presentation of their products.

Support and Training

EON is extensively used as a tool to build simulation-based 3D distance learning applications. The main application area within e-learning is basic skills training in which, for example, an assembly or maintenance sequence can be learned or re-freshened over the Internet instead of training on the actual product. Also, hazardous training and service areas such as nursing and banking have been successfully implemented using EON. Besides the interactive 3D component, EON also tracks what a student is actually doing within the training environment.

The game-like training environment EON provides increases the engagement of students significantly compared to traditional training methods, which motivates students to perform and learn faster.

EON’s applications feature enhanced capabilities for creation of interactive training applications, both for instruction, practice and assessment. Simulations can contain a high level of interactivity giving students a realistic experience. EON Training base contains, for example, nodes for assembly/disassembly, instructions in text or audio and evaluation of performance. Furthermore, there are nodes for creating sequential courses of events.

Companies gain a significant competitive advantage using the EON solution to lower product-related training, maintenance and support costs. The advantages of EON applications include:

• Automating redundant FAQs
• Providing 24/7 maintenance information. Customers and support staff can use EON to access user-directed maintenance and repair instructions that describe and visually demonstrate important information
• Decreasing customer support requirements. Interactive visual images with full product functionality provide assembly instructions and product use information with less need for help from customer service personnel.
• Decreasing product returns. EON applications ensure that customers order the right product and the right configuration.

EON support and training applications include:

• Customer training through interactive manuals and training applications
• Internal training of maintenance personnel, salesforce and support staff as well as assembly line training
• Training of service and support staff through scenario-based problem solving, online support, interaction with digital products

The advantages of EON applications in support and training include:

• Up to 55% time and cost reduction compared to classroom training
• Up to 80% time and cost reduction compared to on the job training
• Examples of 25% increased retention and skills transfer compared with classroom training
• Close to real experiences rather than just theory
• Repetition and assessment
• Safe and realistic hazardous situation training
• 24 hour accessibility


Maintenance and Repair

EON applications allow users to see, inspect, test, and understand a wide range of important product information including operating instructions, maintenance and repair procedures in realistic interactive 3D. Advantages of utilizing EON applications include:

• Easy integration into existing IT systems and internet channels
• Accurate and complete product information. Digital images of products contain all characteristics of the actual objects including behavior, textures, functionality and other information
• Compact file size. Object geometry is optimized to allow for Internet use and fast distribution whether browsing through a product manual, walking through a virtual showroom, getting detailed specifications, or seeing how the products actually work and interacting with them
• Tracking of user interaction. Companies are able to monitor how product information is used for maintenance, repair and product support
• Drill down learning. EON solutions include features such as "mousing over" or right click activation of the product information database to provide additional levels of product information
• 24/7 availability. EON provides secure, 24/7 access to detailed product support information in real time



FUTURE PRODUCT AND MARKET TRENDS

EON Reality’s products are on the cutting edge of 3D visualization technologies, and the Company continues to develop new products that will provide significant growth opportunities in new markets. Beyond its current focus on the IPCM and SBL markets, EON has identified spaces within 3D that have demonstrated strong growth. Hardware and software capabilities have advanced to the point that 3D is no longer limited to niche entertainment functions, but rather can enhance business processes, including communication, collaboration, marketing, and planning.

Augmented Tele-Presence (ATP)

New technologies are allowing people to move away from purely physical communication to “augmented/mixed” reality communication and interaction. Augmented Tele-Presence is the real-time display of 3D information and images that assists and enhances collaboration and interaction. Enhanced visualization will become ubiquitous, as it will provide added contextual information to functions like communication, product development and R&D, and medical imaging. Augmented Tele-Presence will allow users to reduce travel costs, enhance presentations, enable hands-on experience and customization of products, and provide contextually relevant information.

