PolyDisplay ASA informs THE SITUATION TODAY AND THE MILESTONES AHEAD

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1 PolyDisplay ASA PolyDisplay ASA informs Dear shareholders and partners, THE SITUATION TODAY AND THE MILESTONES AHEAD On January 31 st PolyDisplay ASA s board of directors approved the company s Grand Plan This plan is describing the goals and the way forward to attain them, from the last years focus on technology development, through the ongoing market research and prototype building for specific applications, to the commercial break through together with partners, commencing in the autumn of this year. The plan is based on our best knowledge, analysis and assessments, and will be updated every six months by corporate top management, normally in June and December, with a subsequent report to the board. As of today PolyDisplay ASA and its subsidiaries are on schedule with the planned milestones, and with the activities and budgets covering the milestones in the Grand Plan. The information given below is concentrating on the most important milestones (value drivers) in the short- term perspective, based on the Grand Plan. The information picture will be updated every quarter. I The present situation Market Displays as interface between man and information processing devices ( machines ) are conquering our everyday life at a very fast pace. The LCD market is enormous, more than 20 billion USD pr year, and growing at an annual rate of some 20% worldwide. PolyDisplay s technology, based on the unique qualities in the smectic A liquid crystals (EASL), is superior to other emerging display technologies for specific applications, encompassing communities all around the world, - a market more than ready to welcome EASL DMD displays - PolyDisplays and PolyFlex in plastic - with their unique properties. The first market niche to be addressed is information, advertising and entertainment boards in sports arenas and other arenas (centres) where people gather. In combination with LED video boards (appointed agency) EASL displays constitute a total concept with a substantial commercial potential. Marketing has started in Norway and will continue in Germany in the autumn. The subsidiary Locus AS is challenged to play an important role in systems integration and interconnecting of units and centres communication-wise, giving users of mobile units a new degree of efficiency and security..

2 Parallel to this market approach by the subsidiary TechnoDisplay AS in Oslo, the same company is preparing a business case aimed at an industrial and financial actor, where the market niche in main focus is advertising boards. In Germany alone some boards (6 9 square meters) represent the initial market waiting for a display technology with excellent contrast and readability in direct sunlight, unlimited image without power supply, superior reading angle, simple design, production friendliness and cost-efficiency. The business case also includes other applications for EASL displays, not yet ready for publicity. The market potential for the applications mentioned above is roughly the number of sports arenas of some size, shopping centres, transport terminals indoors and outdoors in the cities, the countries and the continents we choose to address. Obviously we must advance step by step and together with partners/allies along this avenue of opportunities. PolyDisplay and its subsidiaries are monitoring other display technologies keenly, and we can say with certainty that no other technology possesses today the qualities mentioned above for the applications in question. PolyDisplay s patents are strong and the patent portfolio is being continuously renewed. PD ASA is addressing five market areas: domotic, public, defence (dual use), automotive and personal applications. The Grand Plan covers them all with programmes, milestones, activities and resources allocation. As the EASL technology is developed further, applications will materialise with qualities that increase market potential and business opportunities in all areas. PolyDisplay AB in Stockholm is aiming at the market for information screens and labels, based on the patented reflective pixel (RPix) construction technology for costeffective mass production of very thin display modules. The company has obtained a letter of intent with a large manufacturer of display modules, and has a dialogue going with several potential customers. PD AB was represented at the CeBIT fair in Hanover in March this year, arising great interest. In Spain our recently acquired subsidiary, SIDSA Sistemas SL, has entered private and public market niches with tailored LCD panels, fitting well into the total span of market competence, products and applications within the Group. Synergies are about to be exploited. In addition SIDSA Sistemas is the local platform for addressing the defence market for PolyDisplay ASA and Locus AS and managing important parts of future business emerging from offset agreements with IZAR (earlier BAZAN). Locus and SIDSA Sistemas are co-operating to this effect. Through PolyDisplay Inc in Michigan, USA we are monitoring the North American market possibilities and mapping potential partners and customers to prepare adequate actions in due time in selected application areas; intelligent windows being a selected sector. A team of highly skilled and experienced engineers are now working closely together in the PolyDisplay Group with external resources in monitoring relevant activities, screening the market, building prototypes for potential customers and penetrating the first market niches. Our long time co-operation with the armed forces has been a valuable reference. This important reference customer can benefit with more effective security systems for international operations, as vehicle mounted solutions are available today, as well as flexible displays as part of soldier uniforms in the future.

