Quarterly Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-QSB

[X]	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2006

[ ]	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission file number: None

PureDepth, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

(State or other jurisdiction of

incorporation or organization)

20-4831825

(I.R.S. Employer Identification No.)

255 Shoreline Drive, Suite 610, Redwood City, California 94065

(Address of principal executive offices)

(650) 632-0800

(Issuer’s telephone number)

(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

As of December 11, 2006 there were 65,681,099 shares of the issuer’s common stock, $.001 par value, outstanding.

Traditional Small Business Disclosure Format (check one): Yes [ ] No [X]

INDEX

		Page
PART I	FINANCIAL INFORMATION

Item 1.	Unaudited Condensed Consolidated Balance Sheet		3

	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)		4

	Unaudited Condensed Consolidated Statements of Cash Flows		5

	Notes to Unaudited Condensed Consolidated Financial Statements		6

Item 2.	Management’s Discussion and Analysis of Plan of Operations		10

Item 3.	Controls and Procedures		23

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings		24

Item 2	Unregistered Sales of Equity Securities		24

Item 3	Defaults on Senior Securities		24

Item 4	Submission of Matters to a Vote of Security Holders		24

Item 5.	Other Information		24

Item 6.	Exhibits		24

	Signatures		25

PART I - FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

PUREDEPTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(unaudited)

	October 31, 2006
	Unaudited
ASSETS
Current assets:
Cash and cash equivalents	$	9,877,476
Restricted cash		60,298
Accounts receivable		52,700
Prepaid expenses		209,056
Total current assets		10,199,530

Property & Equipment (net)		294,049

Other Assets:
Intellectual property (net)		2,561,630
Other assets held for sale		796
Total intangible assets		2,562,426

Total assets	$	13,056,005

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion - notes payable		108,661
Accrued interest		60,811
Accounts payable		201,690
Accrued expenses		310,886
Accrued payroll		97,283
Deferred revenue		750,000
Total current liabilities		1,529,331

Note payable		554,726
Deferred revenue - non-current portion		2,971,154

Total liabilities		5,055,211

Shareholders' equity

Common stock, $0.001 par value, 190,000,000 shares authorized, 65,681,099 shares issued and outstanding		65,681
Additional paid-in-capital		26,270,743
Additional paid-in-capital options & warrants		6,081,841
Accumulated deficit		(23,706,570	)
Accumulated other comprehensive loss		(710,901	)
Total shareholders' equity		8,000,794

Total liabilities and shareholders' equity	$	13,056,005

The accompanying notes are an integral part of these unaudited financial statements

PUREDEPTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS and COMPREHENSIVE (LOSS)

(Unaudited)

	Three Months Ended October 31,						Nine Months Ended October 31,
	2006			2005			2006			2005
Net sales	$	81,496		$	-		$	81,496		$	-
Cost of goods sold		55,178			-			55,178			-

Gross profit		26,318			-			26,318			-

Operating expenses
Depreciation and amortization		114,749			83,782			338,090			286,526
Sales and marketing		446,639			196,856			1,513,408			550,337
Professional fees		184,124			22,582			559,668			154,105
Loss on fixed asset disposal		18,092			-			18,092			5,444
General and administrative		1,666,988			843,197			4,734,781			1,771,924
Research and development		296,112			367,100			1,927,405			1,255,658
Total operating expenses		2,726,704			1,513,517			9,091,444			4,023,994
Operating loss		(2,700,386	)		(1,513,517	)		(9,065,126	)		(4,023,994	)

Other income (expense)
Interest, net		59,827			(51,759	)		69,901			(101,644	)
Grant receipts		-			-			1,850			7,324
Foreign exchange gain (loss)		(14,305	)		(7,850	)		34,922			72,051
Other income		2,039			66,654			86,269			157,450
Total other net income (loss)		47,561			7,045			192,942			135,181
Loss before income tax		(2,652,825	)		(1,506,472	)		(8,872,184	)		(3,888,813	)

Income tax provision		-			-			-			-

Loss from continuing operations		(2,652,825	)		(1,506,472	)		(8,872,184	)		(3,888,813	)

Income (loss) from discontinued operations, net of income tax					-			15,279			-

Net loss	$	(2,652,825	)	$	(1,506,472	)	$	(8,856,905	)	$	(3,888,813	)

Other comprehensive income gain/loss
Net loss per statement of operations	$	(2,652,825	)	$	(1,506,472	)	$	( 8,856,905	)	$	( 3,888,813	)
Foreign currency gain (loss) adjustments		-						33,132			(138,206	)

Total comprehensive loss	$	(2,652,825	)	$	(1,506,472	)	$	(8,823,773	)	$	(4,027,019	)

Basic and diluted loss per share
Loss from continuing operations	$	(0.05	)	$	(0.06	)	$	(0.14	)	$	(0.14	)
Income from discontinued operations, net of income tax		-			-			0.00			-
Net loss	$	(0.05	)	$	(0.06	)	$	(0.14	)	$	(0.14	)

Weighted average shares outstanding basic & diluted		57,261,454			27,177,371			57,182,066			27,089,894

The accompanying notes are an integral part of these unaudited financial statements

PUREDEPTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine months ended October 31,
	2006			2005
Cash flows from operating activities:
Net loss	$	(8,856,905	)	$	(3,888,813	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		338,090			286,526
Non-cash compensation expense		4,094,789			1,209,618
Non-cash interest expense		-			68,978
Loss on disposal of fixed assets		18,092			5,444
Foreign exchange (gain)		(34,922	)		(72,051	)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable, trade		19,295			(54,642	)
(Increase) in prepayments		(155,572	)		(241,680	)
Increase (decrease) in accounts payable		(90,686	)		393,271
Increase in deferred revenue		3,721,154			-
Increase (decrease) in payable in accrued expenses		323,399			(75,165	)
Increase in accrued interest		55,674			1,546
Net cash used in operating activities		(567,591	)		(2,366,968	)

Cash flows from investing activities:
Payments for purchases of fixed assets		(270,613	)		(178,352	)
Expenditures - intellectual property		(223,260	)		(222,581	)
Net cash used in investing activities		(493,873	)		(400,933	)

Cash flows from financing activities:
Proceeds from issuance of common stock, net		10,123,845
Proceeds from short-term borrowing		-			65,873
Increase (decrease) in short-term borrowings		(29,585	)		-
Principal payments on related party note payable		-			-
Issuance of related party note payable		-			2,555,377
Stock subscriptions received					307,490
Principal payments on note payable		-			-
Net cash provided by financing activities		10,094,260			2,928,740

Effect of exchange rate changes on cash and cash equivalents		46,982			76,727

Net increase in cash and cash equivalents		9,079,776			237,566

Cash and cash equivalents at beginning of period		857,998			114,817
Cash and cash equivalents at end of period	$	9,937,774		$	352,383

Supplemental cash information:

Notes and accrued interest converted to stock	$	774,330		$	4,824,890
Cash paid for interest	$	19,215		$	801
Cash paid for income taxes	$	-		$	-
Purchase of intellectual property via issuance of note payable	$	-		$	-

The accompanying notes are an integral part of these unaudited financial statements

PUREDEPTH, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Basis of Presentation

The accompanying unaudited financial statements of PureDepth, Inc. (“the Company") are presented in accordance with the requirements for Form 10-QSB and Article 10 of Regulation S-X and Regulation S-B. Accordingly, they do not include all of the disclosures required by generally accepted accounting principles. In the opinion of management, all adjustments (all of which were of a normal recurring nature) considered necessary to fairly present the financial position, results of operations, and cash flows of the Company on a consistent basis, have been made.

These results have been determined on the basis of generally accepted accounting principles and practices applied consistently with those used in the preparation of the Company's Annual Financial Statements for the ten months ended January 31, 2006 and year ended March 31, 2005. Operating results for the nine months ended October 31, 2006 are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 2007.

The accompanying condensed financial statements for the interim period should be read in conjunction with the audited financial statements contained in the Form SB-2A filed with the Commission on December 1, 2006. Those statements contain a summary of significant accounting policies.

Note 2 -Description of Business

The Company - Description of Business

PureDepth, Inc., along with our wholly owned subsidiaries, PureDepth Limited (PDL) and PureDepth Incorporated Limited (PDIL) develops, manufactures, markets and supports multi-layer display technology. We believe our technology has gaming, military, automotive and handheld video display applications.

Prior to our entry into a significant licensing revenue contract during the quarter ended October 31, 2006, we were considered a development stage enterprise and reported our financial information in accordance with Statement of Financial Accounting Standards (SFAS) No. 7 Accounting and Reporting by Development Stage Enterprises. The contract resulted in the Company no longer being considered development stage under SFAS No. 7.

Note 3 - Reorganization

On March 31, 2006 and pursuant to an Agreement and Plan of Merger and Reorganization dated March 16, 2006, the Company entered into a forward triangular merger with PureDepth Technologies, Inc., a Delaware corporation and wholly owned subsidiary of Diamond One, Inc., a Colorado corporation quoted on the Over the Counter Bulletin Board. As a result of the merger, PureDepth Technologies, Inc. succeeded to the business of PureDepth, Inc. (California) and survived as a wholly owned operating subsidiary of Diamond One, Inc. The merger was effected by the filing of a certificate of merger with the Delaware Secretary of State on March 31, 2006. Following the reorganization, the surviving entity was named PureDepth, Inc., a Delaware corporation.

At the effective time of the merger, the legal existence of the PureDepth, Inc. (California) ceased and all of the approximately 23,311,855 shares of the Company’s common stock that were outstanding immediately prior to the merger were cancelled. Simultaneously, the PureDepth, Inc. (California) former shareholders received an aggregate of 233,118.55 shares of Diamond One, Inc’s Series "A" Preferred Stock, representing approximately 89% of the registrant’s outstanding voting power after the merger. In addition, all securities convertible into and exercisable for shares of the PureDepth, Inc. (California) common stock (e.g., options and warrants) that were outstanding immediately prior to the merger were cancelled, and their holders received similar securities for the purchase of Diamond One, Inc. common stock. In total, immediately following the merger, former holders of PureDepth, Inc. (California) securities held approximately 93% of the outstanding common stock of Diamond One, Inc. on a fully diluted basis.

Prior to the merger and pursuant to authority granted to it by the registrant’s articles of incorporation, as amended, Diamond One, Inc.’s board of directors approved and adopted a Certificate of Designation relating to a new class of preferred stock denominated “Series A Preferred Stock.” On May 9, 2006, upon the effectiveness of the amended Diamond One, Inc.’s articles of incorporation increasing the number of shares of authorized common stock, all outstanding shares of Series "A" Preferred Stock automatically converted into shares of common stock on a 229.021-for-1 basis.

The merger represented a change in control of Diamond One, Inc. inasmuch as greater than 50% of the issued and outstanding voting stock of the registrant on a post-merger basis was held by the former holders of the Company‘s capital stock. In addition, and simultaneously with the effectiveness of the merger, the board of directors of Diamond One appointed Messrs. David Hancock, Fred Angelopoulos and Mark Kalow to its board of directors, and directors Troy Fullmer and Robert Chramosta thereupon resigned. Moreover, Messrs. Fullmer and Chramosta resigned their positions as officers of Diamond One, Inc. In their place, Fred Angelopoulos was appointed as its Chief Executive Officer and President, and Kristin Bowman was appointed as Chief Operating Officer, Secretary and Acting Chief Financial Officer, subsequently replaced as Chief Financial Officer by Robert O’Callahan on June 30, 2006.

For a full description of the forward triangular merger transaction refer to the Form 8-K and Form 8-K/A filed with the Securities and Exchange Commission on April 6, 2006 and June 16, 2006, respectively.

The following is pro-forma condensed operating data which portrays the results of operations as if the transaction had occurred at the beginning of each period presented:

	Nine months ended October 31,
	2006			2005
Net Sales	$	81,496		$	--
Operating loss		(9,065,126	)		(4,023,994	)
Other income (expense)		192,942			135,181
Income/(loss) from discontinued operations		15,279			(45,447	)
Pro-forma net loss		(8,856,905	)		(3,934,260	)
Pro-forma net loss per share *	$	(0.15	)	$	(0.12	)
Pro-forma weighted average shares outstanding		57,182,066			32,345,294

Pro-forma net loss per share is computed as if all preferred shares are converted as of the beginning of the period.

Reincorporation Merger

On May 5, 2006, Diamond One, Inc., (the parent of the Company after completion of the forward triangular merger) held a special meeting of the shareholders to consider and act upon the following corporate actions:

(a)	a proposal to adopt amended and restated articles of incorporation for Diamond One, Inc.; and

(b)	a proposal to reincorporate Diamond One, Inc. in the State of Delaware by merging Diamond One, Inc. with and into PureDepth Technologies, Inc., the wholly owned subsidiary of Diamond One, Inc. with PureDepth Technologies, Inc. surviving the merger.

On May 8, 2006 the name of PureDepth Technologies, Inc., and (Delaware) was changed to PureDepth, Inc. On May 9, 2006, Diamond One, Inc. filed its Amended and Restated Articles of Incorporation with the Secretary of State of Colorado, changing its name to “PureDepth, Inc.”

The short-form merger and reincorporation was consummated on May 30, 2006, with PureDepth, Inc. (formerly known as PureDepth Technologies, Inc.) surviving the merger. The charter documents of PureDepth, Inc. (formerly known as PureDepth Technologies, Inc.) became the effective charter documents of the Company. These proposals were both approved at the meeting by approximately 72% of the shareholders entitled to vote on the proposals.

Conversion of Preferred Stock

On May 9, 2006 all 233,118.55 shares of the registrant’s Series A Preferred Stock issued in the acquisition of Diamond One were converted into an aggregate of 53,389,045 shares of common stock, giving the registrant a total of 58,644,445 shares of common stock and no shares of preferred stock (also taking into account a transfer to the Company of 1,000,000 shares of its outstanding common stock on the same date as disclosed below under "Divestiture of Former Business").

The conversion was effected pursuant to the terms of the Certificate of Designation for the registrant’s Series A Preferred Stock, which provided that each outstanding Series A Preferred Share would automatically convert into shares of common stock, on 1-for 229.021 basis, upon an increase in the number of shares of common stock authorized for issuance under the registrant’s articles of incorporation.

Divestiture of Former Business

On May 9, 2006, pursuant to the exercise of an option (the “Option”) pursuant to an Option Agreement dated March 16, 2006 by and among Diamond One, Inc. and Robert Chramosta and Troy Fullmer, the former officers and directors of the Company, the Company transferred all of the outstanding membership interests in its wholly owned subsidiary, Numismatic Capital Group, LLC (a Colorado limited liability company) to Messrs. Chramosta and Fullmer in consideration of their transfer to the Company of 1,000,000 shares of our common stock held by them. We have retired and cancelled these shares.

Prior to the forward triangular merger, Diamond One had assigned all of its assets and liabilities, specifically including the coin and exchange business owned operated by Diamond One, to Numismatic Capital Group. On May 9, 2006 the exercise of the Option effectively divested the Company of the entire coin and exchange business.