Communication and Collaboration

Virtual reality will allow people to interact from disparate locations, reducing the need for human congregation. Dedicated office space for virtual reality interaction will become increasingly common. “Mixed Reality” immersion environments, such as EON I-Presence will be ubiquitous. EON’s I-Presence system enables communication that blends virtual reality, web, and video to let users have a virtual presence in conferencing activities. ATP will also allow geographically disparate offices to collaborate on product development and R&D, and enhance learning in the fast-growing distance education market.
For a detailed Description of other EON ATP Products please see 1

Medical Imaging

The Medical Imaging vertical of 3D visualization is already gaining considerable traction. 3D imaging will allow doctors to better identify illnesses like cancer. Clinical testing of this application of the technology is underway at Emory University and the University of Pittsburgh Medical School. ATP will also assist in operations, particularly in minimally invasive surgeries that require the surgeon to conduct an entire procedure using a video screen.

ATP will utilize many technologies that EON has or is currently developing: immersive 3D displays and superimposed live video and intuitive interaction techniques like EON I-Presence, EON Touchlight, and EON Virtual Presenter.

Rich Media Publishing

Web-based 3D experiences

Rich Media Publishing presents a significant growth opportunity for EON. Advances in hardware and 3D software like EON’s will let end-users experience 3D visualizations across a scope that was impossible in the past due to constraints in technology. 3D visualization will serve as a foundation for advances in e-commerce displays, as websites will be able to overcome the distinct advantage that “brick-and-mortar” stores have by providing visual and auditory sensory feedback that is comparable to reality, and, on a long-term horizon, touch and smell. As examples, photorealistic 3D catalogues and dynamic 3D interfaces will let consumers customize clothes to body types, choose parts and accessories for cars, and visualize finished products while they are still on the drawing board. 3D visualization on the web is growing rapidly - EON’s own plug-in has been downloaded over 36 million times since being released in 2001.

Publishing Tools and Object Repositories

Beyond the Internet, 3D imagery will be able to be integrated into other media like PowerPoint and Multimedia presentations. EON’s latest product, Dali, will utilize the integration of 3D with the web to provide users with an intuitive interface that supports drag and drop functionality for 3D viewing, exploration, 3D materials, 3D object and environment libraries, 3d sound, configuration and interaction, and animation capabilities. Along these lines, the web will offer enormous possibilities for the use of emerging visual search technologies to access and develop 3D object repositories that can be used by developers to create rich media content. Matthew Brennesholtz of Insight Media (2006) notes that much of the source material for content that is displayed in 2D today actually exists in 3D, but due to display limitations is not taken advantage of (most computer games and graphics, for example, exist in 3D).

Experience Discovery Centers (EDC) and Edutainment Solutions

As an extension of location-based display solutions (for example, kiosks at trade shows, or rides at amusement parks), the market for more advanced, immersive 3D experiences in education and discovery will grow. EDC requires the integration of hardware, software and services to create next-generation 3D environments that will enhance learning and entertainment experiences. The Company’s existing experience in executing large-scale integration projects put it at the forefront of the EDC market. EON software and holographic and large immersive displays will let participants visit different places, times, and people while interacting with their 3D environment in real time.






EON will be launching a 100,000 Square feet EDC (expected order value approx 10 MUSD EON order value) which will become the main attraction of a 400 million dollar development in Arizona.


















For a detailed Description of other EON LBE Solution please see appendix 3



MARKET OVERVIEW

Recent technological developments have triggered rapid growth in the market for interactive, 3D visualization technologies. Hardware has both improved in performance and become considerably cheaper. Software now supports real-time and interactive 3D visualization technologies across a variety of applications for both the consumer and the enterprise. According to technology leader Intel, interactive 3D’s transformative power:

“Lets you examine and manipulate objects in ways not possible with two dimensions, enabling the opportunity to deliver innovative new products and services that go above and beyond the traditional two-dimensional experience.”

