From The CEO

Dear Customers and Partners,

As we complete our first quarter following the merger of LizardTech, Extensis and Celartem U. S., I am happy to report that we have made huge strides toward honing our focus on digital content management and distribution to position the company to best serve new and existing markets, while creating a more efficient and focused operation toward profitability for our shareholders.

As part of this strategy, this quarter, Celartem Inc. completed the sale of its popular creative professional tools from Extensis and LizardTech including Photoshop® Plug-in, Genuine Fractals to independent software developer, onOne Software. onOne Software is committed to continue serving the loyal customer base of professional photographers and creative professionals that Genuine Fractals has developed over the years. The sale of Genuine Fractals to onOne Software will enable us focus on our growth strategy for digital content management and distribution.

On the geospatial side, LizardTech was one of the sponsors of this year's "GML and Geo-Spatial Web Services Conference" in Vancouver, BC. At the conference, two of our senior engineers, in conjunction with our partners from Galdos, presented a paper and a workshop on the new GMLJP2 standard from OGC. LizardTech has been leading together with Galdos the standardization process for GMLJP to "spatially enable" JPEG 2000 files, by adding GML to the .jp2 file which can represent the coordinate reference system of the image, provide annotations, define how multiple images within a file should be mosaicked together, and more. GML and JPEG 2000 — both ISO standards — are a great example of how the geospatial industry can leverage and combine standards to take advantage of new technologies and an even greater example of how LizardTech is contributing to development of interoperability standards in the industry.

Another notable milestone last quarter was LizardTech's Document Express with DjVu becoming instrumental in enabling the Washington State Digital Archives to make public records available via the Internet in LizardTech's open DjVu® document image format. The Washington State Digital Archives is the nation's first archives dedicated specifically to the preservation of electronic records - from both state and local agencies - that have permanent legal, fiscal or historical value, including maps and other documents that were scanned from their original paper form. So now you can enjoy a high quality version of historical documents like the Washington Constitution delivered in your desktop instantly thanks to LizardTech's DjVu technology. For more details take a look at our case study here or just enjoy the "Top Five Treasures" of the digital archive in DjVu here.

Best regards,

Carlos Domingo
President and CEO
Celartem Inc.