Note 4 - Stockholder’s Equity

On January 31, 2006, PureDepth, Inc. (California) had 16,712,769 shares outstanding, including 1,371,158 shares issued in a private placement offering. In March 2006, it issued 31,800 shares pursuant to the exercise of an option and 6,567,286 shares as a continuation of the private placement offering. PureDepth, Inc. (CA) thus had 23,311,855 common shares outstanding immediately prior to the merger on March 31, 2006.

On March 31, 2006, all then-existing PureDepth, Inc. (CA) shares were converted into 233,118.55 Preferred A shares in PureDepth, Inc. (Delaware).

Diamond One, Inc. had 6,255,400 common shares outstanding immediately prior to the merger, which became 6,255,400 common shares in the surviving entity PureDepth, Inc. (Delaware).

Following the balance sheet date, on May 9, 2006, the 233,118.55 Preferred A shares converted into 53,389,045 PureDepth, Inc. (Delaware) common shares. Considering the return of 1 million shares pursuant to the divestiture of the coin and exchange business, the Company then had 58,644,445 shares outstanding.

On July 11, 2006, the Company accepted an in-process stock subscription relating to the March private placement and issued 114,510 shares and 114,510 warrants to purchase shares of the Company’s common stock to the purchaser.

On July 31, 2006, the Company closed an offering to existing investors to exchange outstanding warrants to purchase the Company’s common stock that it issued in a private placement earlier in 2006 (the “B Warrants”) for 6,716,044 shares of the Company’s common stock and warrants to purchase shares of the Company’s common stock (the “D Warrants”).

On September 6, 2006 we issued 344,000 “D Warrants” to an advisor as compensation for services rendered.

On September 29 and October 5, 2006, the Company issued an aggregate of 206,100 shares of common stock pursuant to the exercise of options.

Note 5 - Stock Option Plan

Prior to the merger, and effective March 31, 2006, the Board of Directors of PureDepth, Inc. (California) approved and authorized an amendment and restatement of its Second Amended and Restated Executive Share Option Plan No. 3 (the “Prior Plan”) into the 2006 Stock Incentive Plan (the “Plan”) and entered into agreements with each of the existing option holders whereby such option holders agreed that the Plan would thereafter govern their respective options. The amendment had no effect upon the number of options or the strike prices.

As a result of the forward triangular merger, all unvested stock options issued under the Plan vested upon the effective date of the merger, March 31, 2006. The option shares are not currently registered under Form S-8 but, when registered, they would be available for sale into the market.

Options issued under the Company’s Prior Plan, except those issued to David Hancock and Keith Phillips, carried certain anti-dilution rights with respect of company securities issued prior to the merger transaction. Upon closing of the private placement offering of PureDepth, Inc. (California) on March 1, 2006, further options were deemed to be issued to various holders under the Plan holding anti-dilution rights with subsequent vesting of those options occurring under the accelerated vesting provisions on the reverse acquisition date, being March 31, 2006. These anti-dilution rights terminated at the effective time of the merger, and were not carried forward under the Plan.

A summary of option activity under the Prior Plan (on or prior to March 31, 2006) and the Plan (after March 31, 2006) as of October 31, 2006, and changes during the quarter then ended is presented below.

Options	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (months)		Aggregate Intrinsic Value ($000)
Outstanding at July 31, 2006		12,450,569		$	0.29		6	$	23,246
Granted		975,200		$	3.04		84	$	2,964
Exercised		(206,100	)	$	0.28		-	$	(676	)
Forfeited or expired		(682,043	)	$	0.28		-	$	(1,867	)
Outstanding at October 31, 2006		12,537,626		$	0.28		9	$	42,753
Exercisable at October 31, 2006		12,450,570		$	0.28		3	$	42,456

Stock Compensation

We currently use the Black-Scholes option pricing model to determine the fair value of stock options. The determination of the fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables. These variables include our expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rate and expected dividends.

We estimate the volatility of our common stock by using our limited historical data and similar entities. Our current volatility assumption of 88% is higher than the estimate of 52% used in the prior annual financial report, primarily due to the changed nature of the reorganized business. We base the risk-free interest rate that we use in the option valuation model on U.S. Treasury issues with remaining terms similar to the expected term on the options. We do not anticipate paying any cash dividends in the foreseeable future and therefore use an expected dividend yield of zero in the option valuation model. We are required to estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. We estimate option forfeitures. All stock-based payment awards are amortized on a straight-line basis over the requisite service periods of the awards, which are generally the vesting periods. We estimate the expected term of options granted by assuming the term equals the grant term, since we lack significant historical stock option exercise experience.

Note 6 - Income Taxes

For the three months and nine months ended October 31, 2006, we incurred operating losses of approximately $2.7 million and $8.9 million, respectively, and accordingly we made no provision for income taxes has been recorded. In addition, we recorded no benefit for income taxes due to the uncertainty of the realization of any tax assets.

At January 31, 2006, PureDepth, Inc. (California) had both a federal and state net operating loss carry-forward of $1,016,582. Further, there were foreign net operating loss carry-forwards of $3,102,917 in respect of PureDepth, Inc’s. foreign subsidiaries.

In addition, at January 31, 2006, Diamond One, Inc. reported approximately $43,000 of federal and state net operating losses, but has not assessed the current status of net operating loss carry-forwards following reorganization.

Net operating loss carry-forwards, if not utilized, will begin to expire within twenty years for federal purposes and within ten years for California purposes. The foreign net operating tax loss carry-forward can be carried forward indefinitely unless a change in ultimate control of the loss companies results.

For financial reporting purposes, we have incurred a loss in each period since its inception. Based on the available objective evidence, including the our history of losses, management believes it is currently more likely than not that the net deferred tax assets will not be fully realizable. Accordingly, we provided a full valuation allowance against its net deferred tax assets.

Note 7 - Related Parties

On August 4, 2006, the Board of Directors of PureDepth, Inc. issued Robert O’Callahan, Chief Financial Officer, and Mark Kalow, Director, each the first tranche of a stock option to purchase shares of PureDepth common stock. The total stock options involved represent 500,000 and 167,067 shares for Messrs. O’Callahan and Kalow, respectively. The option grants have an exercise price of market price as of grant date per share and are otherwise subject to the PureDepth, Inc. stock option plan. The grant issuance will occur in five tranches with 1/5 (or approximately 1/5) of the total stock options involved issuing at the closing price on five dates: August 4, September 5, October 5, November 6, and December 5, 2006. Mr. Kalow did not participate in the Board action regarding his grants.

On September 7, 2006 the Board of Directors appointed Mr. John Floisand and Mr. Thomas L. Marcus as directors to fill vacancies on the Board. Each of Mr. Floisand and Mr. Marcus will receive an annual fee of $20,000 as director payable in semi-annual installments and at the beginning of each semi annual period. The Board granted each director an option (the “Initial Option”) to purchase an aggregate of 100,000 shares of the Company’s common stock pursuant to the Company’s 2006 Stock Incentive Plan ("Plan"). The Initial Option will be issued in five equal tranches of 20,000 shares on the following dates: September 7, October 5, November 6, December 5 and January 5.

Note 8 - Revenue

In October 2006, we entered into a contract licensing our technology to IGT exclusively for certain markets. A minimum fee was paid and further license fees will be paid once a minimum threshold is exceeded. We expect to recognize this revenue according to the following section of our revenue recognition policy. Royalties derived from the licensing of our intellectual property are recognized when persuasive evidence of an arrangement exists, delivery of the product or performance of the service has occurred, no significant company obligations with regard to implementation or integration exist, the fee is fixed or determinable and collectibility is probable. Arrangements for which the fees are not deemed probable for collection are recognized upon cash collection. Payments from customers received in advance of revenue recognition are recorded as deferred revenue. In this quarter we show $53,000 revenue and $55,000 cost of revenue related to assisting a licensee in implementing our technology. Our license revenue does not have a cost of revenue.

Note 9 - Restricted Cash

Restricted cash at October 31, 2006 represents time deposits held at financial institutions as collateral for our potential use of credit limits on credit cards issued.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and related notes contained herein and the information included in our financial reports and in our other filings with the Securities and Exchange Commission. This discussion includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”).

All statements in this Quarterly Report on Form 10-QSB, other than statements of historical fact, are forward-looking statements for purposes of these provisions, including any statements of the plans and objectives for future operations and any statement of assumptions underlying any of the foregoing. Statements that include the use of terminology such as “may,” “will,” “expects,” “believes,” “plans,” “estimates,” “potential,” or “continue,” or the negative thereof or other comparable terminology are forward-looking statements.

All forward-looking statements and risk factors included in this document are made as of the date of this report, based on information available to us as of such date. We assume no obligation to update any forward-looking statement or risk factor.

Overview of business

Currently, we are a technology licensing company whose business is the commercialization of innovative technology incorporating a third dimension of actual “depth” into a smart, compact video display device.

We have entered into a development and sales agreement with Sanyo that involves the manufacture and distribution of products to be manufactured by Sanyo, incorporating PureDepth technology, for sale in the retail entertainment market. The Sanyo agreement grants Sanyo certain rights of exclusivity for the development and sale of products in the amusement and gaming industry. We anticipate that revenue under this contract will be generated within the fiscal year ending January 31, 2008.

On October 13, 2006, we entered into a development and sales agreement with International Game Technology (IGT) that involves the manufacture and distribution of products to be manufactured by IGT, incorporating PureDepth proprietary technology, for sale in the gaming and amusement markets. The IGT agreement grants IGT certain rights of exclusivity for the development and sale of products. Certain license fees under this contract have been received and recognized during the quarter ended October 31, 2006.

We have also entered into a development and sales agreement with the DRS Electronic Systems, Inc. and DRS Laurel Technologies for the development and distribution of derivative PureDepth technology in products to be manufactured for the US Army and US Navy. We have received certain proceeds, classified as other income, in respect of the development of a prototype 30-inch monitor incorporating PureDepth technology for DRS. Due to the longer development and sales cycle typical with sales to the United States Department of Defense and government agencies, we do not anticipate significant revenue from this agreement in the fiscal year ending January 31, 2007.

Our technology was originally invented and developed in New Zealand. As part of our program to commercialize our technology, PureDepth, Inc. was formed as a California corporation as the successor-in-interest to a New Zealand corporation, Deep Video Imaging Limited (founded in 1999), as part of an effort to reorganize Deep Video Imaging Limited and its affiliates “PureDepth Ltd.” and “PureDepth Incorporated Limited.” Through two merger transactions completed on March 31, 2006 and May 30, 2006, respectively, this California company and subsidiaries reorganized in a transaction with a Colorado corporation formerly known as Diamond One, Inc. The company surviving the merger transactions was PureDepth, Inc. (Delaware).

We have two wholly-owned subsidiaries incorporated in New Zealand. Our direct subsidiary, PureDepth Ltd., is the holding entity for the our intellectual property portfolio, which is subject to an exclusive license with us for its use, exploitation and future development. Our indirect subsidiary (subsidiary of PureDepth, Ltd.) is PureDepth Incorporated Ltd., which undertakes the operations in respect of any future research and development of the intellectual property portfolio on our behalf.

Company Background

PureDepth, Inc. (the California corporation) began business in May 1999 through our predecessor entity DVIL, by acquiring and researching and developing certain innovative technology protected by patents and trademarks. PureDepth, Inc. (the California corporation) was incorporated in April 2005, as part of a corporate restructuring that continued over both the fiscal year ended on March 31, 2005 and the ten month period ended January 31, 2006. Our fiscal year ends on January 31.

On March 31, 2006 and pursuant to an Agreement and Plan of Merger and Reorganization dated March 16, 2006, the Company entered into a forward triangular merger with PureDepth Technologies, Inc., a Delaware corporation and wholly owned subsidiary of Diamond One, Inc., a Colorado corporation quoted on the Over the Counter (OTC) Bulletin Board. As a result of the merger, PureDepth Technologies, Inc. succeeded to the business of PureDepth, Inc. (the California corporation) and survived as a wholly owned operating subsidiary of Diamond One, Inc. The merger was effected by the filing of a certificate of merger with the Delaware Secretary of State on March 31, 2006.

The merger represented a change in control of Diamond One, Inc. inasmuch as greater than 50% of the issued and outstanding voting stock of the registrant on a post-merger basis was held by the former shareholders of PureDepth, Inc. (the California corporation). In addition, and simultaneously with the effectiveness of the merger, the board of directors of Diamond One appointed Messrs. David Hancock, Fred Angelopoulos and Mark Kalow to its Board of Directors, and directors Troy Fullmer and Robert Chramosta resigned from the Board. In addition, Messrs. Fullmer and Chramosta resigned their positions as officers of Diamond One, Inc. Fred Angelopoulos was appointed as its Chief Executive Officer and President, and Kristin Bowman was appointed as Chief Operating Officer, Secretary and Acting Chief Financial Officer, subsequently replaced by Robert O’Callahan as Chief Financial Officer on June 30, 2006.

For a full description of the forward triangular merger transaction you may refer to the Form 8-K and Form 8-K/A filed with the Securities and Exchange Commission on April 6, 2006 and June 16, 2006, respectively.

On May 5, 2006, Diamond One, Inc. held a special meeting of the shareholders to consider and act upon the following corporate actions:

(a)	a proposal to adopt amended and restated articles of incorporation for Diamond One, Inc.; and

(b)	a proposal to reincorporate Diamond One, Inc. in the State of Delaware by merging Diamond One, Inc. with and into PureDepth Technologies, Inc., the wholly owned subsidiary of Diamond One, Inc. with PureDepth Technologies, Inc. surviving the merger.

On May 8, 2006 the name of PureDepth Technologies, Inc. was changed to PureDepth, Inc. On May 9, 2006, Diamond One, Inc. filed its Amended and Restated Articles of Incorporation with the Secretary of State of Colorado, changing its name to “PureDepth, Inc.”

Divestiture of Former Business

On May 9, 2006, pursuant to the exercise of an option (the “Option”) pursuant to an Agreement dated March 16, 2006 by and among Diamond One, Inc. and Robert Chramosta and Troy Fullmer, the former officers and directors of the Company, the Company transferred all of the outstanding membership interests in its wholly owned subsidiary, Numismatic Capital Group, LLC (a Colorado limited liability company) to Messrs. Chramosta and Fullmer in consideration of their transfer to the Company of 1,000,000 shares of our common stock held by them. We have retired and cancelled these shares. Prior to the forward triangular merger, Diamond One had assigned all of its assets and liabilities, specifically including the coin and exchange business owned and operated by Diamond One, to Numismatic Capital Group. The exercise of the Option effectively divested PureDepth of the entire coin and exchange business.

Summary of Capitalization

As of October 31, 2006 there were 65,681,099 shares of the PureDepth common stock, $.001 par value, outstanding. The common stock is quoted for trading on the OTC Bulletin Board under the symbol “PDEP.” No preferred shares are outstanding. As of October 31, 2006 there were outstanding securities convertible into or exercisable for an aggregate of 32,259,663 shares of common stock. This is comprised of 12,537,626 options and 19,722,037 warrants.