3 Technology PD ASA has the proprietary rights to the EASL DMD technology (Electrically Addressable Smectic Liquid - Daylight Memory Displays), mainly by the ownership of several world-wide patents. Since these rights were secured in the early 1990 ies the technology has been developed further in steps as resources were made available for the company, primarily from SND (State owned fund) and the Norwegian Defence. Last summer (2000) PD ASA launched an ambitious R&D programme, combined with a systematic search for strategic partners within finance and industry. SINTEF is chosen as main partner for further developing the technology into commercially viable products. PD ASA has also earlier engaged SINTEF in preparing EASL display demonstrators and in synthesis of liquid crystal components. Since last summer SINTEF Chemistry and SINTEF Electronics & Cybernetics have allocated competence, made a series of feasibility studies, defined the base line for the EASL crystal mixture and started to produce it. PD ASA is benchmarking SINTEF on a continuous basis and has established R&D partners in Sweden and UK, and initiated several others. Contact is established with Saratov State University where scientists have been working with Smectic A liquid crystals for years, and a Russian scientist (Dr.) is recruited to work in PolyDisplay s R&D project in Norway. Organisation The PolyDisplay Group consists of the mother company PolyDisplay ASA in Sandefjord and the following operative subsidiaries: - Locus AS in Sandefjord - TechnoDisplay AS in Oslo (Blindern) - PolyDisplay AB in Stockholm (Kista Science Park) - SIDSA Sistemas SL (by PolyDisplay SA) in Madrid - PolyDisplay Inc in Michigan, USA - ImageDisplay Ltd in London In Germany PolyDisplay AG is under establishment. The Group employs some 60 people. In addition some 15 scientists and engineers are working for PolyDisplay at SINTEF and Chalmers (Gothenburg), and some on an individual basis. Since spring last year the organisation is strengthened within management, technical and M&S skills and capabilities, in order to plan, prepare and carry out the commercialisation phase subsequent to technology development. The PolyDisplay Group presents itself today as a highly competent and efficient team within display technologies and applications, and within business management arising from engineering, prototype building, production processing and marketing/sales of display modules and tailored panels and boards. II Business idea PolyDisplay ASA is exploiting its unique generic EASL DMD technology, the RPix technology and other related technologies to gain competitive advantages in a growing display market, with the aim through strategic alliances to become a

4 leading supplier of new generation display modules in glass and plastic, (PolyDisplays & PolyFlex ). III Milestones to be obtained 2001 Technology - Synthesis of crystal mixture verified in March (met) - RPix demonstrated with other technologies in March (met) - Concept for new generation of EASL ( PolyFlex ) tested in June - More production friendly EASL (classic) concept tested in Q4 - Commercial production of liquid crystals initiated in Q4 The long term overall R&D programme target is to create a technology base for product cost < 30% less than to competing products in large volume production. Applications development - Concept development for EASL Smart Grid in April (met) (Smart Grid is a PD developed technique for modular approach to reduce electronics and create costeffective displays.) - TechnoDisplay AS has established the first agency (large area video boards) in March (met), a second in June - Entertainment and advertising board concept ready for first application in Q3 (ahead of schedule) - Concept for advertisement boards developed and ready for presentation in Germany in September - Prototype for optimised module with RPix and conventional technologies ready in May, in-store application test in Q4 Business and Market/Sales development - The first customer contracts for entertainment and advertising boards and displays in sports arenas in Q3 - An agreement with partner(s) in Germany for the launching of EASL in advertisement boards application in September/October - Partner choice for manufacturing of display modules based on RPix and the first customer contracts - Locus AS obtains the first contract and order in Spain based on offset possibilities (frigate contract) - A preliminary product proposal ( POINTER ) delivered to the Army Material Command in March (met), a presentation of the proposal to ministry and defence bodies in May, and a development and procurement contract in Q3-Q4 - Application area within automotive decided in June, concept development in Q3, and partner decided in Q4 - Locus AS established as market leader in Scandinavia through merger/acquisition up and further development of its core software, products and solutions (systems) - Licence possibilities investigated for production of EASL Classic

5 Financing - To demonstrate EASL DMD technology applications in early autumn to a level of documentation where a large business potential is obvious to analysts and venture capitalists, so that access to capital and other financial instruments. - To prepare for IPO and carry through a process according to timing decided by board of directors (with authorisation from the general assembly), to have PolyDisplay ASA and/or subsidiaries introduced on Norwegian and foreign stock exchanges in due time We welcome inputs and questions! Akerholm, April 26 th 2001