Due to the wide scope of visualization across industries and within organizations in areas such as product development, communications, marketing, and training, the emergence of 3D visualization technologies will leave no organizations unaffected in coming years.
After a lengthy period during which expensive and slow hardware restricted broad deployment of 3D applications, the market for interactive 3D has finally arrived. However, it is highly fragmented and unevenly deployed across industries and within organizations. Industries that utilize 3D in their production processes, like heavy manufacturing and medical imaging, have been fast adopters of 3D technology. On the other hand, sales and marketing, communications, and educational organizations are just beginning to tap the benefits of 3D visualization processes. Advances in technology have made interactive 3D a viable, cost-effective workflow enhancement. These market statistics illustrate the growing penetration of 3D environments:

• The global interactive 3D market was $43 billion in sales in 2003 and is expected to grow to $77 billion by 2007
• Second Life, the 3D virtual world created by Linden Labs, has surged from 105,000 users in December, 2005, to 1.3 million in November of 2006
• Sharp has sold three million cell phones with 3D screens in Japan since 2003
• 3D displays will see sales to the private sector rise to 8.1 million units in 2010, up by more than a factor of four from 2 million in 2003

The growth in interactive 3D reflects growing global acceptance of interactive 3D and virtual reality as mainstream technologies in specific applications across industry, education, training, and research.

While displays and related hardware components are key components of the emerging 3D ecosystem, software is equivalently critical to the mass adoption of interactive 3D technology. Functional, usable software is necessary to create 3D content and publish it content across the numerous display technologies in use. In particular, software can leverage the extensive libraries of 2D content held in enterprises, research institutions, and other organizations by transforming it from static 2D data into dynamic 3D content for publishing and interactive applications.

EON SALES AND REVENUE MODEL

EON’s unique IPCM and SBL solutions for Global 1000 companies typically follow a stepwise sales and implementation process that uses both direct sales and channel partners.

• As a first step, EON typically installs a pilot visualization project that often combines its software with display technologies from partners to introduce IPCM or SBL to a limited range of products or training exercises.
• After project evaluation has occurred and ROI is established, customers typically choose to make a much larger catalogue of product available for IPCM or a larger set of training curricula available for SBL. EON often out-sources this content production process, creating revenue opportunities for partners.
• With an initial library of IPCM or SBL content available and visible throughout the enterprise, more users require the ability to interact with 3D content, allowing EON to deploy software licenses in volume.



Typical Revenue Distribution for an IPCM installation

Interactive Digital Centers

EON has found that the visual nature of its solutions demand in-person experiences to maximize sales potential. As a result, EON has created a new business model whereby it partners with local organizations to build visualization centers known as Interactive Digital Centers (“IDC’s”). To develop IDC’s, EON partners with local organizations that bring:

 Understanding of the local market
 Quality technical resources plus the main expertise in focus areas such as IPCM or SBL
 Management and administration capacity
 Facilities and network access
 50% of the capital required for start-up and operation of the IDC

In return, EON offers its partners:

 A proven business concept
 Customer network and contacts with potential development projects
 Training and educational material
 Technology transfer
 State of the art software for IDC
 Necessary IPCM hardware
 System integration knowledge
 Experience from development of new software applications
 50% of the capital required for the start-up investment and operation of the IDC

IDC’s accomplish a variety of goals:

 Put partner’s region on the map as an international leader in visualization
 Attract key international visualization players to the region
 Create new quality IT jobs in visualization
 Create new direct revenue opportunities by attracting projects in IPCM, SBL, and other areas
 Create awareness of EON’s products that generates leads and sales outside the IDCs


CUSTOMER OVERVIEW

EON has built a customer base of over 150 Global 2000 enterprises and research institutions. Due to the novel nature of EON’s solutions, EON has developed deep relationships with its customers over many years and throughout multiple engineering and IT departments. EON’s solutions are fully integrated in customers' IT infrastructure, data flows and processes. As a result, EON customers' processes are typically tailored around EON Reality's products.