Significant Shareholder

The principal shareholder is K One W One Limited (known as "K1W1") who owns 35,780,006 shares or approximately 55% of our outstanding common stock and 1,768,698 warrants to purchase the Company’s common stock as of October 31, 2006. K1W1 is a private venture capital investment company wholly owned by Mr. Stephen Tindall. K1W1 is an investor in emerging innovative New Zealand technologies. K1W1 first invested in PureDepth, Inc.'s predecessor company, Deep Video Imaging Limited, in 2000 and continued to invest in the technology and acquired the interests of other shareholders over the next five years. PureDepth, Inc. (the California corporation) was wholly owned by both K1W1 and its employees through their interests in the stock option plan until the private placements of January-March 2006 and the reverse merger which created the public entity in March 2006.

Private Placements

On January 27 and March 1, 2006, the Company (then PureDepth, Inc., the California corporation) completed a private placement offering of an aggregate of 3,583,079 units, each unit consisting of two shares of common stock, one three-year warrant to purchase an additional share of common stock at an exercise price of $2.75 per share (the “A-Warrants”), and one warrant to purchase an additional share of common stock at an exercise price of $2.00 per share (the “B-Warrants”). The offering raised proceeds to the Company of approximately $6,000,000, net of legal, accounting, consulting and finder fees relating to the offering. Additionally, as part of the offering, we converted approximately $770,000 of loans from our majority stockholder, K1W1, on the same terms and conditions as provided in the offering, thereby issuing an additional 386,143 units. The offering totaled 3,969,222 units. Adjusted to reflect the March 31, 2006 merger transaction (and the subsequent automatic conversion of Series A Preferred Stock), investors in the offering received an aggregate of 18,180,704 shares of our common stock, A-Warrants to purchase an aggregate of 9,090,358 shares of our common stock at an exercise price of approximately $1.20 per share and B-Warrants to purchase an aggregate of 9,090,358 shares of our common stock at an exercise price of approximately $0.87 per share. In connection with the offering, we issued to a finder (adjusted to reflect the March 31, 2006 merger transaction) “C-Warrants” to purchase an aggregate of 1,082,811 shares of our common stock at an exercise price of $0.44 per share. We accepted an in-process stock subscription relating to the March private placement and issued 114,510 shares and 114,510 warrants to the purchaser on July 11, 2006

On June 30 and July 30, 2006, we closed a transaction with existing investors who were holders of the B Warrants which raised proceeds of approximately $5.6 million. The transaction involved issuance of a D Warrant to all B Warrant holders who would exercise their outstanding B Warrants to purchase PureDepth common stock during the offering period ended July 30, 2006. We issued approximately 6,700,000 shares of common stock and D-Warrants to purchase approximately 6,700,000 shares of common stock and as a result cancelled approximately 6,700,000 B-Warrants pursuant to the private offering. The D-Warrants entitle the holder thereof to purchase shares of our common stock at an exercise price of approximately $1.20 per share.

On September 6, 2006, we issued “D-Warrants” to purchase 344,000 shares of common stock to an advisor as compensation for services rendered.

Plan of Operations

Overview

Plan of Operations

We are a technology licensing company whose business is the commercialization of innovative technology incorporating a third dimension of actual “depth” into a smart, compact video display device. Accordingly, our primary operations are the research and development of products and software, and the marketing and licensing of such products and software. Licensees are and will be responsible for the manufacture and sales of products incorporating PureDepth technology and related software.

Our critical research and development activities include: further enhancing our existing PureDepth display and software technology; developing and testing prototypes for our existing licensee partners and potential licensee partners; designing and customizing features to the specification of potential licensee partners; and patent defense and application for our existing and new technology developments. Enhancement of our existing technology will include research in optics, LCD technology, backlighting, and component technologies. We anticipate that our research and development expenses will increase significantly in absolute dollars in future periods, primarily because of the enhancement of our core technology, and, to a lesser extent, the design and development of prototypes for future customers.

We intend to increase our sales and marketing efforts to identify, contact and negotiate licensing agreements with identified and yet to be identified potential partner companies. We have identified six applications/markets that we feel are appropriate for our core technology, two of which, the amusement and defense applications, are represented by our existing agreements. Our efforts in the immediate future are to identify relatively few high-profile manufacturers in identified application markets, and concentrate its sales and marketing resources on them. This expanded effort will necessitate hiring additional personnel. Accordingly, we anticipate that our sales and marketing costs will increase in absolute dollars in the next twelve months.

The sales cycle for the evaluation and incorporation of our PureDepth technology can range from six months or more, plus an additional six months before our licensee partners commence volume production of products incorporating our technology. We anticipate that this sales cycle will be shortened over time as more of our technology becomes accepted and resident on commercially available products.

Our primary operating costs are compensation for employees, including stock options, warrants and other incentives; ongoing research and development of our technology; legal costs including future patent applications and defense of currently-held patents; and rental for premises in both Redwood City, CA and Auckland, New Zealand. No significant capital equipment purchases are expected during the next 12 months.

Other than our research and development expenditures, no significant capital equipment purchases are expected during the next 12 months.

Although we do not believe that we will need to raise cash to operate through the fiscal year ending January 31, 2007, we may consider undertaking further capital raising within such period, possibly in the form of either debt or equity, or a strategic partnership. In addition, we may consider utilizing currently outstanding derivative securities, such as warrants or options, as a means for providing cost-efficient financing in the future.

Financial Results

During the three months ended October 31, 2006 we had a net loss of $2,652,825 compared to a net loss of $1,506,472 in the corresponding period of the prior fiscal year. During the nine months ended October 31, 2006 we had a net loss of $8,856,905 compared to a net loss of $3,888,813 in the corresponding period of the prior fiscal year. There was $81,496 in revenue recorded for licensing of the intellectual property and licensee support. We expect revenue to increase due to our licensing contracts in place. Deferred revenue related to contracts involving both an exclusive license for a term and a provision for royalty payments per units beyond a minimum threshold will be recognized as follows: the initial payment amount will be either (a) recognized equally over the term or (b) based upon customer license usage, whichever cumulative figure is higher.

For the three months ended October 31, 2006, our sales and marketing expenses increased $249,783 to $446,639 from $196,856 recorded in the corresponding period of the preceding fiscal year, primarily due to increased staff compensation and agent fees. Our sales and marketing expenses consist primarily of staff compensation including commissions and non-cash compensation expense from the grant of stock options. These expenses also include items such as agent or consulting fees, outside support for marketing programs, marketing programs, travel and entertainment, tradeshows and related facilities expense. We expect these expenses to increase in absolute dollars as we attempt to secure additional licensees for our technology. For the nine months ended October 31, 2006, our sales and marketing expenses increased $963,071 to $1,513,408 from $550,337 recorded in the corresponding period of the preceding fiscal year, primarily due to increased staff compensation and agent fees.

For the three months ended October 31, 2006, our professional fees expenses increased $161,542 to $184,124 from $22,582 recorded in the corresponding period of the preceding fiscal year primarily due to increased activity related to securities registration and public company compliance. Our professional fees expenses include legal and accounting fees to support required filings and audits and stock registrations. Although we expect these expenses related to filings to decrease in absolute dollars, the future cost of Sarbanes-Oxley compliance is currently unknown and these expenses may create a net increase in absolute dollars. For the nine months ended October 31, 2006, our professional fees expenses increased $405,563 to $559,668 from $154,105 recorded in the corresponding period of the preceding fiscal year primarily due to securities registration and public company compliance.

For the three months ended October 31, 2006, our general and administrative expenses increased $823,791 to $1,666,988 from $843,197 recorded in the corresponding period of the preceding fiscal year primarily due to advisory fees relating to financing and increased staff compensation. Our general and administrative expenses consist primarily of staff compensation including non-cash compensation expense from the grant of stock options. These expenses also include items such as consulting and advisory fees, public company filing, reporting and registration expenses, insurance, travel and entertainment, director’s compensation and related facilities expense. We expect these expenses to increase in absolute dollars as we expands operations and also engages in Sarbanes-Oxley compliance. For the nine months ended October 31, 2006, our general and administrative expenses increased $2,962,857 to $4,734,781 from $1,771,924 recorded in the corresponding period of the preceding fiscal year primarily due to advisory fees relating to financing and increased staff compensation.

For the three months ended October 31, 2006, our research and development expenses decreased $70,988 to $296,112 from $367,100 recorded in the corresponding period of the preceding fiscal year primarily due to decreased non-cash compensation in the quarter. Our research and development consist primarily of staff compensation including non-cash compensation expense from the grant of stock options. These expenses also include items such as consulting and advisory fees, operating supplies and specialty parts or fabrication, travel and related facilities expense. We expect these expenses to increase in absolute dollars as the company expands its research and development operations generally and for specific markets. For the nine months ended October 31, 2006, our research and development expenses increased $671,747 to $1,927,405 from $1,255,658 recorded in the corresponding period of the preceding fiscal year primarily due to increased staff compensation.

Our depreciation and amortization expense of $114,749 for the three months ended October 31, 2006 consists primarily of amortization of our patent assets. This expense is $30,967 higher than the $83,782 recorded in the comparable prior period and primarily reflects the additional patent assets, compared to last year, which are being amortized. We expect these expenses to increase in absolute dollars as we add to our patent base. For the nine months ended October 31, 2006, our depreciation and amortization expenses increased $51,564 to $338,090 from $286,526 recorded in the corresponding period of the preceding fiscal year primarily due to additional patent assets, compared to last year, which are being amortized.

The Company had $953,251 in non-cash compensation expense within the three months ended October 31, 2006 and $4,094,789 within the nine months ended October 31, 2006. We expect to continue to recognize non-cash compensation expense to reflect the costs of existing grants.

Liquidity and Capital Resources

During the three months ended October 31, 2006, we spent $35,634 on fixed assets, and paid $90,902 toward developing our intellectual property. For the nine months ended October 31, 2006, our operations used $567,591 in cash, reported $4,094,789 in non-cash compensation expense and added $3,721,154 in cash supporting deferred revenue. During those nine months, we spent $270,613 on fixed assets, and paid $223,260 toward developing our intellectual property. Our financing activities over the nine months ended October 31, 2006 generated $10,123,845 from the issuance of stock.

During the quarter we have continued to develop our technology in support of three contracts executed with Sanyo, IGT and DRS Electronic Systems, Inc. The IGT licensing contract was secured during the quarter ended October 31, 2006.

Our cash requirements and potential capital raises are discussed above under the heading Plan of Operations .

We have issued options to employees and consultants pursuant to our stock option plans. As of October 2006 we had 12,537,626 options outstanding under our 2006 Stock Incentive Plan.

Subject to approval of our Board of Directors, the 2006 Stock Incentive Plan allows option holders to exercise options using a “cashless exercise,” whereby the Company uses vested shares as payment for the exercised options. While the exercise of stock options will generally increase immediate working capital, the approval of a cashless exercise by our board of directors would impact directly on the extent of this working capital and our ability to use existing options as a capital resource.

Provision for State and Federal Income Taxes

From inception through October 31, 2006, we have incurred net losses for federal and state tax purposes. We have also incurred foreign net losses in respect of our predecessor entity and two foreign subsidiaries.

We have not recorded a tax benefit for domestic tax losses because of the uncertainty of realization. We adhere to SFAS No. 109, Accounting for Income Taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. We have recorded a full valuation allowance as the realize ability of our net operating loss carry-forwards is not determinable.

Critical Accounting Policies

Those material accounting policies that we believe are the most critical to an investor’s understanding of our financial results and condition are discussed below. Our significant accounting policies are more fully described in the notes to our consolidated financial statements. Certain of these policies are particularly important to the portrayal of our financial position and results of operations and require the application of significant judgment by our management to determine the appropriate assumptions to be used in the determination of certain estimates.

Revenue Recognition

Revenue is derived from the sale of computer hardware products; software licenses and related services; and royalties related to licensed use of our intellectual property which includes technical transfer, implementation and integration of both hardware and software solutions, post contract support, training, and consulting.

Revenue from the sale of computer hardware is recognized on a contractual basis when final products are dispatched to the customer.

Royalties derived from the licensing of our intellectual property are recognized when persuasive evidence of an arrangement exists, delivery of the product or performance of the service has occurred, no significant Company obligations with regard to implementation or integration exist, the fee is fixed or determinable and collectibility is probable. Arrangements for which the fees are not deemed probable for collection are recognized upon cash collection. Payments from customers received in advance of revenue recognition are recorded as deferred revenue.

Deferred revenue related to contracts involving both an exclusive license for a term and a provision for royalty payments per units beyond a minimum threshold will be recognized as follows: the initial payment amount will be either (a) recognized equally over the term or (b) based upon customer license usage, whichever cumulative figure is higher.

Service revenue from consulting, technical transfer, and training is recognized as the service is performed.

Research and Development Costs

Research and development costs are recognized in the period incurred in accordance with SFAS No. 2 Accounting for Research and Development Costs. Research and development expenses primarily include prototype development costs, contractor fees, and administrative expenses directly related to research and development support.

Intellectual Property

The costs of internally developing intellectual property that are not specifically identifiable, have indeterminate lives, or are inherent in a continuing business and related to an entity as a whole have been expensed as incurred pursuant to the requirements of SFAS No. 142, Goodwill and Other Intangible Assets. Legal fees, registration costs, and ongoing maintenance costs relating to intellectual property are capitalized as incurred and are amortized on a straight line basis over the estimated remaining statutory lives of the patents, ranging from one to twenty years. We evaluate the recoverability of our intellectual property periodically and take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists. No impairments of intellectual property have been identified during the periods presented.

Income Taxes

We provide for income taxes under the provisions of SFAS No. 109 Accounting for Income Taxes. The standard requires an asset and liability based approach in accounting for income taxes.

Deferred income tax assets and liabilities are recorded to reflect the tax consequences in future years of temporary differences between revenue and expense items for financial statement and income tax purposes. Valuation allowances are provided against assets that are not likely to be realized. Deferred tax assets and liabilities for each jurisdiction are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Stock Based Compensation Expense

We account for grants under our 2006 Stock Incentive Plan in accordance with SFAS No. 123(R), Share-Based Payment. We record the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. That cost is recognized over the period during which an employee is required to provide service in exchange for the award—the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service. The grant-date fair value of employee share options and similar instruments is estimated using option-pricing models. If an equity award is modified after the grant date, incremental compensation cost will be recognized in an amount equal to the excess of the fair value of the modified award, if any, over the fair value of the original award.

Foreign Operations & Foreign Currency

We have two wholly-owned subsidiaries incorporated in New Zealand. Our direct subsidiary, PureDepth Ltd., is the holding entity for the intellectual property portfolio, which is subject to an exclusive license with us for its use, exploitation and future development. Our indirect subsidiary, PureDepth Incorporated Ltd., undertakes the operations in respect of any future research and development of the intellectual property portfolio on our behalf. This activity is governed by a development agreement with us upon which an annual development fee of $1,000,000, calculated at the end of each quarter, is paid. Income and expenditure relating to the license and future development of the intellectual property is an inter-company transaction eliminated on consolidation. Therefore, these amounts are not shown in the financial statements. We (including our subsidiaries) use the US dollar as our functional currency. We determined that the cash flow, sales price, sales market, expense, financing and intercompany transaction indicators on balance had by July 31, 2006 reached a significant level where under SFAS 52 each of the entities would be best represented by the US dollar as the functional currency.

