Audio Pixels – Review of Operations

Review of Operations for the period to 14 August 2013 as reported in the Half-Year Report to 30 June 2013 lodged with ASX on 15 August 2013

PRESS RELEASE (8/15/2013)- The Company continues development of our digital speakers technologies and its commercialisation into a high demand product; including but not limited to activities under a Joint Development Agreement with one of the world leading consumer electronic manufacturers, signed in July 2011.

Management’s focus was on the implementation of Phase-3 of our previously detailed four-phase commercialization plan. Phase 3 is specifically designed to utilize mass production techniques in order to produce demonstrable working speaker chips that will also serve as early engineering samples for select customers.

While the objectives for Phases 1 and 2 were concentrated on modelling, characterization analysis and debugging of wide assortment of specific geometrical and functional elements of the electro-mechanical structure (and its fabrication process), the objectives for Phase 3 shift focus toward completing the comprehensive design and performance criteria required to produce playing chips.

Phase 3 fundamentally amounts to a pre-production phase of a completed product. As such, partners selection for Phase 3 of development carries additional long terms significance. The critical decisions involving partners necessitated meticulous review, qualification and selection process involving many of the world’s leading fabricators, equipment and material manufacturers and design houses. The qualification efforts demanded among others, the development, design, and simulation of a full process flow, customized to meet the specificities of each individual fabrication equipment and capabilities.

In the area of MEMS fabrication, management determined significant value in supplementing its existing partners’ fabrication capabilities, by adding an additional MEMS fabrication partner. As was publicly announced on July 23rd 2013, the Company entered into a comprehensive agreement with Teledyne-Dalsa, an award winning semiconductor wafer foundry with a proven history of innovation in specialties such as MEMS, and high voltage CMOS. As a pure-play foundry, Teledyne-Dalsa’s is solely focused on serving as a manufacturing partner to fabless and fab-lite semiconductor companies, such as ours.

Another critical aspect of Phase 2 involved the transformation of the drive electronics from discrete components to an integrated circuit (ASIC). After meticulous evaluation of over a dozen design houses the Company elected to partner with a world leading integrated circuit design company with proven solutions in the consumer, medical, industrial, automotive and aerospace markets. The partner selection expected to be announced in the near future, is a foundry independent design house and thus ideally suited to augment ongoing ASIC activities being conducted simultaneously with other fabrication partners.

The final top-level effort of Phase-3 involves the chip package and packaging process. In general the packaging of MEMS devices is not a trivial matter, as MEMS chips inherently require both exposure to, and protection from, the external environment.  Our chip package requirements extend far beyond the “norm” as the requirements not only encompass the cost effective single package integration of the MEMS and ASIC but also the incorporation of a “first-of-its-kind” “acoustic window”.

At the heart of our package is our proprietary “acoustic window” which incorporates among others our recently granted patent entitled “Dust Protection Apparatus for Flat Loudspeakers”. The “acoustic window” serves to protect the chip from the environment while enabling the sound waves to emanate from the chip with negligible attenuation.  The innovation is a result of very close collaboration with a world-renowned company having countless innovations in the field of advanced materials. Additionally the company is in close collaboration with several of the world-leading suppliers of semiconductor assembly equipment to develop and deliver high-volume assembly solutions that meet our specialized packaging requirements.

The three top level projects and all its many subsets are meticulously managed and timed to be completed simultaneously. It should however be noted that the key driver of the timeline is the MEMS fabrication as the company has already developed interim solutions for both the ASIC and Package. While the interim solutions may not be suited for volume production nonetheless the company has already built the necessary electronics and package required to serve as early engineering samples capable of demonstrating the viability and playing capabilities of the device.

An equally significant backdrop to the ongoing technological advancement is the company’s constant endeavour to expand its intellectual property portfolio. Since the beginning of 2013, the intellectual property portfolio has expanded to include 5 new patent families.  The patents granted in various patent jurisdictions around the world include 2 patent grants for the Basic architecture and functional principles of its MEMS based digital speaker; the Control of Volume and Tone in Direct Digital Speakers; the control of Directivity Patterns in Direct Digital Speakers; and the aforementioned environmental / Dust Protection for MEMS based digital speakers.

The entity continues to hold its commercial property in Sydney.  Further information concerning the operations and financial condition of the entity can be found in the financial report and in releases made to the Australian Stock Exchange (ASX) during the half year.

About Audio Pixels

Audio Pixels patented technological platform utilizes entirely new techniques to generate sound waves directly from a digital audio stream using low cost micro-electromechanical structures (MEMS). This innovation overcomes many of the limitations found in conventional loudspeaker subassemblies thus enabling the production of speaker products that deliver superior sound and electrical performance all in a semiconductor type package that is remarkably compatible with existing and emerging OEM requirements and ambitions for their consumer electronic device designs.

For further information please contact:

Danny Lewin – CEO Audio Pixels Limited

+972-732-324-444

danny@audiopixels.com

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