EON PARTIAL CUSTOMER LIST


3D Advanced Computer
3D Energy Creations
3D Interactive
5DT, Inc.
Aaron B
Absolut
ACAD
Airbus
Alberta College
Appsoft Technology
Arktis
Archia Ltd
ARRSO Rest
Associated Air
Atlas Copco
Bechtel National
Beijing Yiyong
Boeing
Bombardier
BP
Bracco Diagnostics
Bridge Consulting
Brite Computers
CA Avocado
CADImage Solutions
CAI
Cal Poly
Cardiac Surgery Dev
Centrum
Cessna Aircraft
CIAT
CNOTINFOR
College of Marin
Computer Sciences
Consat
Cornell University
Coventry
Cyviz
Deeplight
Design Academy
Design Integrations
Designers Vision
Doncaster
Drottn Silvia Barnsjukhus
Ellis/Signage
EPRI
Epson America
Ferrero
Flexstudio
FM Mattson AB
Gateway College
GE Healthcare
Gedas Iberia
Graphitec
Greg Carleton
GSCNE
Hawaii CC
Henry Wang
Huahuai
IM Innovations
Infotiv Visual
ISI-Dentsu
Politecnico of Milan
ITALY - Whirpool Americas
Ivolve
JEK
JTM
KCTCS
KGT
Konica
Kubas
LaserCAD
LBX
Lexus
Lufthansa
Matrix
Matrix/E-Lux
Mora
MSHA Academy
Naledi 3D
Nasa Langley/ODU
Natl Univ of Singapore
Navantia
Navigator
Neumann Homes
Next Vision
Nexus
Nihon Binary
NTU
NUS
Office Depot
OI, LLC
Old Dominion
Orthoclear
Outhouse
P B World
Paccar
Pedensia
Philip Morris
Philip See
Piiroinen
Prosopon
Purdue
RAT
Rochester Inst Tech
Romania Distribution
Samas Group
San Diego CC
Sauder Woodworking
Shoreline CC
SIMT
Singapore Distribution
Siquant
Stereovision
Stormbit
Stryker
Suzuki
Synthosys
TechTrend
TeknikCad
Temasek
Texas Tech
The Art Institute
Tipexpo
Tokyo Boeki
TP IDC
UAB Design
Univ de Valencia
Univ Deusto
Univ Madrid
Univ of Dresden
Univ of Hawaii
Univ of Idaho
Univ of LA
Univ of Louisiana
Univ of Lund
Univ of Manitoba
Univ of Qatar
Univ Rey Juan Carlos
Univ Vigo
University of Missouri
Victor Valley
Vimtek
Visual Motion
Volia Software
Volume
VR Solutions
Wales
West Valley Mission
Wichita St
WIN
WMU
Yeditepe University
Zermatt
ZG




Case Study: Suzuki

Problem / Challenge:

Suzuki's vision was to create a sales application in the Company’s dealerships that could be updated continuously over the Internet and extended online. The application needed to assist owners and managers to improve salesperson performance and create a consistent sales approach. Suzuki wanted to allow customers to select all products and be able to visually configure in real-time any accessory or color, which resulted in millions of potential product combinations. EON Reality’s software applications and authoring tools were the only solution that could meet those demands.

EON Solution:

EON integrated its server, authoring tools, and application tools to provide Suzuki with an interactive 3D Product Configurator that displays Suzuki vehicles with different option configurations. EON’s server was used to manage and track in real-time the 3D visual configuration process of the accessories and colors as well as the parts updates.
EON Studio's ease of use, rapid interaction creation, and reusability provided tremendous content production cost savings. The EON user interface (configuration template) provided a revolutionary approach to customers by providing a visually driven configuration and sales assistant. The software also seamlessly integrated financial data and significantly streamlined the quote and sales process.

Key Benefits:

• The Suzuki dealership configuration assistant has proven a tremendously successful marketing application. EON’s solution has increased dealer profit margins by allowing them to display all accessories on a motorcycle without increasing the amount of inventory carried. The innovative and exciting application provides a distinctive competitive advantage in the multi-brand dealership environment, and has increased average sales of accessories. The consistent product sales presentation approach allows dealerships to discover preferences and observe customer feedback by tracking behavior and choices, which has improved individual salesperson performance. Finally, it has decreased product returns, as customers are able to observe the product in a realistic configuration and environment.








Suzuki dealers increased sales and decreased inventory by utilizing EON Sales Assistant.


Case Study: Deloitte & Touche

Problem / Challenge:

In the highly competitive consulting industry, Deloitte & Touche must constantly stay on top of the latest technologies for communicating ideas. Throughout its history, Deloitte & Touche has consistently led the market in large-scale construction projects and continues to innovate within the highly competitive consulting market. Its strategy to approach each industry sector individually and provide customized service to meet clients' individual requirements thus demanded a high-performance, scalable solution to deliver complex, customized results in a timely fashion.