Market Risk Disclosure

We record the majority of our foreign operating transactions in the US dollar. We also record all of our US operating transactions, including cash inflows and outflows, in the local currency, the US dollar. We expect that international activity will continue to represent a significant portion of our operations. Transactions with our New Zealand research and development facility and with any potential contract manufacturers in Asia will be directly affected by fluctuations in various currency rates. The New Zealand operation makes us vulnerable to future fluctuations in the exchange rate. We are prepared to hedge against any fluctuations in foreign currencies should such fluctuations have a material economic impact on us, although we have not engaged in hedging activities to date.

Off-Balance-Sheet Arrangements

As of October 31, 2006, there were no off-balance-sheet arrangements.

Recently Issued Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 123 (R) (“SFAS 123(R)), Share-Based Payment , which replaced SFAS No. 123, Accounting for Stock-Based Compensation , and superseded Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees . The Statement requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. Under SFAS No. 123(R), the Company must determine the appropriate fair value method to be used for valuing share-based payments and the amortization method of compensation cost. The financial statements presented reflect the adoption of SFAS No. 123(R) for all periods.

In May 2005, the FASB issued Statement of Financial Accounting Standards No. 154 (“SFAS 154”), Accounting Changes and Error Corrections, which requires retrospective application to prior periods’ financial statements of changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. When it is impracticable to determine the period-specific effects of an accounting change on one or more individual prior periods presented, this Statement requires that the new accounting principle be applied to the balances of assets and liabilities as of the beginning of the earliest period for which retrospective application is practicable and that a corresponding adjustment be made to the opening balance of retained earnings for that period rather than being reported in an income statement. When it is impracticable to determine the cumulative effect of applying a change in accounting principle to all prior periods, this Statement requires that the new accounting principle be applied as if it were adopted prospectively from the earliest date practicable. All periods are presented in accordance with SFAS No. 154.

In June 2005, the FASB issued FSP FAS 143-1, “Accounting for Electronic Equipment Waste Obligations” ( “FSP 143-1” ), which provides guidance on the accounting for certain obligations associated with the Waste Electrical and Electronic Equipment Directive (the “Directive” ), adopted by the European Union ( “EU” ). Under the Directive, the waste management obligation for historical equipment (products put on the market on or prior to August 13, 2005) remains with the commercial user until the customer replaces the equipment. FSP 143-1 is required to be applied to the later of the first reporting period ending after June 8, 2005 or the date of the Directive’s adoption into law by the applicable EU member countries in which the manufacturers have significant operations. To date, FSP 143-1 has not had a material impact on its consolidated results of operations and financial condition.

In June 2006, the FASB issued FIN No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109, which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. The interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN No. 48 requires recognition of tax benefits that satisfy a greater than 50% probability threshold. FIN No. 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN No. 48 is effective for us beginning February 1, 2007. We are assessing the potential impact that the adoption of FIN No. 48 will have on our financial statements.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157 (“SFAS 157”), No. 157 (“SFAS 157”), Fair Value Measurements which defines fair value, establishes guidelines for measuring fair value and expands disclosures regarding fair value measurements. SFAS 157 does not require any new fair value measurements but rather eliminates inconsistencies in guidance found in various prior accounting pronouncements. SFAS 157 is effective for fiscal years beginning after November 15, 2007. Earlier adoption is permitted, provided the company has not yet issued financial statements, including for interim periods, for that fiscal year. We are currently evaluating the impact of SFAS 157, but do not expect the adoption of SFAS 157 to have a material impact on our consolidated financial position, results of operations or cash flows.

Factors affecting future results

We are not currently profitable and may never become profitable. We have a history of losses and expect to incur substantial losses and negative operating cash flow for the foreseeable future. In fact, we expect that our expenses will increase substantially in the near future. As a result, we will need to generate significant revenue in order to achieve and maintain profitability. Currently, we have limited sources of revenue. Even if we succeed in developing and commercializing additional products, we expect that we will thereafter incur substantial losses for the foreseeable future. In sum, we may never achieve or maintain profitability. Our failure to achieve or maintain profitability will be likely to negatively impact the value of our securities.

We have a limited operating history upon which to base an investment decision. We are an early-stage company with a limited operating history upon which to evaluate the viability of our business and long-term prospects for success. Accordingly, potential investors should carefully consider the risk, expenses and unforeseen difficulties generally encountered in the operation and development of an early-stage business, including the risks and uncertainties frequently encountered by companies whose business and viability is dependent upon new technologies.

If we are unable to innovate and develop attractive new products, our business will be likely to be adversely affected. We expect to derive a substantial portion of our estimated revenues from the incorporation of the PureDepth Multi-Layer Display (“MLD”) technology into innovative new products for sale. The process of developing and marketing new products is generally complex and uncertain, and involves a number of risks including, without limitation, the following:

we may be unable to obtain adequate funding and resources necessary for investments in new products and technologies;

our investment and commitment of significant resources may not result in successful new products or technologies;

we may misunderstand our customers’ product needs and desires;

we may not be able to successfully anticipate the new products and technologies which will gain market acceptance, especially since the industry in which we operate is characterized by rapid changes, including technological changes;

we may not be able to protect the proprietary intellectual-property rights associated with the technologies we may use in any newly developed products;

our technology may become obsolete earlier than expected due to rapid advancements in technology and changes in consumer preferences, and

delays in being first to market with new technologies and products may prevent us from successfully competing with our rivals.

If we fail to develop and market innovative new products, or if any of the risks described above materialize, our business may be negatively and adversely affected.

Even with significant capital spending in the future to keep pace with technological changes, we may not be able to develop new technologies that are accepted by the market. Advances in technology typically lead to rapid declines in sales volumes for products made with older technologies and may even lead to those products becoming obsolete. As a result, we will likely be required to make significant expenditures to develop or acquire new technologies, including alternative display panel technologies that may cause our MLD technology to obsolesce. We may not be able to successfully develop new products that keep pace with technological changes through our own research and development efforts or through our acquisition of technology licenses. This may be true even after we have spent significant amounts of capital in pursuit of a particular technology. Furthermore, even if we are successful in developing or acquiring any particular technology, we may not be able to effectively commercialize or market the resulting product.

Our need to spend significant amounts of capital in developing new technologies and products may require us to seek additional financing that could dilute shareholdings or restrict our operations. Expenses for research and development activities for new products, especially those that involve innovative technology, are generally extremely difficult to forecast. If our actual expenditures far exceed our forecasted expenditures, or in the event of adverse market conditions, we may need to seek additional financing.

Additional financing could be sought from a number of sources, including, but not limited to, additional sales of equity or debt securities, or loans from banks, other financial institutions or affiliates of the Company. We cannot, however, be certain that any such financing will be available on terms favorable to us, if available at all. If additional funds are raised by the issuance of our equity securities, such as through the issuance of stock, convertible securities, or the issuance and exercise of warrants, then the ownership interest of our existing stockholders would likely be diluted. If additional funds are raised by the issuance of debt or other equity instruments, we may become subject to certain operational limitations, and such securities may have liquidation rights senior to those of the then existing holders of common stock. Ultimately, if no additional financing is obtained as and when needed, we may be required to slow our growth, abandon certain product candidates (including candidates on which we have already spent considerable resources), or cease operations altogether.

Our business may be adversely affected if alternative display panel technologies erode future sales of products based on our proprietary MLD technology. The introduction of alternative display panel technologies, including those that may be currently under development by our competitors and us, may erode future sales of MLD technology, which may have a material adverse effect on our business.

The average selling prices of our displays using our technology may decline over time and negatively affect our operating results. The average selling prices of our displays using our technology are expected to continually decline over time as a result of, among other factors, technology advances, cost reductions and increased competition. Although we may be able to take advantage of the higher selling prices typically associated with new products and technologies we may bring to market, we cannot provide assurance that we can maintain licensing royalty prices in the face of market competition. If we are unable to effectively anticipate and counter the price erosion that accompanies our products, our profit margins will be negatively affected.

Our business model has changed and may be forced to change in the future . We currently focus our efforts on developing and licensing technology. Our licensing revenues depend on the success of our licensees in launching products in volume that incorporate our technology. We may be required to expand our efforts further into manufacturing, production startup, customer product development support, assisting in establishment of contract manufacturing and other services. To facilitate business, we may be required to manufacture and supply specialized physical components. These business model changes may be difficult or impossible and may be unprofitable.

We operate in a highly competitive environment and we may not be able to sustain our current market position. Our ability to compete successfully depends on factors both within and outside our control, including product pricing, performance and reliability, successful and timely investment and product development, success or failure of our end-brand customers in marketing their brands and products, component and raw material supply costs, and general economic and industry conditions. Currently, we believe that our MLD technology has a number of competitive advantages over competing technologies. Nevertheless, our competitors from time to time may have greater financial, sales and marketing, manufacturing, research and development or technological resources than us. In particular, competitors with greater resources may be able to license or manufacture competitive products on a larger scale or with greater cost efficiencies than us. Alternatively, because innovation in our industry often creates wide scale change in technologies and resulting products, our competitors may develop superior technologies and obtain exclusive rights to those technologies. In sum, we may not be able to sustain our perceived current market advantages.

Governmental regulation may limit our activities or increase our costs of operations. Our business and operations are subject to various forms of government regulation in the countries in which we do business, including required business/investment approvals, export regulations based on national security or other reasons, and other export/import regulations such as tariffs. In addition, environment and recycling laws and regulations relating to the disposal of electronics are likely to be revised and tightened in the near future. If we cannot comply with these regulations without great cost, our financial performance may suffer.

General economic conditions may adversely affect our sales and profitability. For the most part, purchases of our products are discretionary. As a result, demand for consumer electronics products, which we believe will account for a significant proportion of our worldwide operating revenue, will be likely to be affected by general economic trends in the countries or regions in which our products are sold. Similarly, demand for business use products and for components we may manufacture that go into products of third parties will be likely to be affected by general economic trends in the various markets in which we sell our products. In sum, economic downturns and resulting declines of demand in our major markets, including North America, Europe, Australia and Asia, may adversely affect our sales and operating results.

As we materially rely on a limited number of third-party suppliers for key raw materials, components and manufacturing equipment, and any disruption in their supply will negatively affect our business. Our development, marketing prototype and production support operations depend on obtaining adequate supplies of quality raw materials and components on a timely basis. In general, we source most of our raw materials as well as key components of MLD products from two or three suppliers for each key component. We may experience shortages in the supply of these and other components or raw materials as a result of, among other things, anticipated capacity expansion in the MLD and competitive industries. If we are unable to obtain adequate supplies of high quality raw materials or components in a timely manner or make alternative arrangements for such supplies, this would contribute to slower production and negatively impact license fees.

Our business materially relies on patent rights that may be narrowed in scope or found to be invalid or otherwise unenforceable. Our success will materially depend on our ability to obtain, defend and enforce our patent rights worldwide. The coverage claimed in a patent application can be significantly reduced before a patent is issued. Consequently, our pending or future patent applications may not result in the issuance of patents. Patents issued to us may be subjected to further proceedings limiting their scope and may not provide significant proprietary protection or a competitive advantage. Our patents also may be challenged, circumvented, invalidated or deemed unenforceable. In addition, because (i) patent applications in various countries publish at different times, (ii) it is difficult to monitor patent applications that may be filed in other countries by third parties, and (iii) the publication of discoveries in scientific or patent literature often lags behind actual discoveries, we generally cannot be certain that (i) we were the first creator of inventions covered by our pending patent applications, (ii) that we or any of our licensors will be entitled to any rights in purported inventions claimed in pending or future patent applications, or (iii) that we were the first to file patent applications on such inventions.

Failure to protect our intellectual property rights could impair our competitiveness and harm our business and future prospects. We believe that developing new products and technologies that can be differentiated from those of our competitors is critical to the success of our business. We intend to take active measures to obtain international protection of our intellectual property by obtaining patents and undertaking monitoring activities in our major markets. Nevertheless, we may not be able to effectively deter competitors from improper use of our proprietary technologies. For instance, our competitors may misappropriate our intellectual property, disputes as to ownership of intellectual property may arise, and our intellectual property may otherwise become known or independently developed by our competitors Our technology may be accessible in markets, such as Asia, where the practical legal protections for intellectual property may be considerably less than in North America or Europe. As a result, we may have to litigate to enforce and protect our intellectual-property rights to determine their scope, validity or enforceability. Intellectual-property litigation is particularly expensive, could cause a diversion of resources, and may not prove successful. The loss of intellectual-property protection or the inability to secure or enforce intellectual property protection could materially harm our business and ability to compete.

If we infringe the rights of third parties we could be prevented from selling products, forced to pay damages, or forced to defend against litigation. If our products, methods, processes or other technologies infringe the proprietary rights of other parties, we could incur substantial costs and we may have to:

obtain licenses, which may not be available on commercially reasonable terms, if at all;

abandon an infringing implementation or product;

redesign our products or processes to avoid infringement;

stop using the subject matter claimed in the patents held by others;

pay damages; or

defend litigation or administrative proceedings which may be costly whether we win or lose, and which could result in a substantial diversion of our valuable management resources.

We rely upon trade secrets and other unpatented proprietary know-how to maintain our competitive position in our industry, and any loss of our rights to, or unauthorized disclosure of, our trade secrets or other unpatented proprietary know-how could negatively affect our business. We also rely upon trade secrets, unpatented proprietary know-how and continuing technological innovation in our business. We typically enter into confidentiality agreements with each of our employees and consultants upon the commencement of an employment or consulting relationship, whereby each employee or consultant agrees to maintain the confidentiality of trade secrets and certain other Company information on a perpetual basis. However, these agreements may be breached and in certain circumstances we may not be able to enforce them. Moreover, even if we can enforce such an agreement, we may not have an adequate remedy for any such breach. The mere disclosure of our trade secrets or other know-how as a result of such a breach could adversely and irreparably affect our business.

Our business will subject us to potential product-liability claims that could adversely affect our operating results, financial condition and business reputation. We may in the future manufacture various products or components in accordance with internationally accepted quality-control standards. We cannot be certain, however, that all of the products using our technology will be defect-free and will not be recalled at some later date. Furthermore, although we maintain insurance against product-liability claims, we cannot be certain that such insurance can adequately satisfy the liabilities that may ultimately be incurred. In addition, insurance may not continue to be available on terms acceptable to us. A large-scale product recall or a successful product-liability claim against us could result in significant costs or have a negative impact on our reputation, which may in turn lead to a decrease in sales, adversely affecting our results of operations.

We rely on key engineers, senior management and other personnel, and the loss of the services of any such personnel or the inability to attract and retain suitable replacements may negatively affect our business. Our success depends to a significant extent upon the continued service of our research and development and engineering personnel, and on our ability to continue to attract, retain and motivate qualified researchers and engineers, especially during periods of rapid growth. The loss of the services of any of our key research and development and engineering personnel or senior management, without adequate and timely replacement, could result in delays in product development, loss of customers, partners and sales, and a diversion of management resources, each of which could have a material adverse effect on our business.

