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IBM AND CADENCE DESIGNS TEAMS UP WITH ADI TECHNOLOGIES [ADH/VSE] Corporate Name: ADI Technologies, Inc.             Operating Subsidiary: Audio DigitalImaging Inc.             Address: 511 West Golf Road             Arlington Heights, Illinois 60005 USA             Telephone Number:  (847) 439-1335             Telefax Number: (847) 439-1533             Trading Symbols:             VSE:  ADH             NASDAQ: ADIKF             (Bulletin Board listing)             Website http://www.adi.net/adicorp.html For additional information, please contact:             Sheryl Ann De Spain at: (847) 439-1335             or email: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it THE COMPANY Audio DigitalImaging, Inc., (ADI) specializes in the design and development of digital video and audio compression multimedia components. From its inception in 1989, the Company's _object_ive has been to establish itself as a system provider of high quality proprietary video compression hardware and software systems for manufacturers of specialized products. Now, worldwide acceptance of international standards for video and audio compression is propelling an emerging multi-billion dollar multimedia industry. ADI intends to become a premier supplier of quality integrated chip components that enable execution of audio and video compression for, and decode of, these standards by offering solid, well-conceived products that fill an unfilled need. ADI's management team represents over eighty years of experience in the PC and related industry markets. To complement this team, ADI has established alliances with two high-profile organizations: Cadence Design Systems and IBM. These relationships will allow ADI to move forward toward its _object_ive of delivering a cost-advantageous single chip MPEG system-on-a-chip solution. ADI expects to introduce its highly complex integrated MPEG video and audio decode-only chips, the Apogee D1 and D-2, in 1998. ADI chip components are designed for use in PC printed circuit boards (mother boards), add-in PC boards and other multimedia products including television set top receiver boxes, digital TVS and DVD p_layer_s. All products are intended for direct sales to major electronics manufacturers and through IC distributors. THE MARKET Multimedia is the combination of two or more medias to accomplish any task. Realizing that the majority of all human communication is _base_d on visual content, execution for and delivery of multimedia is THE premier focus of the electronics industry. Merging of communications, entertainment, education and personal services into one industry has singularly created the largest global market to exist in recent history. The multimedia industry is promising to change the very way in which we live our lives with digital interactivity. From digital TV to Digital Versatile Disk (DVD), stories of new product application growth potential in the multimedia marketplace can be heard everywhere. On the one hand, the FCC has ruled that over-the-air television broadcasters must give up their existing analog channels by the year 2006. New channels, providing additional bandwidth for digital broadcast, have already been allocated to the broadcast industry. These new digital channels, together with MPEG-2 compression technology, will allow the broadcasters to have up to six (6) individual channels for every one (1) analog channel they now have. The conversion from analog to digital TV format will open the MPEG-2 market to numerous new product applications as broadcasters widen the spectrum of services they offer viewers and on-air-sponsors. On the other hand, Digital Versatile Disk (DVD) is still somewhere between the truth and the story. Widely heralded as the medium that will send videotape and VCRs the way of vinyl records and turntables, the truth is that the consortium of companies directing the development and introduction of DVD is at an impasse over the implementation of Content Scrambling System (CSS). Without a clear industry participants' concensus on how to address essential DVD piracy and copyright issues, DVD is not likely to become THE big growth market for MPEG-2 compression in the near-term. Underscoring this statement is the fact that, to date, no MPEG component manufacturer has produced a verifiable implementation of CSS in a hard-coded ASIC and no PC industry company has yet been granted a license to implement CSS in software. In the coming decade, the availability of advanced digital compression products will make long-promised services, such as real-time interactive Cable Access television programs and video-on-demand offerings, a reality. ADI, with its Apogee? family of hard-coded ASIC components and extended line of state-of-the-art multimedia technologies and products, is able to support all existing MPEG-2 product applications, and well-prepared to support emerging digital markets. THE TECHNOLOGY In November of 1993 and November of 1994, the ISO MPEG-1 and MPEG-2 committees, respectively, ratified standards for video and audio motion picture data compression decode. MPEG-1 is intended for use in PC environments implementing use of quarter screen or full screen moving picture sequences. The maximum MPEG-1 data rate allowed for combined video and audio is 1.5 Mb/s due to constrained data through-put allowances (bandwidth) of CD-ROMs and many PCS. Therefore, only a maximum quarter screen resolution (SIF) of video data is used. Due to choice or limitations determined by the processor used to generate MPEG compression, many original compressed video sequences are only one-sixteenth screen (QSIF) of video data and are expanded to either SIF or full screen (CCIR601) resolutions at time of display. SIF and QSIF compressed pictures result in lesser quality video and produce artifacts which become very visible and disturbing to viewers when expanded to larger screen display modes. ADI's Apogee? Series chips are single chip components capable of processing both encoding and decoding of all SIF, QSIF and full screen (CCIR601) modes. MPEG-2 was conceived of for use in the television and broadcast industries and specifically addresses the management of interlaced video plus complex transport system management of video and audio data information in compliance with industry broadcast