EON Solution:

Deloitte & Touche identified the need to create interactive virtual models to simulate large-scale development projects. This required the capability to utilize data from architectural CAD in order to evaluate concepts at very early stages, a process that necessitated the ability to import models containing a very large number of polygons, apply real-time lights, and be able to fly through and interact with the models in real time. Additionally, given the global nature of the firm and its projects, it was necessary to view the models over the Internet. EON met all these requirements by providing a suite of software solutions utilizing EON Studio's extensive import capability. EON Studio's ease of use, rapid interaction creation and reusability provided tremendous content production cost savings. EON Server and EON Immersive also provided the capability to deploy the same simulation over Internet or in advanced stereo display.
Key Benefits:
Estimates from several projects show that the EON’s technology solution reduced the design and decision making process by over 30%. In addition, the unique ability of EON Studio to interact and change designs in real time allowed Deloitte & Touche to clearly address design issues and misconceptions, while quickly developing new solutions without having to go back to the drawing board. The proposal process was clearer, and its ability to communicate intricate levels of design planning gave Deloitte & Touche a competitive advantage in the marketplace.

EON allowed Deloitte & Touche to create full, detailed, interactive mockups of large-scale construction projects.

COMPETITION

The competitive landscape for 3D visualization products is fragmented and relatively poorly documented. Competition is still emerging and few, if any of the Company’s competitors have the marketing and sales channels that EON has aggressively pursued. The participants in the 3D market can be broken down into the following categories: Display Makers, Other Hardware Makers, Content Providers, Service Providers, Software, and Standards Organizations. EON is well positioned within the software category of 3D visualization. As a necessary means to expand the footprint of its software business, the Company engages in the sale of displays and other integrated hardware solutions. Its main competitors in the space include the following companies:

Virtools – French company focused on developing 3D tools for general VR use. Most applications are targeted broadly in the visualization, VR and entertainment and architecture area. Virtools has no specific software solution for IPCM and have only interacted with EON in the architecture area. The company was sold to Dassault Systemes earlier this year as the company was not profitable. Most likely the software will be restricted from supporting competing CAD formats (such as UGS or Pro/E). Major Global 1000 corporations will likely prefer a CAD neutral IPCM solution.

Viewpoint - Viewpoint provides visual experiences on the Web. They have no specific software solution for IPCM and have encountered EON competitively only in the web space. Viewpoint operates a separate service division that is interested in IPCM using EON instead of their own software. Their own tools lack IPCM features and cannot produce high-end visual solutions for larger display formats.

VR4Max - a 3d Max plug in software with no focus or advanced features in IPCM. VR4MAX is a low end real-time interactive virtual reality environment to distribute 3ds max and Autodesk VIZ designs. The tool has very limited capabilities and has no specific software solution for IPCM. EON has only competed with them in the architecture area with the company’s correspondent EON Raptor plug-in.

Other competitors include:

Octaga: Swedish company that develops real time web-based 3D viewing plug-ins similar to Raptor, and offers a suite of 3D players, server and development environments targeted mostly toward web content.

Bitmanagement Software: German company that targets similar areas as EON. The company was founded in 2002 and broke even in 2004-2005.

Media Machines: Makes internet browser application plug-ins and software geared towards low-end consumer usage.

EON’s competitors do not offer the IPCM capabilities that EON does, and often compete with EON only in horizontal, low-end visualization markets. EON’s technology is significantly ahead of the competition when it comes to rendering and displaying more complex 3D data. In an emerging market like 3D IPCM and SBL, sales and marketing efforts are critical to build out a viable ecosystem, and EON has made itself a leader in the field by implementing very large, complex display projects for major corporations. The Company’s focus on workflow application integration also distinguishes it from other companies in the 3D space. While most focus heavily on consumer entertainment and gaming, EON has recognized that 3D serves valuable, functional purposes and has spent thousands of man-hours to develop application authoring tools that will seamlessly enhance workflow and product lifecycle management functions.