If we are unable to hire additional qualified personnel, our ability to grow our business may be harmed. As we attempt to grow our business, we will need to hire additional qualified personnel with expertise in software development, testing, research, technology development and manufacturing, as well as sales and marketing. We believe that attracting and retaining qualified personnel will be critical to our success. In this regard, we compete for qualified individuals with numerous other enterprises. Competition for such individuals is intense, and we may not be able to attract and retain qualified personnel.

We expect to have significant international operations, which will pose unique risks to our business. We expect that a substantial portion of our operational activity will be conducted outside of the United States and New Zealand (particularly in Asia). There are a number of risks inherent in doing business in overseas markets, including the following:

unexpected legal or regulatory changes;

unfavorable political or economic factors;

difficulties in recruiting and retaining personnel;

labor disputes, including strikes;

less developed technological infrastructure, which can affect our production or other activities or result in lower customer acceptance of our products and services;

potentially adverse tax consequences; or

social, political or economic turmoil due to terrorism, war, or other factors.

Our failure to adequately address these risks may hurt our business.

We may be unable to successfully manage and sustain our growth, which could harm our business. Since the founding of DVIL, we have experienced, and expect to continue to experience, rapid growth in the scope and complexity of our operations. This growth may strain our managerial, financial, manufacturing and other resources, impairing our ability to effectively execute our business plans. In addition, we may experience manufacturing difficulties with our partners in starting production that uses our technology. The materialization of these risks could adversely affect our operating results.

Trading of our common stock on an illiquid market may result in lower market prices. Trading of our common stock is conducted on the OTC Bulletin Board. This has an adverse effect on the liquidity of our common stock, not only in terms of the number of shares that can be bought and sold at a given price, but also through delays in the timing of transactions and reductions in security analysts’ and the media’s coverage of our operations and our common stock. This may result in lower prices for our common stock than might otherwise be obtained and could also result in a larger spread between the bid and asked prices for our common stock.

There is currently little trading volume in our common stock, which will make it difficult to sell shares of our common stock. In general, there has been very little trading activity in shares of our common stock. The small trading volume will likely make it difficult for our stockholders to sell their shares as and when they choose. Furthermore, small trading volumes generally depress market prices. As a result, our stockholders may not always be able to resell shares of our common stock publicly at times and prices that they feel are fair or appropriate.

When additional registrations occur and transfer restrictions lapse, the availability of shares may depress the price. In a private placement in January and March 2006, we issued approximately 18,200,000 shares of our common stock, A Warrants to purchase approximately 9,100,000 shares of our common stock and B Warrants to purchase approximately 9,100,000 shares of our common stock. In July 2006, we cancelled B Warrants to purchase approximately 6,700,000 shares of our common stock and issued D Warrants to purchase approximately 6,700,000 shares of our common stock. We are obligated to register for resale some of these shares which will significantly increase the shares and shares underlying the warrants freely tradable following resale from the current 5,200,000 freely tradable shares. Holders may also have an ability to sell under Rule 144 as time elapses, regardless of registration rights. Additionally, there are options to purchase approximately 12,500,000 shares of our common stock which may be registered under Form S-8 in the near term. Any one of these factors or a combination of them will substantially increase the number of shares available on the market and may have an effect on the trading price of the stock.

We may not succeed in efforts to have our common stock listed on the Nasdaq Global Market or a securities exchange. We plan to seek listing of our common stock on a national securities exchange. However, we cannot assure you that we will be able to meet the initial listing standards of any stock exchange.

There has been only a limited public market for our common stock to date. To date, there has been only a limited public market for our common stock on the Over-the-Counter Bulletin Board. Our common stock is currently not listed on any exchange. If an active trading market for our common stock does not develop, the market price and liquidity of our common stock will be materially and adversely affected.

Because we became public by means of a forward triangular merger, we may not be able to attract the attention of major brokerage firms . Additional risks may exist as a result of our becoming a public reporting company through a forward triangular merger transaction, as opposed to a traditional initial public offering. Because we did not engage in a more traditional and publicized initial public offering, security analysts of major brokerage firms may not provide us research coverage. In addition, there is no incentive to brokerage firms to recommend the purchase of our common stock. The failure of brokerage firms to provide analyst coverage will be likely to slow the dissemination of awareness and knowledge of our business. As a result, the trading price of our common stock may be adversely affected.

Our majority stockholder possesses a controlling portion of the voting power of our common stock, which could adversely affect the market price of our common stock. As of October 31, 2006, K1W1, our majority stockholder, possessed beneficial ownership of 35,780,006 shares of our common stock or approximately 55% of our outstanding common stock plus 1,768,698 shares issuable upon exercise of warrants. This represents a significant and controlling portion of the outstanding voting power, and enables K1W1 to control our management and affairs through the election and removal of our entire Board of Directors, and all other matters requiring stockholder approval, including any future merger, consolidation or sale of all or substantially all of our assets. This concentrated control could discourage others from initiating any potential merger, takeover or other change-of-control transaction that may otherwise be beneficial to our stockholders. As a result, the return on an investment in our common stock through the market price of our common stock or ultimate sale of our business could be adversely affected.

Our certificate of incorporation grants the Company’s Board of Directors with the power to designate and issue additional shares of common and/or preferred stock. Our authorized capital consists of 200,000,000 shares, of which 190,000,000 shares are designated as common stock, par value $.001 per share, and 10,000,000 shares are designated as preferred stock, par value $.001 per share. Pursuant to authority granted by our certificate of incorporation, our Board of Directors, without any action by the stockholders, may designate and issue shares in such classes or series (including classes or series of common stock and/or preferred stock) as it deems appropriate and establish the rights, preferences, and privileges of such shares, including dividends, liquidation and voting rights. The rights of holders of classes or series of common stock or preferred stock that may be issued could be superior to the rights of the common stock offered hereby. Our Board of Directors’ ability to designate and issue shares could impede or deter an unsolicited tender offer or takeover proposal. Further, the issuance of additional shares having preferential rights could adversely affect other rights appurtenant to the shares of common stock offered hereby. Any such issuances will dilute the percentage of ownership interest of our stockholders and may dilute our book value.

We are subject to the Sarbanes-Oxley Act and the reporting requirements of federal securities laws, which can be expensive. As a public reporting company, we are subject to the Sarbanes-Oxley Act of 2002, as well as the information and reporting requirements of the Securities Exchange Act of 1934 and other federal securities laws. The costs of compliance with the Sarbanes-Oxley Act and of preparing and filing annual and quarterly reports and other information with the SEC, will cause our expenses to be higher than they would be had we remained privately held. In addition, because we only recently became subject to these laws and regulations, we cannot accurately estimate their cost to us from a general and administrative standpoint.

We have never paid dividends on our capital stock and do not intend to do so for the foreseeable future . We have never paid dividends on our capital stock and we do not anticipate that we will cause the Company to pay any dividends for the foreseeable future. Accordingly, any return on an investment in us will be realized, if at all, only when an investor sells shares of our common stock.

Item 3. Controls and Procedures

As of October 31, 2006, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of that date are effective to ensure that information required to be disclosed in the reports we file under the Securities and Exchange Act is recorded, processed, summarized and reported on an accurate and timely basis. Additionally, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is communicated to the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure. During the third quarter of fiscal 2006, there were no changes in our internal controls over financial reporting that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting subsequent to the date of such evaluation.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

None

Item 2. Unregistered Sales of Equity Securities

On August 4, 2006, Robert O’Callahan, Chief Financial Officer, and Mark Kalow, Director were each granted options to purchase 100,000 and 33,400 shares of our common stock, respectively. The option grants have an exercise price of market price as of grant date per share with seven year term and otherwise subject to the 2006 Stock Incentive Plan. The shares subject to the options will vest with 1/6 of such shares vesting on December 30, 2006, and 1/12 at quarterly intervals thereafter over three years concluding June 30, 2009. On August 4, 2006, an advisory board member was granted an option to purchase 40,000 shares of our common stock on these terms. On each of September 5 and October 5, each of the foregoing individuals were granted options to purchase an additional 100,000, 33,400, and 40,000 shares of our common stock respectively, in each case on the same terms as the initial grants.

On September 6, 2006 we issued 344,000 “D Warrants” to an advisor as compensation for services rendered.

On September 7, 2006, John Floisand and Thomas L. Marcus were each granted options to purchase 20,000 shares of our common stock in connection with their appointment as directors to fill vacancies on the Board. The option grants have an exercise price per share equal to the per share market price of our common stock on the grant date with a seven year term and otherwise subject to the 2006 Stock Incentive Plan. The shares subject to the options will vest over three years, with the first 1/6 vesting at six months. On October 5 each of the foregoing individuals was granted an option to purchase an additional 20,000 shares of our common stock, in each case on the same terms as the initial grants.

On September 29 and October 5, 2006, we issued 206,100 shares of common stock pursuant to the exercise of options.

On October 26, 2006, at a duly convened Board Meeting we granted 375,000 stock options at the closing price that day.

The sales of the securities identified above were made pursuant to privately negotiated transactions that did not involve a public offering of securities and, accordingly, PureDepth believes that these transactions were exempt from the registration requirements of the Securities Act pursuant to Section 4(2) thereof and/or Rule 506 promulgated thereunder. Each of the above-referenced investors in PureDepth’s stock private placements represented to PureDepth in connection with their investment that they were “accredited investors” (as defined by Rule 501 under the Securities Act) and were acquiring the shares for investment and not distribution, that they could bear the risks of the investment and could hold the securities for an indefinite period of time. The investors received written disclosures that the securities had not been registered under the Securities Act and that any resale must be made pursuant to a registration or an available exemption from such registration. All of the foregoing securities are deemed restricted securities for purposes of the Securities Act.

Item 3. Defaults on Senior Securities

None

Item 4. Submission of Matters to a Vote of Security Holders

None.

Item 5. Other Information

None.

Item 6. Exhibits

(a) Exhibits

Exhibit No.	Description

10.10	Executive Employment Agreement - O’Callahan (1)

10.11	Executive Employment Agreement - Angelopoulos (2)

10.12	License Agreement - IGT++


31.1	Certification of Chief Executive Officer

31.2	Certification of Chief Financial Officer

32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(1)	Incorporated by reference from our Form 8-K filed November 7, 2006.

(2)	Incorporated by reference from our Form 8-K filed November 16, 2006.

++	Confidential treatment has been requested as to certain portions of this exhibit pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.

SIGNATURES

In accordance with the requirements of the Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	PUREDEPTH, INC.

Date: December 15, 2006	By:	/s/ Fred Angelopoulos
		Fred Angelopoulos Chief Executive Officer



	By:	/s/ Robert O’ Callahan
		Robert O’ Callahan Chief Financial Officer

Index to Exhibits Filed with this Report

(a) Exhibits

Exhibit No.	Description

10.12	License Agreement - IGT++

31.1	Certification of Chief Executive Officer

31.2	Certification of Chief Financial Officer

32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

++	Confidential treatment has been requested as to certain portions of this exhibit pursuant to Rule 406 of the Securities Exchange Act of 1933, as amended.

Exhibit 10.12

CONFIDENTIAL TREATMENT REQUESTED - REDACTED COPY

PATENT AND TECHNOLOGY LICENSE AND TECHNOLOGY TRANSFER AGREEMENT

This Patent and Technology License and Technology Transfer Agreement (the “ Agreement ”) is entered into as of October 13th, 2006 (the “Effective Date”) by and between IGT, a Nevada corporation with principal offices at 9295 Prototype Drive, Reno, Nevada 89521 (“IGT”), and PureDepth Inc., a Delaware corporation with principal offices at 255 Shoreline Drive , Suite 610 , Redwood City, California, 94065 (together with its subsidiaries, PureDepth Limited and PureDepth Incorporated Limited, collectively “PureDepth”).

Background

PureDepth and its affiliates are a research and design business focused on developing new display technology. PureDepth and its affiliates have developed and continue to develop a multi-layer display (MLD) technology with promising commercial potential.

IGT is a leading manufacturer of gaming machines and other devices for use in the wager-based gaming industry.

PureDepth wishes to grant to IGT an exclusive license to incorporate its MLD Technology into IGT products and to offer for sale, sell and/or distribute such IGT products within the Field of Use under the terms and subject to the conditions of this Agreement.

In consideration of the mutual promises and covenants and conditions contained herein, IGT and PureDepth agree as follows:

1.	Definitions

Section 1.01 “Administrative Machine” means a device developed now or in the future (i) which is designed for use in casino administration of Gaming Machines and (ii) that would, absent this Agreement, infringe the Licensed Intellectual Property.

Section 1.02 “Affiliate” means, with respect to IGT and PureDepth, any other natural person or corporation, partnership, joint venture, limited liability company or other business entity that directly or indirectly controls, is controlled by, or is under common control with, IGT or PureDepth, respectively. An entity or person shall be regarded as in control of another entity if it owns or controls, directly or indirectly, at least fifty percent (50%) of the voting stock or other ownership interest of the other entity. A joint venture entity in which IGT or an IGT Affiliate owns at least 50% of the equity interest shall be deemed a n IGT Affiliate.

Section 1.03 “Agreement” means this agreement, including th e Exhibits to this Agreement.

CONFIDENTIAL TREATMENT REQUESTED - REDACTED COPY

Section 1.04 The “Copyrights” means any copyright held by PureDepth, whether registered or not, in any written material, plans, designs, software, or other work relating to the development, assembly, sale, and distribution of Pure Depth’s MLD Technology in the Field of Use.

Section 1.05 The “Core Patents” shall mean those PureDepth Patents listed in Exhibit B that claim generic aspects of MLD technology, and are not limited by application or by features not directly related to the functioning of a display. The Core Patents include at least US Patent No. [****] and its non-US counterparts.

Section 1.06 “Field of Use” means wager-based non-amusement gaming. Examples of technology within the Field of Use include without limitation class 2 technology, class 3 technology, and central determination technology.

Section 1.07 “Gaming Machine” means a machine adapted to provide or assist in providing a fully or substantially automated wagering game. This includes machines and other devices capable of receiving wagers and/or issuing awards to players for play of games of chance. A Gaming Machine will be associated with at least one wagering station. Gaming Machines include, but are not limited to, stand-alone Gaming Machines, networked Gaming Machines (wired and wireless), general-purpose computers configured with software, including Internet applications, for implementing the wagering game, and automated multi-player station based table games. Gaming Machines may be non-Mobile Gaming Machines or Mobile Gaming Machines (e.g., handheld and/or wireless) used primarily for gambling but not including certain common mobile devices such as iPods, Gameboys, and, PSPs. It is understood that a general purpose personal computer or mobile phone, not designed primarily for gambling, is not a Gaming Machine. Gaming Machines include Internet capable general or special purpose machines used primarily for Internet gambling.

Section 1.08 “ Improvements ” means modifications to, improvements in, developments from or additions to the Licensed Intellectual Property during the Term as set forth in Section 2.01.

