1. Attempting to Cross Death Valley Nick England 2/21/08 3rdTech, Inc. Durham NC www.3rdtech.com nick@3rdtech.com

2. Original Game Plan – Jump-start Companies  Step 1- Create new companies  Step 2 - Interim Funding – 3rdTech plus early sales Nick & Angels  Step 3 - Interim operations - 3rdTech Product development Market development Proof of concept – early adopter sales  Step 4 – Spin Out Raise VC funding Recruit management team

3. Product Evolution  Research Stage - Works in the lab Impossible to duplicate Impossible for non-PhD to use Untested in applications – usefulness unknown  Lab Product – usable by early adopters Expensive, cumbersome => proof of concept  Application Solution – usable by non-experts Low cost, easy to use => large markets

4. NanoManipulator Software  Working Prototype UNC-CH CS & Physics  Product development – 2+ man-years Interact with customers and partners Clean-up / Rewrite Software Robustness & Testing User Interface & New Features Develop Documentation, & Training

5. NanoManipulator Status  Lab Sales – $560K as of 12/31/03 $800K total to date  Stalled – No follow-on AFM partner acquired – no new partner  No Outside Funding No Development No Marketing No Spinoff

6. HiBall Tracker – HW + SW  Working Prototype – UNC-CH CS  Product Development – 10 man-years Interact with Customers Redesigned hardware components Cheaper, Easier to Install Manufacturable & Reliable Redesigned / Rewrote Software Reliability & Maintainability Performance & Features

7. HiBall Tracker Status  Lab Sales – $1M sales as of 12/31/03 $1.7M total to date  Stalled - No Next-Generation Development Expensive, cumbersome => limited market  No Outside Funding No Development No Marketing No Spinoff

8. DeltaSphere 3D Scanner – HW + SW  Working Prototype - UNC-CH CS  Product Development – 8 man-years Interact with Customers New Hardware Ease of Use Manufacturability & reliability New Software Ease of Use, Features, & Performance Reliability & Maintainability Create Documentation & Training

9. DeltaSphere Status – 12/31/03  Lab Sales – $600K as of 12/31/03  Stalled - No Next-Generation Development Expensive, hard-to-use => limited market  No Outside Funding No Development No Marketing No Spinoff

10. 1/04 - CHANGE STRATEGY  Problem - No outside funding Proved product viability & market But no help on other side of Death Valley  Plan - Focus on one market Try to bootstrap an application solution Not enough money to develop hardware and software

11. SceneVision-3D Software  Completely New Application Software  Resulted from Customer requests  9 man-years development  Application Crime Scene Investigation  Easy to use – but hardware still expensive

12. 2/08 DeltaSphere Status  Sales - $2.5M – 60+ customers Customers love application solution  $1B market identified for next-generation  But Still No Outside Funding No Next-Generation Hardware Expensive, hard-to-use => limited markets No sales/marketing ramp-up

13. 2/08 Summary  Sales = $5.0M, 100+ customers 60% gross margin  Proved viability – technology & markets  $100K royalties to UNC  Still No Outside Funding  Total Costs = $7.6M Debt = $1.6M Unpaid employees = $1M

14. 2/08 Lessons Learned?  Don’t start crossing the valley unless you can make it on your own Don’t Count on VC’s  Take the long road or the cheap road Don’t Count on VC’s  Don’t quit your day job Don’t Count on VC’s  Raise money first Don’t Count on VC’s

15. 2/08 Lessons Learned?  Don’t Count on VC’s  VC’s don’t invest in markets they don’t “understand” – either by experience or by following the herd  If the VC doesn’t get it – just walk away  “If you were in Silicon Valley you’d have already been funded and acquired for $30-40M”