FACILITIES AND OPERATIONS

Founded in 1999, EON Reality is headquartered in Irvine, California and employs a team of 50 management and staff with combined 260 years of relevant experience in 3D computer graphics, real-time algorithms and virtual reality technologies. The Company also operates a development office in Gothenburg, Sweden, and sales and support offices in New Jersey, Alabama, Spain, China and Australia. The Company employs over 50 full-time staff members in 8 offices worldwide, and has resellers and support staff in more than 35 countries.






MANAGEMENT TEAM

Mats W. Johansson, Co-Founder, President & CEO
Mats is a virtual reality pioneer with over 15 years extensive experience in the 3D Interactive Simulation market from a sales, marketing and technology perspective. A recognized simulation expert, he founded Prosolvia, Inc. (the U.S. subsidiary to a publicly-traded company) and grew it organically to 35 employees and $13 million in annual sales in under 3 years. Mats is a specialist in Immersive Display Technology and holds an M.Sc. in Mechanical Engineering and an MBA in International Business administration from Chalmers University.

Dan Lejerskar, Co-Founder, Chairman, Executive Vice President
Dan has over 19 years of experience in VR and Simulation. He was previously the Manager for the Ariane 5 European Space Project, and the Founder and President of PFAB, a real-estate development company that he grew to over 200 employees. Dan was also founder and President of Prosolvia AB, a publicly traded simulation company organically grown to over 600 employees with 14 offices and annual sales of US$60M. Dan also was founder and President of RealityBUY Inc, an e-commerce company focused on interactive 3D, which was organically grown to 50 people. He holds a M.Sc. in Mechanical Engineering and M.Sc. in Computer Science from Chalmers University.

Sean O’Brian, VP Business Development USA
Sean O’Brian has over 16 years experience of sales and technology leadership. He was a Captain in the US Army Airborne Ranger Infantry. Sean also served as a Production Manager for Intel-led production initiatives directing manufacturing processes for a Pentium line. Sean was an executive VP/CRO for Modis Technologies, an $11-million company specializing in simulation and VR software products and services, where he led the sales and fiscal planning. Sean holds a BSEE & BS in Economics from the University of Colorado.

Stefan Larsson, VP Business Development Europe
Stefan brings over 18 years of experience in the 3D digital field to EON. He founded the Swedish 3D and CAD software distributor Lasercad and grew it to a workforce of 50 with offices in Sweden, Denmark and Hungary. He later sold the company in 1995 after 8 years of profitability and served an additional five years as the CEO. Stefan also served as 3D Director for one of the largest game development organizations in Sweden. He co-founded the 3D Festival, which attracts over 7,000 attendees and has become the premier event for 3D technology in Northern Europe.

Sridhar Sunkad, Director, Business Development
Mr. Sunkad began his career in 1996 at Prosolvia in Sweden as project co-coodinator for Indian operations and developed outsourcing partnerships with Indian IT companies. In 1997, he was promoted to head the Asian market development activities.
In 1999, Mr. Sunkad joined the EON team as a founding employee at EON Reality and he has been mainly responsible for developing the Asian market activities along with additional responsibility of developing the Mid Western market in the USA.
Currently, Mr. Sunkad is directly working on the Singapore Project and has been actively involved in setting up the first IDC in Asia along with Temasek Poly in Singapore. Mr. Sunkad is responsible for developing the company’s operating strategy and establishing strategic partnerships with indirect channels, technology, and go-to-market partners in the Asian markets.
Mr. Sunkad holds a bachelors degree in Mechanical engineering and also studied for Masters in production Technology management from Chalmers University of management in Goteborg Sweden.

Hiromi Kobayashi, Director Business Development Asia
Hiromi has over 14 years experience in the Virtual Reality field in Japan and Asia. She was the Business Development Director, Asia Pacific, at Sensable Technologies, a leading provider of 3D touch-enabled digital solutions. Hiromi was also the General Manager for the Virtual Reality Center in Yokohama.

FINANCIAL INFORMATION


Appendix 0 Forecast Revenues 2006-2010 Pro forma













Appendix 1 Detailed Description of New EON Products
























Appendix 2 Description of EONExperience
See separate presentation

Appendix 3 Description of other EON LBE Solution
See separate presentation