Section 1.09 The “Know-How” means, collectively, all know-how, show-how, technical information, technical knowledge, unpatentable inventions, manufacturing procedures, methods, specifications, bills of materials, processes, and formulas relating to PureDepth’s MLD Technology.

Section 1.10 “Licensed Intellectual Property” means the trade secrets, the Know-How, the Copyrights, the PureDepth Patent Applications, and the PureDepth Patents. The Licensed Intellectual Property is applied in the development, manufacture, assembly and sale of the MLD Technology as well as any designs developed by PureDepth, whether or not registered or protected by copyright or patent, devised or acquired by PureDepth and applied in the development, manufacture, assembly and sale of the MLD Technology. For the avoidance of doubt, the Licensed Intellectual Property includes all Improvements.

Section 1.11 “Licensed Products ” means any product, including devices and machines developed now or in the future utilizing aspects of the MLD Technology and Sold within the Field of Use, that would, absent this Agreement, infringe the Licensed Intellectual Property. Licensed Products include Gaming Machines and Administrative Machines that would infringe the Licensed Intellectual Property.

Section 1.12 “ MLD Technology ” is the multi-layer display technology owned by PureDepth and protected by the Licensed Intellectual Property.

Section 1.13 The “PureDepth Patent Applications” means “Existing Patent Applications” as identified in Exhibit A and any “Future Patent Applications” relating to MLD Technology filed in the US or elsewhere during the term of this Agreement. The PureDepth Patent Applications include but are not limited to continuations, divisionals, continued examinations, substitutes, and continuations-in-part of any PureDepth Patent Applications.

CONFIDENTIAL TREATMENT REQUESTED - REDACTED COPY

Section 1.14 The “PureDepth Patents” means issued patents covering MLD Technology owned or controlled by PureDepth including “Existing Patents,” which are patents owned or controlled by PureDepth on the Effective Date, including those listed in Exhibit B, as well as any renewals, reissues, substitutes and reexaminations thereon and any “Future Patents,” which are patents granted after the Effective Date upon any PureDepth Patent Application in the US or elsewhere, and includes any patents of which PureDepth is the permitted user of worldwide and which relate to the MLD Technology.

Section 1.15 “ Sale” or “ S ell” or “S elling ” or “S old” means the sale, transfer, or other disposition of a Licensed Product by IGT, either directly or through its sublicensees and/or Affiliates, to an ultimate customer.

Section 1.16 “Territory” means worldwide except for Japan.

Section 1.17 “Wagering Station” means a physical station associated with one or more gaming machines where a player can place bets on a game of chance. To qualify as a wagering station herein, the gaming machine associated with the wagering station must include at least one display incorporating MLD Technology. Typically though not necessarily a wagering station includes facilities for not only placing bets but also initiating play of the game of chance.

2.	Term and Termination

Section 2.01 Term . This Agreement shall commence on the Effective Date and shall continue in full force and effect for an initial term of [**** ] years (“Initial Term”).

Section 2.02 Termination .

(a) Either party may terminate this Agreement if the other party materially breaches this Agreement and fails to cure such breach within sixty (60) days after receiving written notice thereof by the non-breaching party, which notice shall specify the manner in which the Agreement has been breached . Thereafter, such non-breaching party may, at its option and in addition to any other remedy that it might be entitled to, immediately terminate this Agreement by notice to the breaching party in writing, which notice of termination will be effective upon receipt.

(b) In the event there is a final, non-appealable judgment that one or more of the Licensed Products have infringed the intellectual property rights of a third party, and as a result, IGT is enjoined from Selling the Licensed Products as contemplated in this Agreement, then IGT shall have the right to terminate this Agreement upon written notice to PureDepth .

CONFIDENTIAL TREATMENT REQUESTED - REDACTED COPY

Section 2.03 Effect of Termination . Upon termination or expiration of this Agreement, except in the case of Section 2.2(b), IGT will have a period of ninety (90) days from the effective date of the termination or expiration in which to Sell any Licensed Products in its inventory as of the effective date of the termination or expiration. Within fifteen (15) days of the effective date of termination or expiration, IGT will provide a report listing all Licensed Products that are in IGT’s inventory by product type and quantity. Upon termination or expiration of this Agreement, IGT will return, within ten (10) days, all PureDepth Know-How and Confidential Information including the manufacturing package and the design package. Termination or expiration of this Agreement , for any reason, will not be construed to release any party from any obligation accrued prior to the effective date of such termination or expiration . In this regard, the termination of this Agreement by either party for any reason shall not relieve any party of any liability for a breach of this Agreement, any misrepresentation or failure to comply with any term or covenant hereunder or any other liability accruing prior to the date of expiration or termination ; provided , however , that neither party shall be deemed to be in default of any of its obligations hereunder (other than any payment obligations) to the extent any delay in its performance is caused by or is the result of factors beyond its reasonable control, including, without limitation, the factors identified in Section 9.15 (“Force Majeure”).

Section 2.04 Option for Renewal . The parties may elect to renew this Agreement for an additional term, subject to mutual agreement of the parties in writing, at least [****] prior to expiration of the Initial Term, on [****].

3.	License Grant

Section 3.01 Grant . PureDepth hereby grants to IGT an exclusive license under the Licensed Intellectual Property throughout the Territory and in the Field of Use, to make, have made, use, market, distribute, Sell, offer to Sell, import, and export to any person and in any manner Gaming Machines.

PureDepth hereby grants to IGT a non-exclusive license under the Licensed Intellectual Property throughout the Territory and in the Field of Use to make, have made, use, market, distribute, Sell, offer to Sell, import, and export to any person and in any manner Administrative Machines.

Section 3.02 Right to Sublicense . PureDepth grants to IGT the exclusive right under the Licensed Intellectual Property to sublicense any third party (including IGT Affiliates and contract manufacturers) throughout the Territory and in the Field of Use, to make, have made, use, market, distribute, Sell, offer to Sell, import, and export to any person and in any manner Gaming Machines without first obtaining the consent of PureDepth.

PureDepth also grants to IGT the non-exclusive right under the Licensed Intellectual Property to sublicense any third party (including IGT Affiliates and contract manufacturers) throughout the Territory and in the Field of Use to make, have made, use, market, distribute, Sell, offer to Sell, import, and export to any person and in any manner Administrative Machines without first obtaining the consent of PureDepth.

For all Sales by sublicensees (except as otherwise limited herein including as specified in Sections 4.01 and 4.04), IGT will pay over to PureDepth royalties equal to amounts PureDepth would have received from IGT on equivalent Licensed Products Sold by IGT as specified in Section 4.02. IGT will report the execution of sublicensees to PureDepth in writing within thirty (30) days of the execution of each sublicense and will identify the sublicensee and will provide a copy of the sublicense upon request by PureDepth.

CONFIDENTIAL TREATMENT REQUESTED - REDACTED COPY

4.	Royalties, Payments and Reporting (Accounting and Audit)

Section 4.01 - Prepaid Royalty . - [**** ]. IGT and its sublicensees will Sell Licensed Products subject to the royalty schedule of Section 4.02 (“Royalty Schedule”); however IGT will not be obligated to pay royalties to PureDepth thereunder until [****] . Thereafter, IGT will pay PureDepth royalties on further Sales of Licensed Products according to the schedule of Section 4.02.

Section 4.02 - Royalty Schedule For [****], IGT will pay PureDepth a royalty of $[****].

Further, IGT shall have no obligation to pay royalties for any sales of any Licensed Product having one or more displays that IGT purchases from PureDepth.

Section 4.03 - Payments and Reporting.

(a) After [****], IGT will compute and pay royalties pursuant to the royalty schedule of Section 4.02 to PureDepth within thirty (30) days after the end of each quarter of the calendar year -- the quarters ending on March 31st, June 30th, September 30th and December 31st.

(b) Within thirty (30) days after each quarter (from January 1 to March 31, from April 1 to June 30, from July 1 to September 30 and from October 1 to December 31) for as long as this Agreement remains in effect, IGT will furnish to PureDepth a report in writing containing full particulars of the Sales of Licensed Product during the quarter (including the numbers of Wagering Stations per Gaming Machine).

(c) IGT will keep or cause to be kept, true and accurate books and records with respect to Sales of Licensed Products (and all Wagering Stations) covered by this Agreement in accordance with generally accepted accounting principles and in a manner consistent with the accounting methods employed by best business practice.

(d) PureDepth will have the right, at its own expense, to engage an independent, certified public accounting firm to examine the relevant books and records of IGT (including those records received by IGT from its sublicensees and any of its Affiliates who have Sold the Licensed Products) at any reasonable time during business hours after notifying IGT of its desire to do so in writing. Except for the disclosure of financial information to PureDepth or except as otherwise required by law, regulation or legal process, such accounting firm will be required to maintain the confidentiality of all financial or other non-public information of IGT and any of its Affiliates who have Sold the Licensed Products. The examination will be no more than once each year and will cover no more than the preceding three (3) anniversary years. Except in the case of an intentional failure to disclose or omission by IGT or its Affiliates or agents, no year may be audited more than once. The examination will be solely for the purpose of determining the compliance by IGT of its reporting and payment obligations under this Agreement. In the event that an examination discloses an error by IGT (for whatever reason) of more than [****]% the of royalties paid or due to PureDepth for the period under audit, IGT will fully reimburse PureDepth for all PureDepth's costs and expenses of the examination, and will pay to PureDepth the amount of the royalties due to PureDepth within thirty (30) days.

(e) Royalty payments will be made subject to the required withholding of any government with jurisdiction. IGT shall maintain complete and accurate accounting records of such withholding and shall fully cooperate with PureDepth’s efforts to obtain credits of taxes paid or withheld, where appropriate.

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(f) Independent of any audit examination, PureDepth will credit to IGT the amount of any overpayment of royalties made by IGT in error which overpayment is identified and explained in writing by IGT to PureDepth within six (6) months of the overpayment, subject to PureDepth' s confirmation of the overpayment

Section 4.04 - No Royalty for Samples . No royalty will be owed or paid by IGT to PureDepth for any Licensed Product supplied free of charge as an evaluation, sample or promotional unit, provided, however, that net shipments of such units do not exceed [****]% of the total number of Licensed Products Sold by IGT or [****] units, whichever is less, in any given year.

5.	Intellectual Property

Section 5.01 Ownership of Intellectual Property Rights . Nothing in this Agreement is intended to transfer the ownership of any intellectual property owned by either party. The parties acknowledge and agree as follows:

(a) PureDepth's Ownership . PureDepth shall, for all purposes, be considered the sole and exclusive owner or licensee empowered to grant IGT full rights under Section 3.01 of (i) the PureDepth Existing Patents and (ii) the Existing Patent Applications. PureDepth shall also be considered the sole and exclusive owner of (iii) all Future Patent Applications, if and to the extent the inventions covered in such Future Patent Applications are invented solely by PureDepth or result from work performed under the sole direction of PureDepth.

(b) IGT's Ownership . IGT shall, for all purposes, be considered the sole and exclusive owner of all patent applications to the extent the inventions covered in such patent applications are invented solely by IGT or result from work performed under the sole direction of IGT.

(c) [****] Ownership . [****]. Each of IGT and PureDepth may exploit any joint inventions and any patent applications filed thereon and any patent issuing thereon in any manner and without any accounting to the other, provided however that (i) PureDepth shall not license, assign, or otherwise convey any of its interest in any such patent application and any patents issuing therefrom to any party for practice, use, or commercialization in the Field of Use without the express written permission of IGT in its sole discretion, and (ii) IGT shall not license, assign, or otherwise convey any of its interest in any such patent application and any patents issuing therefrom to any party for practice, use, or commercialization outside the Field of Use without the express written permission of PureDepth in its sole discretion. The parties agree that, both during and after the term of this Agreement, they each shall take such action and execute and deliver such documents as are reasonably requested by the other party to evidence and confirm the foregoing provisions regarding each party's ownership rights and to cooperate reasonably prosecution of any patent applications with respect to any Joint Future Patent Applications. IGT shall be responsible for prosecution of such patent applications subject to PureDepth’s prior written approval (i) of the prosecuting attorneys, and (ii) the patent application prepared for filing .

Section 5.02 Third Party Infringement . IGT shall promptly inform PureDepth of any infringement of any Licensed Intellectual Property by a third party. During the term of this Agreement, PureDepth and IGT each shall have the right to institute an action for infringement of the Licensed Intellectual Property against such third party subject to the following:

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(i) PureDepth may institute suit, and, at its option, join IGT as a plaintiff. If PureDepth decides to institute suit, then it shall notify IGT in writing. If IGT does not notify PureDepth in writing within fifteen (15) days after the date of the notice from PureDepth, that it will join in enforcing the Licensed Intellectual Property pursuant to the provisions hereof, PureDepth shall bear the entire cost of such litigation and shall be entitled to retain the entire amount of any recovery or settlement;

(ii) If PureDepth opts not to institute suit as described in (i), IGT and PureDepth may agree to institute suit jointly, and in such case, the suit shall be brought in both their names, the out-of-pocket costs thereof shall be borne equally, and any recovery or settlement shall be shared equally. IGT and PureDepth shall agree to the manner in which they shall exercise control over such action. PureDepth may, if it so desires, also be represented by separate counsel of its own selection, the fees for which counsel shall be paid by PureDepth;

(iii) If PureDepth notifies IGT that it has decided not to institute a suit in accordance with (i) and in the absence of agreement to institute a suit jointly, as provided in (ii) above, IGT may institute suit and, at its option, join PureDepth as a plaintiff. IGT shall bear the entire cost of such litigation and shall be entitled to retain the entire amount of any recovery or settlement;

(iv) Should either PureDepth or IGT commence a suit under the provisions of this Section 5.02, and thereafter elect to abandon the same, such party shall give timely notice to the other party who may, if it so desires, continue prosecution of such suit, provided, however, that the sharing of expenses and any recovery in such suit shall be as agreed upon between PureDepth and IGT ;

(v) Notwithstanding the terms of (ii), (iii) and (iv) above, PureDepth reserves the right to control an action insofar as a claim of invalidity is made by a third party as to the PureDepth Patents.

Section 5.03 Intellectual Property Review by IGT and Maintenance Rights . PureDepth shall have the right to prosecute and maintain the Licensed Intellectual Property, including but not limited to the PureDepth Patent Applications and PureDepth Patents. PureDepth shall provide IGT with copies of proposed responses to any substantive action of any intellectual property office at least 30 days prior to the unextended filing deadlines for such responses, if applicable, and IGT shall have the right to make reasonable changes to such responses. PureDepth shall also provide IGT with copies of any proposed PureDepth Patent Applications prior to filing and IGT shall have the right to make reasonable changes to such PureDepth Patent Applications. For non-provisional Patent Applications having a bar date, past which US or non-US patent rights will be lost if a Patent Application is not filed, PureDepth will provide copies of such Patent Applications to IGT at least 30 days prior to any such bar date. [****]. PureDepth shall bear the expense of such filing, prosecution and maintenance, except [****] in which case IGT shall be solely responsible for expenses incurred in prosecution and maintenance.