standards. All MPEG-2 applications use full screen CCIR601 video and require higher clarity of picture streams. Data rates for MPEG-2 picture streams usually range between 5 ~ 10 Mb/s with 6 ~ 8 Mb/s being generally preferred. All MPEG-2 components must also enable processing of MPEG-1 data. ADI PRODUCTS The Apogee? Family of ASIC Components In the development of its Apogee? family of ASIC components, ADI has employed a unique system-on-a-chip design approach. While, on the surface, ADI's MPEG chip technology may appear similar to other company's MPEG chip technology, ADI has incorporated many system management features, such as system transport _layer_ management, and proprietary features into all of its Apogee? chips, thereby eliminating the need to use multiple external chip components or firmware, resulting in significant implementation cost savings per manufactured item. The first of ADI's Apogee? MPEG chip components is scheduled for fabrication in 1998. Apogee? decode-only chips addressing the MPEG-1 and MPEG-2 markets will be sold as application specific integrated chip (ASIC) components to original equipment manufacturers (OEMs). ADI's COMPETITION Presently, a handful of companies have announced or are now offering multiple chip solutions for MPEG-1 and MPEG-2 encode. While the use of any of these chips results in the creation of MPEG video, some of these solutions come with a price tag of up to $6,400 per chip set, with additional costs for required supporting microcode. Moreover, extensive software must be written to _link_ the MPEG processor with a large number of auxiliary support chips prior to application or implementation. Solutions for MPEG-1 or MPEG-2 decode-only abound at prices ranging from $15 to $150. However, none of the encode or decode chips currently available or announced demonstrate a functional competitive edge in the market by comparison; most of these chip solutions were designed and developed with a focus on singular product segments within the multimedia industry; and not one incorporates the range of system and proprietary features that make ADI's Apogee? family of ASIC components so desirable for current and future digital multimedia product applications. MARKETING & SALES STRATEGIES ADI intends to capture a major market position within the multi-million dollar multimedia market and intends to remain dominant throughout the coming decade of interactivity. Throughout the Apogee? chip design phase, ADI has consulted with over twenty major multi-national OEM manufacturers and, under bilateral confidentiality agreements, certain Apogee? design specifications have been exchanged in consideration for information regarding multimedia product development plans. Numerous high-level chip function requirements were identified that will facilitate multimedia product designs and these have been incorporated into the Apogee? chip design. The Company anticipates that it will enter into purchase agreements with major multimedia manufacturers when their test phase of the Apogee? chips is completed. Four international distributors, noted for their competence in representing high quality IC components and their systems integration assistance to major client OEMs have been signed, under contractual agreements, to represent and distribute ADI's Apogee? Series of chips. The Distributors' countries of representation are: France; Germany; Japan and The United Kingdom. Sales of the Apogee? chips are promoted utilizing a philosophy of aggressive pricing. Prices of the Apogee? chips are affordable for use in a broad _base_ of consumer and commercial multimedia products, yet the Company expects to maintain a higher than the typical industry gross profit margin. ADI is committed to providing high quality, affordable MPEG chips to fill market needs and believes that, by fulfilling that commitment, it will promote the development of multimedia products that incorporate ADI chip components. CONCLUSION The age of electronic interactivity is upon us and coming with the new age are changes that will forever alter the conduct of our daily lives. The magnitude of impact the coming changes will have, will affect corporations and households well into the next century and will help shape the future of the world. ADI has demonstrated its ability to anticipate market growth by balancing consumer wants with industry needs. Focusing on the development of advanced digital systems compression components, as well as digital video processing and delivery technologies, ADI products will bring about exciting possibilities for a new generation of multimedia and broadcast industry services. Audio DigitalImaging, Inc. is well-positioned to be an active participant in worldwide markets and intends to secure its position as a respected and expanding leader in providing innovative electronic multimedia components. The establishment of a long-term business agreement with Cadence Design Systems validates ADI's algorithmic solutions and methodologies, and gives credence to the fact that ADI has developed unique intellectual property core technologies to offer the expanding multimedia market. Additionally, this relationship gives ADI access to an engineering resource pool that is unparalleled in the industry and the most advanced ASIC design tools. These resources afford ADI a higher competitive edge in translating its chip designs to the latest in silicon technologies. Further, IBM has been selected to provide fabrication and production services because of the close match between ADI's current and future very large silicon integration system-on-a-chip design needs and IBM's future technology migration path. ADI engineers are knowledgeable and experienced in the design complexities that are associated with the intricacies and complexities of video processes which are not only related to compression, but extend into the many phases of video production. The engineering management team blends over eighty years of experience in the PC and related industry markets. To ensure that an atmosphere for creativity is maintained, the management team at ADI is dedicated to fostering an environment that inspires creativity and rewards new ideas. Designing unique products that strategically fill market voids is the corporate philosophy that is lived daily. 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