On December 22, 2006, the Company entered into an Asset Purchase Agreement with Next Sierra, Inc. ("Next Sierra") and certain of its shareholders named therein (the "Agreement"). Pursuant to the Agreement, the Company has agreed to purchase (the "Acquisition"), on the closing date and subject to the satisfaction of the conditions set forth in the Agreement, substantially all of the assets of Next Sierra, a Mountain View, California-based hardware developer that specializes in designing light-emitting diode display driver chips. The total purchase price for the Acquisition is described under Item 3.02 below. The closing date is scheduled to occur on January 3, 2007.

The Agreement contains standard representations and warranties by Next Sierra and its shareholders named therein as to its business affairs as of the date of the Agreement. Pursuant to the Agreement, the Company has agreed to file a registration statement with the SEC covering the resale of the shares delivered to Next Sierra as the purchase price and to use its commercially reasonable efforts to cause the registration statement to become effective no later than 100 days after the closing date (subject to a 60-day extension if it is reviewed by the SEC).

The shares delivered as the purchase price for the Acquisition will be issued without registration under the Securities Act of 1933 or any state securities laws. The Company is relying on the exemption from the registration requirements of the Securities Act of 1933 pursuant to Section 4(2) thereof. As described in Item 1.01 above, the Company has agreed to file a registration statement for the resale of the shares.

Neither this Current Report nor any exhibit attached hereto is an offer to sell or the solicitation of an offer to buy shares of common stock or other securities of the Company.

Statements contained in this Current Report that are not historical facts are "forward-looking statements" and their presence may be indicated by words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "seek," "will" and "may," as well as the negative thereof and similar expressions. There can be no assurance that future developments affecting the Company and its subsidiaries will be those anticipated by management. Among the factors, risks and uncertainties that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements are the following: the consummation of the Acquisition described in this Current Report; the successful development and commercialization of the passive matrix driver technology intended to be achieved from the Acquisition; the outcomes of the Company's ongoing and future research and development activities, as well as those of its licensees; the Company's ability to form and continue strategic relationships with manufacturers of P-OLED materials and displays; the successful commercialization of products that include the Company's P-OLED technology by its licensees; the willingness of the Company's manufacturers and licensees to continue to develop, manufacture and sell commercial products integrating the Company's technology; the future demand for products using the Company's P-OLED technology; the comparative advantages and disadvantages of any competing technologies; the Company's ability to maintain and improve its competitive position following the expiration of its fundamental patents; the adequacy of protections afforded to the Company by the patents that it owns or licenses and the cost to the Company of enforcing these patents; the Company's ability to obtain, expand and maintain patent protection in the future and to protect its unpatentable intellectual property; developments in and expenses associated with resolving matters currently in litigation; and the Company's future capital requirements and its ability to obtain additional financing when needed. Readers should also consider the additional factors described under the captions "Cautionary Statement Concerning Forward-Looking Statements" and "Risk Factors" in the Company's 10-K and 10-Q reports filed with the SEC. Investors should not place undue reliance on such forward-looking statements and the Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.