Section 5.04. Invalidity of Patents . In the event all Core Patents of PureDepth are invalidated on a final, non-appealable judgment, this Agreement shall be terminated and IGT shall have no further royalty obligation as of the date of such judgment. If, however, one or more (but not all) PureDepth Core Patents are invalidated, PureDepth and IGT shall confer in good faith to equitably adjust, if appropriate, the royalty schedule set forth in Section 4.02. If the parties cannot reach an agreement on the royalty schedule within sixty (60) days of the commencement of such discussion, then the subject matter shall be submitted to arbitration as set forth under 9.06(b).

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Section 5.05 Marking . IGT agrees to mark the Licensed Products (or their labels) with the numbers of the applicable PureDepth Patents .

Section 5.06 PureDepth License to IGT Improvement Patents . PureDepth shall have a fully paid up non-exclusive worldwide license to make, have made, use, market, distribute, Sell, offer to Sell, import, and export products under all patents and patent applications owned by IGT (as specified in Section 5.01(b)) claiming MLD Technology, which are filed after the Effective Date and do not claim priority to any patent applications filed prior to the Effective Date. [****]. Nothing in this section 5.06 grants PureDepth a license to exploit any other IGT patent.

6.	Technology Transfer

Section 6.01 During the term of the Agreement, PureDepth shall, in the manner set forth in Exhibit C, disclose and make available to IGT all information available to PureDepth regarding the MLD Technology and related technology necessary to implement the MLD Technology in the Licensed Products. In this regard, PureDepth shall provide training to IGT personnel. Such training shall commence and proceed according to the schedule provided in Exhibit C.

Section 6.02. As set forth in Exhibit C and in order to facilitate face-to-face time for such training, IGT personnel will be sent to PureDepth facilities in Redwood City, California, or other suitable location, and that in further pursuance of such training PureDepth personnel will be sent to IGT facilities in Reno, Nevada. IGT shall provide reasonable meals and lodging for all times that any PureDepth personnel are visiting IGT facilities, and IGT will assume responsibility for the meals and lodging for all times that any IGT personnel are visiting PureDepth facilities. All travel costs for travel by IGT and PureDepth personnel shall be borne by IGT. PureDepth shall provide office space and desks for IGT representatives, as well as phone/fax and Internet access during the periods of Technology Transfer. Free use of PureDepth’s facilities and materials will be provided during this time by PureDepth. In like manner, IGT will provide free use of its facilities to visiting PureDepth personnel during periods of Technology Transfer.

Section 6.03. Maintenance . PureDepth shall provide continuous ongoing maintenance to IGT for all initial and later developed aspects of MLD Technology, as may be reasonable. Such maintenance shall include all necessary error detection and correction, and troubleshooting. Support shall mean assistance and training provided by PureDepth in familiarizing IGT R&D personnel with the items and information as delivered, and shall include reasonable levels of technical support in the use of all supplied items, and responses to IGT inquiries and reports of problems. In this regard, PureDepth further agrees to provide IGT with fixes and corrections that may be developed by PureDepth for use with the MLD Technology. Any such fixes, including release notes and any other pertinent documentation, shall be provided to IGT either within thirty (30) days of their completion internally at PureDepth or prior to installation in the field anywhere in the world, whichever shall come first. This provision shall not apply to field trials or prototypes under the full control of PureDepth. PureDepth shall provide to IGT improvements and/or upgrades of the items containing new features and/or functions, such as may be developed by PureDepth from time-to-time.

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Section 6.04 Solicitation . IGT and PureDepth hereby agree that neither party shall directly hire as its own employee(s) any current or future employees of the other party, including all technical personnel, during the term of this Agreement and for a period of at least five (5) years from the termination or expiration of this Agreement , except as may be mutually agreed upon between the parties ; except where such prospective employee responds to general advertisements. The provisions contained in this Section 6.04 shall apply mutatis mutandis to Affiliates .

7.	Representations and Warranties

Section 7.01 Representations and Warranties of IGT . IGT represents and warrants to PureDepth as of the Effective Date that:

(a) Corporate Organization, Good Standing, Etc. IGT is a corporation duly incorporated, validly existing and good standing under the laws of the State of Nevada, and has all corporate power and authority to own, lease and operate its properties and to carry on its businesses as currently conducted and as proposed to be conducted. IGT has all necessary corporate power and authority to enter into this Agreement and to perform its obligations hereunder.

(b) Due Authorization, Etc. This Agreement has been duly authorized, executed and delivered by IGT and constitutes the legal, valid and binding obligation of IGT, enforceable against it in accordance with its terms, subject to any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally, and general principles of equity.

(c) No Conflict . The execution and delivery by IGT of this Agreement and the consummation of the transactions contemplated hereby do not violate or conflict with the Articles of Incorporation or Bylaws of IGT, any material contract, agreement or decree, order or award of any court, governmental body or arbitrator by which IGT is bound or any law, rule or regulation applicable to IGT.

(d) Consents and Approvals . No consent, approval or authorization of, or exemption by, or filing with, any governmental or regulatory authority or any non-governmental person is required in connection with the execution, delivery or performance by IGT of this Agreement or the consummation of the transactions contemplated hereby.

Section 7.02 Representations and Warranties of PureDepth . PureDepth represents and warrants to IGT as of the Effective Date that:

(a) Due Organization, Good Standing, Etc. PureDepth is a corporation duly incorporated, validly existing and good standing under the laws of the State of Delaware , and has all corporate power and authority to own, lease and operate its properties and to carry on its businesses as currently conducted and as proposed to be conducted. PureDepth has all necessary corporate power and authority to enter into this Agreement, to grant the rights to be granted to IGT hereunder and to perform its obligations hereunder.

(b) Due Authorization, Etc. This Agreement has been duly authorized, executed and delivered by PureDepth and constitutes the legal, valid and binding obligation of PureDepth , enforceable against it in accordance with its terms, subject to any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors ’ rights generally, and general principles of equity.

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(c) No Conflict . The execution and delivery by PureDepth of this Agreement and the consummation of the transactions contemplated hereby do not violate or conflict with the Articles of Incorporation or Bylaws of PureDepth, any material contract, agreement or decree, order or award of any court, governmental body or arbitrator by which PureDepth is bound or any law, rule or regulation applicable to PureDepth. Without limiting the generality of the foregoing, PureDepth has not entered into, and will not enter into, any agreement granting rights to any person which will conflict with or be a breach of PureDepth’s obligations hereunder. Further, PureDepth is not a party to any other agreements that would require any third-party consents, waivers or authorizations needed for PureDepth to grant the items and rights provided in this Agreement.

(d) Ownership of Licensed Technology . PureDepth is the owner of or licensee of PureDepth Patents and has full power and authority to grant the rights and licenses granted to IGT. Further, the PureDepth Patents are not, as of the Effective Date, subject to any lien or other encumbrance that would affect the ability of IGT to exercise the rights granted to IGT by PureDepth herein .

(e) Validity of Patents . All of the PureDepth Patents are currently in compliance with all formal legal requirements (including payment of filing, examination and maintenance fees and proofs of working or use), and, to the best of PureDepth’s knowledge, are valid and enforceable.

(f) No Interference . [****] and PureDepth is currently unaware of any potentially interfering patent or patent application of any person with respect to the PureDepth Patents.

(g) No Infringement . [****] PureDepth is currently unaware of any patent or other proprietary rights of any third party that would be infringed by the use of the MLD Technology.

(h) Full Rights to Practice MLD Technology . By this Agreement, PureDepth has granted IGT a License under all intellectual property it owns, controls or has licensed as necessary to practice the make use of the Licensed Intellectual Property and Gaming Machines and Administrative Machines as set forth in Section 3.01.

8.	Indemnification

Section 8.01 Indemnification with regard to infringement claims . PureDepth will assume the defense of any suit brought against IGT or [****], for [****] insofar as such suit is based upon a claim that the [****] is attributable to IGT’s application without substantial modification of such MLD Technology supplied under this Agreement. In any such suit, PureDepth will indemnify IGT against any money damages or costs awarded in such suit in respect to such a claim.

Section 8.02 Indemnification Procedures for Third-Party Claims . The obligations of PureDepth stated in Section 8.01 apply only if (a) IGT shall inform PureDepth in writing within fifteen (15) days of receiving any claim within the scope of Section 8.01 and (b) IGT assists PureDepth in all necessary respects in conduct of the suit. PureDepth may assume control of the defense of any such claim; provided, however, that the IGT may, at its own cost and expense, participate through its attorneys or otherwise, in such investigation, trial and defense of such claim and any appeal arising therefrom. PureDepth shall not settle any such claim without IGT’s prior written consent (which consent shall not be unreasonably withheld or delayed), unless such settlement would not subject IGT to any liability (e.g., the settlement is solely for monetary damages for which IGT is fully indemnified under this Agreement). If PureDepth does not assume full control over the defense of a claim pursuant to this Section 8.02, then PureDepth may participate in such investigation, defense or trial, solely at its cost and expense, and IGT shall have the right to defend or settle such claim in such manner as IGT deems appropriate, subject to the consent of PureDepth which shall not be unreasonably withheld or delayed, solely at the cost and expense of PureDepth.

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Section 8.03 PureDepth’s Total Liability. PureDepth’s total liability to incur out-of-pocket costs in the defense of any suit or suits and to pay damages awarded in any suit or suits shall be limited to the amount theretofore paid to PureDepth by IGT under this Agreement, but not exceeding $[****].

9.	Miscellaneous Provisions

Section 9.01 Confidentiality . Each party ( as a “Disclosing Party”) is willing to disclose to the other party ( as a “ Receiving Party” ) such party’s Confidential Information (as defined herein) pursuant to the following:

(a) “Confidential Information” means IGT’s confidential and proprietary information, including trade secrets related to the use of transparent displays; and PureDepth’s confidential and proprietary information, including trade secrets related to multi-layer displays and manufacturing methods for multi-layer display monitors. Confidential Information may further include but is not limited to the following: contractual provisions, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, flowcharts, data, costs, prices, customer lists, marketing plans, goals, sales figures, revenues and profits and shall expressly include the nature and existence of this Agreement as well as any information directly derived from the Confidential Information.

(b) Each party, as the Disclosing Party may deliver written disclosures of Confidential Information to the other party as the Receiving Party. All such disclosures are agreed to fall within the terms of this Agreement and shall be marked “Confidential”, “Proprietary”, or such other similar language. Disclosures of Confidential Information delivered absent such marking shall be deemed Confidential Information if delivered under circumstances that reasonably suggest the confidential nature of the information.

(c) Each party, as the Disclosing Party, may orally communicate Confidential Information to the other party as the Receiving Party. In the event such oral communication of Confidential Information is made, the Disclosing Party shall draft a document for the purpose of reducing such Confidential Information to writing and identifying the date, time and individual representatives privy to the disclosure. The document shall be marked “Confidential”, “Proprietary”, or such other similar language, and delivered to the Receiving Party within ten (10) business days of the disclosure. Disclosures of Confidential Information not reduced to writing shall be deemed Confidential Information if delivered under circumstances that reasonably suggest the confidential nature of the infomation.

(d) The parties shall provide the respective standard of care used by each party in the protection of their own Confidential Information (but in no event less than a reasonable standard of care), and not disclose to any third party any Confidential Information. Confidential Information shall not include the following:

(i) information which, at the time of disclosure, is in the public domain or which, after disclosure, becomes part of the public domain by publication or otherwise through no action or fault of the Receiving Party; or

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(ii) information that the Receiving Party can show (by means of written record) was in its possession or known to the party prior to the time of disclosure and was not acquired, directly or indirectly, from the Disclosing Party, or

(iii) information that was received by the Receiving Party from a third party having no legal prohibition preventing the third party from disclosing the information; or

(iv) information that is independently developed by the Receiving Party without any knowledge or use of the Confidential Information communicated under this Agreement.

(e) Confidential Information may be disclosed by the Receiving Party to a third party if the disclosure is in response to a valid subpoena or order by a court of competent jurisdiction or by a governmental body, provided that the Receiving Party so required to disclose the Confidential Information advises the Disclosing Party promptly upon becoming aware that the Confidential Information is subject to disclosure, does nothing to prevent the Disclosing Party from intervening in any proceeding to protect its rights under this Agreement, uses commercially reasonable efforts to resist disclosure, and if unsuccessful, to obtain an appropriate protective order. Disclosures made under these circumstances shall be made only to the named authority requiring the disclosure.

(f) The parties shall not, without the written permission of the other, use the Confidential Information of the other for any reason other than for the performance of this Agreement. Should any portion of the Confidential Information reach the public domain, the Parties shall not add to the public domain through their knowledge of the Confidential Information and shall continue to maintain that portion of the Confidential Information not yet in the public domain as confidential. The Receiving Party shall not reverse engineer or disassemble any Confidential Information nor any products related to the Confidential Information of the Disclosing Party.

(g) The parties reserve unto themselves all rights under their respective Confidential Information as their absolute property and under patent, trademark, trade secret and copyright laws relating to the Confidential Information they own, including the rights to file patent and trademark applications, obtain patents and trademarks, and file and obtain copyright registrations relating to their Confidential Information. Both parties agree and understand that each party shall have all the rights and remedies available to it under patent, trademark, trade secret and copyright law.

(h) It is understood by the parties that this Agreement does not constitute a sale, license or any other grant to make, use or sell the Confidential Information, other than as specified herein.

(i) The parties shall limit disclosure of Confidential Information to employees and independent contractors in their organization on a need-to-know basis, only, in order to accomplish the purposes of this Agreement. The Confidential Information shall only be provided to employees who are informed of the obligations of confidentiality hereunder and who are bound to protect the confidentiality of such Confidential information. Other than employees meeting the above requirements, neither the existence of this Agreement nor the nature of the discussions between the parties shall be disclosed to any third party.

(j) The parties shall return to the other within a reasonable period of time all materials containing Confidential information and any other materials provided under this Agreement, including but not limited to written information, copies, reports, papers, surveys, letters, lists, drawings, computer printouts, blueprints, manuals, software and firmware, that were delivered to the party, upon request by the other or upon expiration or termination of this Agreement. In the event materials to be returned to the Disclosing Party include confidential information of the Receiving Party, the Receiving Party may optionally elect to have all such materials destroyed and to certify, in writing to the Disclosing Party, that all such materials were destroyed.

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(k) Receiving Party’s obligation under this Section with respect to any particular Confidential Information, shall survive the expiration or termination of this Agreement and violations of such shall remain actionable.

(l) Both parties acknowledge that due to the unique nature of the Confidential Information, there can be no adequate remedy at law for any breach of its obligations hereunder, that any such breach may allow the Receiving Party or third parties to unfairly compete with the Disclosing Party resulting in irreparable harm to the Disclosing Party, and therefore, that upon any breach or any threat thereof, the Disclosing Party shall be entitled to seek and obtain injunctive relief in addition to whatever remedies it might have at law or equity.

