The overall FPD industry has experienced strong growth in recent years. According to DisplaySearch, an independent market research firm tracking the FPD industry, the worldwide FPD market grew from $24.1 billion in 2000 to $43.5 billion in 2003. DisplaySearch expects this market to grow to an estimated $97.0 billion in 2008, representing a compounded annual growth rate since 2000 of approximately 19%.

LCDs, in total, accounted for approximately 83% of total FPD sales in 2003 according to DisplaySearch. Notebook computer applications and mobile phone displays have been enabled by LCDs and, together with desktop monitors, have been the primary growth drivers to date, with demand for LCD televisions accelerating rapidly in 2003.

In addition to patents owned directly by the Company, it has exclusive control of certain patents emanating from the Universities of Cambridge and Oxford. The Company has been granted sub-licensing rights with respect to the extensive portfolio of patents belonging to Seiko Epson to the extent they relate to the manufacture of P-OLED devices by ink jet printing. The Company also possesses substantial know-how, including the implementation knowledge relating to the manufacture of OLED devices.

In 2002, as part of the Company’s IP expansion strategy, the Company acquired control of CDT Oxford, which owns or controls a number of patents protecting the use of dendrimers to make solution processable phosphorescent materials. This allows the Company to develop proprietary materials which have the potential to form the basis of a future generation of high efficiency green and red materials for solution-processed OLED displays.

The Company has a comprehensive IP policy which has as its objectives, the development of new IP both to ensure the Company’s continued control of P-OLED technology and to further the Company’s IP position in relation to OLEDs in general and the maintenance of the Company’s valuable trade secrets and know-how. The Company seeks to achieve these objectives through the education and training of its scientific staff and the adoption of appropriate systems and procedures for the creation, identification and protection of IP.

Cost of sales remained essentially constant at $0.2 million for the quarter ended March 31, 2003 and the quarter ended March 31, 2004.

Research and development expenses decreased by $1.7 million, or 32%, from $5.4 million for the quarter ended March 31, 2003 to $3.7 million for the quarter ended March 31, 2004.

Selling, general and administrative expenses decreased by $0.9 million, or 27%, from $3.5 million for the quarter ended March 31, 2003 to $2.6 million for the quarter ended March 31, 2004.