Section 9.02 Regulatory Compliance . [****]

Section 9.03. Control of Personnel . PureDepth and IGT shall at all times retain the administrative supervision of their respective personnel during visits to each other’s facilities. PureDepth and IGT’s personnel shall, while on location of the other party or the other party’s Affiliates, comply with the other party’s or the other party’s Affiliates’ rules and regulations with regard to safety and security. PureDepth and IGT agree to indemnify each other from any claims or demands, including the costs, expenses and reasonable attorney’s fees incurred on account thereof; that may be made by anyone for personal injury or property damage resulting from the acts or omissions of the other’s personnel.

Section 9.04. Successors and Assigns; Assignment .

(a) Neither party may assign this Agreement without the prior written consent of the other party, except to an Affiliate or in the case of a merger, acquisition or sale of assets.

(b) If PureDepth decides to sell or otherwise transfer any of the Licensed Intellectual, PureDepth shall provide a thirty (30) day advance written notice to IGT of its intended disposition and PureDepth shall give IGT [****]. In its agreement documenting such disposition, PureDepth shall specifically cause the purchaser or transferee, as the case may be, to assume the licenses granted to IGT hereunder.

(c) [****], PureDepth and IGT shall confer in good faith to equitably adjust, if appropriate, the royalty schedule set forth in Section 4.02. If the parties cannot reach an agreement on a new royalty schedule within sixty (60) days of the commencement of such discussion, then the subject matter shall be submitted to arbitration as set forth under 9.06(b).

Section 9.05. Relationship of Parties .

(a) It is understood that the parties hereto are independent entities engaged in the conduct of their own respective endeavors. No party is to be considered the agent or employee of the other for any purpose. In all matters relating to this Agreement, each party hereto will be solely responsible for the acts of its employees and agents, and employees or agents of one party shall not be considered employees or agents of the other party. No party will have any right, power or authority to create any obligation, express or implied, on behalf of any other party nor shall either party act or represent or hold itself out as having authority to act as an agent or partner of the other party, or in any way bind or commit the other party to any obligations. Nothing in this Agreement is intended to create or constitute a joint venture, partnership, agency, trust or other association of any kind between the parties or persons referred to herein.

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(b) IGT shall be responsible for all acts of any Affiliate of IGT in connection with this Agreement, and any breach of this Agreement by any IGT entity shall be deemed a breach by IGT. PureDepth shall be responsible for all acts of any Affiliate of PureDepth in connection with this Agreement, and any breach of this Agreement by any PureDepth entity shall be deemed a breach by PureDepth.

(c) Except as set forth herein, this Agreement will not confer any rights or remedies on any party, person or third party other than IGT, PureDepth, and their respective successors and permitted assigns.

Section 9.06. Governing Law; Dispute Resolution; Jurisdiction .

(a) This Agreement shall be deemed to be executed and performed in the United States of America, State of California, County of San Francisco, and shall be construed in accordance with the laws of the State of California as to all matters, including, but not limited to, matters of validity, construction, effect and performance, without regard to California law pertaining to conflicts or choice of law.

(b) Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall first be addressed by the signatories to this Agreement or appropriate equivalents thereof from each party upon the request of any party. If such persons cannot settle the matter to the mutual satisfaction of all parties within sixty (60) days of such request, then any party may first submit the dispute to arbitration in accordance with the Rules of the American Arbitration Association in the City of San Francisco, California. Judgment upon the award rendered by the Arbitrators may be entered in any Court having jurisdiction thereof. Three qualified arbitrators shall be appointed in accordance with the Rules of the American Arbitration Association and this Agreement. Such qualified arbitrators shall be members of the Nevada or California Bar and shall have experience in intellectual property law matters.

Section 9.07. Amendment and Waiver . No amendment or waiver of any term or condition of this Agreement will be valid or binding on a party unless the same has been mutually assented to in writing by all parties. The failure of a party to enforce at any time any of the provisions of this Agreement, or the failure to require at any time performance by the other party of any of the provisions of this Agreement, or the failure of a party to exercise any of its rights or remedies under this Agreement, will in no way be construed to be a present or future waiver of such provisions, rights, or remedies, nor in any way affect the ability of a party to enforce each and every provision thereafter. Rather, the same will be and remain in full force and effect.

Section 9.08. Severability . If any provision of this Agreement or portion thereof, or the application thereof to any person or circumstances or in any country or countries, shall be held to any extent invalid or unenforceable , the remainder of this Agreement (or of such provision) and the application thereof to other persons or circumstances or in other countries appropriate and applicable shall not be affected thereby.

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Section 9.09. Notices .

(a) All notices pertaining to or required by this Agreement shall be in writing and shall be signed by an authorized representative. Notices shall be sent by facsimile (confirmed receipt) or delivered by hand or sent by certified mail, return receipt requested, with postage prepaid, or sent by overnight courier to the addresses set forth as follows:

If to IGT, such notices shall be delivered to:

Randy Hedrick

Sr. V.P., IGT-Labs

IGT

9295 Prototype Drive

Reno, NV 89521

with copies to:

Keith Moore

Assistant General Counsel

IGT

9295 Prototype Drive

Reno, NV 89521

If to PureDepth, such notices shall be delivered to:

__________________________

CFO

PureDepth , Inc.

255 Shoreline Drive, Suite 610

Redwood City, California, 94065

with copies to:

Stacy Snowman

Attorney at Law

DLA Piper Rudnick Gray Cary US LLP

153 Townsend Street, Suite 800

San Francisco, CA 94107-1957

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(b) Any party may change its official notice address or addresses by notice in writing given to every other party.

Section 9.10. Construction . The parties have each materially and fully participated in the negotiation and drafting of this Agreement and each has had this Agreement reviewed by respective counsel. Accordingly, this Agreement shall not be strictly construed or interpreted against any party.

Section 9.11. Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed an original instrument and all of which together shall constitute one and the same instrument.

Section 9.12. Rights and Remedies . In the event of any breach of or default under this Agreement by either party may suffer irreparable harm and have no adequate remedy at law. In the event of any such breach or default, or any threat of such breach or default, either party will be entitled to injunctive relief, specific performance and other equitable relief. Further, in any legal action or other proceeding in connection with this Agreement (e.g., to recover damages or other relief), either party will be entitled to recover, in addition to any other relief to which it may be entitled, its reasonable attorneys ’ fees and other costs incurred in that action or proceeding. The rights and remedies of either party under this Section 9.12 are in addition to, and not in lieu of, any other right or remedy afforded to either party under any other provision of this Agreement, by law or otherwise.

Section 9.13. Force Majeure . Neither party will be responsible to the other for delay or failure in performance of any of the obligations imposed by this Agreement, provided that, such failure will be occasioned by fire, flood, explosion, lightning, windstorm, earthquake, subsidence of soil, failure of machinery or equipment or supply of materials, discontinuity in the supply of power, court order or governmental interference, civil commotion, riot, act of terrorism, war, strikes, labor disturbances, transportation difficulties, labor shortage, natural genetic variations of any living matter or by any cause of like or unlike nature beyond the reasonable control and without the fault or negligence of such parties.

Section 9.14. Survival . The provisions of Sections 4 (“Royalties, Payments and Reporting (Accounting and Audit)”), including PureDepth’s right to conduct the final audit as specified in Section 4.03(d) within one (1) year of termination of this Agreement, and 2.03 (“Effect of Termination”) shall survive any termination of this Agreement.

Section 9.15. Entire Agreement . This Agreement constitutes the entire agreement between the parties pertaining to the subject matter contained herein and supersedes all prior and contemporaneous agreements, representations, and understandings of the parties, both oral and written. This Agreement may not be amended, except by writing signed by the party against whom such amendment is sought to be enforced.

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This Agreement shall be effective as of October 13th, 2006.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized officers thereof or authorized representatives.

IGT, Inc.	PureDepth, Inc.

By :___/s/___________________________	By: __/s/___________________________

Name: Stephen W. Morro	Name: Fred Angelopoulos

Title: President, Gaming Division	Title: CEO

Date:_____________________________	Date:_____________________________

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EXHIBIT A

[****]

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EXHIBIT B

EXISTING PUREDEPTH PATENTS

PureDepth File Ref	Title	Publication/Grant Number	Application Number	Country
P001AU	A multi layer display device and method for displaying images on such a device		2003213467 (previously 82482/98)	Australia
P001CA	A multi layer display device and method for displaying images on such a device	2,320,694	2320694	Canada
P001IL	A multi layer display device and method for displaying images on such a device		137628	Israel
P001JP	A multi layer display device and method for displaying images on such a device	3335998	3335998	Japan
P001MX	A multi layer display device and method for displaying images on such a device	234895	7616	Mexico
P001NZ	A multi layer display device and method for displaying images on such a device	505800	505800	New Zealand
P001SG	A multi layer display device and method for displaying images on such a device	74918	2000 04117-8	Singapore
P001US	A multi layer display device and method for displaying images on such a device	6,906,762	09/622535	USA
P002AU	Control of Depth Movement for Visual Display with Layered Screen	769120	2002338626	Australia
P002EP	Control of Depth Movement for Visual Display with Layered Screen	1212745	00955194.6	Europe
P002NZ	Control of Depth Movement for Visual Display with Layered Screen	518200	518200	New Zealand
P003AU	Display method for Multiple Layered Screens	769103	67427/00	Australia
P003NZ	Display method for Multiple Layered Screens	518199	518199	New Zealand
P004AU	Interactive three dimensional display with layered screens	766049	63265/00	Australia

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P004NZ	Interactive three dimensional display with layered screens	516965	516965	New Zealand
P005CN	Altering surface of a display from Matt to Optically smooth.	ZL 01820567.4	01820567.4	China
P005NZ	Altering surface of a display from Matt to Optically smooth.	508258	508258	New Zealand
P005SG	Altering surface of a display from Matt to Optically smooth.	200303020-2	200303020-2	Singapore
P005TW	Altering surface of a display from Matt to Optically smooth.	NI-169308	89126584	Taiwan
P006AU	Improved Display	740574	25542/99	Australia
P006NZ	Improved Display		505801	New Zealand
P006SG	Improved Display	74917	2000 04116-0	Singapore
P009NZ	Dual Layer stereoscopic liquid crystal display	517712	517712	New Zealand
P010NZ	Enhanced viewing experience of a display through localised dynamic control of ground lighting level		517713	New Zealand
P012AU	Data display for multiple layered screens		769107	Australia
P012NZ	Data display for multiple layered screens		518198	New Zealand
P013NZ	Multi View Display		521505	New Zealand
P014NZ	Backlighting System for Display Screen		526028	New Zealand
P014US	Backlighting System for Display Screen		7095180	USA
P015US	Three Dimensional Optical Viewing System		5086354	USA
P016US	Three Dimensional Optical Viewing System		5589980	USA
P017US	Optical Viewing system for Asynchronous Overlaid Images		5956180	USA
P018NZ	Depth Fused Display		515395	New Zealand
P019NZ	Improvement to Instrumentation	514119	514119	New Zealand
P019NZA	Improvement to Instrumentation		527910	New Zealand
P020NZ	Layered Assignment Interface		525956	New Zealand

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P020NZA	Layered Assignment Interface		541868	New Zealand
P022NZ	Optical Retarder		511255	New Zealand
P023NZ	Visual Display Unit Illumination	514500	514500	New Zealand
P023NZA	Visual Display Unit Illumination	532447	532447	New Zealand
P024NZ	Information Display		511444	New Zealand
P024SG	Information Display		200306381-5	Singapore
P026NZ	Visual Display System		511120	New Zealand

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EXHIBIT C

TECHNOLOGY TRANSFER

This Exhibit outlines an Agenda for Technology Transfer and Instruction. Any other Agenda may be substituted upon mutual agreement between IGT and PureDepth, with PureDepth to provide personnel necessary for an effective transfer.

Objectives of Technology Transfer: IGT desires to learn [****]. In particular, IGT desires to learn [****].

Technology Transfer and Instruction includes transfer of any PureDepth manuals and data pertinent to the display technology, including review and copying of all PureDepth technical and manufacturing specifications for producing MLD Technology displays for incorporating in Licensed Products. It is contemplated that the Technology Transfer will include [****].

Transfer includes:

Promptly following the Effective Date, and in any event no more than fifteen (15) business days thereafter, PureDepth will deliver to IGT the current manuals and data in existence in the form of documents, drawings, designs, samples or other material, in electronic form when available. Also, on mutually agreeable dates during the month of December, 2006 PureDepth shall provide technology training pursuant to the following:

Instruction and Transfer :

Initial Transfer:

[****] : up to [****] IGT representatives

[****]. Review and Update of PureDepth display technology

[****]. Facilities tour and demonstrations: includes [****]

[****]. Instruction to up to [****] IGT technical representatives: includes [****]

[****]. Continued

[****]. Continued and review of results of IGT instruction under PureDepth supervision

[****] . up to [****] IGT representatives:

Continued instruction and evaluation as needed.

[****] . up to [****] IGT representatives for [***] each, if in PureDepth's reasonable technical judgment

that such extension is necessary in order for IGT representatives to [****] without

the assistance of PureDepth representatives.

It is understood that [****] as used herein refers to [****].

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2. Second Instruction & Transfer :

[****] after conclusion of First instruction as specified in the Initial Transfer: Agenda same as specified under 1.01 - [****].

Objective: review and clarify IGT experience with PureDepth display technology

3. Periodic Instruction at PureDepth: [****], twice per [****] until the [****] anniversary of the Effective Date, to [****] IGT Representatives.

[****]. Review of PureDepth developments and technology update, including update on PureDepth’s MLD Technology

[****]. Consultation and advice with PureDepth key member on IGT technical development issues

[****]. Discussion and instruction of PureDepth ongoing display technology

[****]. Continued

[****]. Review and copying by IGT of relevant PureDepth technical records as needed.

4. Periodic Instruction at IGT in Nevada

[****] until the [****] anniversary of the Effective Date by [****] PureDepth technical representatives, with out

of pocket costs covered by IGT including reasonable travel costs.

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EXHIBIT D

SPECIFICATIONS

Design Pack

[****]

Manufacturing Pack

[****]

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER UNDER SECTION 302 OF THE SARBANES-OXLEY ACT

I, Fred Angelopoulos, certify that:

1. I have reviewed this Quarterly Report on Form 10-QSB of PureDepth, Inc. (the “Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of end of the period covered by this report based on such evaluation ; and

(c) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: December 15, 2006

/s/ Fred Angelopoulos

Fred Angelopoulos, President, Chief Executive Officer

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER UNDER SECTION 302 OF THE SARBANES-OXLEY ACT

I, Robert O’Callahan, certify that:

1. I have reviewed this Quarterly Report on Form 10-QSB of PureDepth, Inc. (the “Registrant”);

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: December 15, 2006

/s/ Robert O’Callahan

Robert O’Callahan, Chief Financial Officer

Exhibit 32.1

CERTIFICATION

CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of PureDepth, Inc. do hereby certify that:

(a) the Quarterly Report on Form 10-QSB of PureDepth, Inc. for the quarter ended October 31, 2006 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(b) information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of PureDepth, Inc.

Dated: December 15, 2006

/s/ Fred Angelopoulos

Fred Angelopoulos

President and Chief Executive Officer

/s/ Robert O’Callahan

Robert O’Callahan, Chief Financial Officer