Mantis was acquired from Lockheed Martin:

http://www.quantum3d.com/press/2005/03-29-05_LM_IDX_JSF.htm

Excerpt:

"The simulation and training industry continues to demand greater

levels of fidelity in synthetic environments," said Ross Q. Smith,

Quantum3D co-founder and president. "Nowhere is that more critical

than in the F-35 program, which is truly pushing the envelope in terms

of fidelity and performance of flight and weapons system simulator

requirements. We are extremely pleased to continue to be the IG of

choice for Lockheed Martin Aero Fort Worth on the F-35 program and

will continue to advance our technology to meet the JSF program and

our other critical customers' evolving needs."

Quantum3D Independence™ 2500 IG Solution Integral to the Independence

2500 IG's sensor simulation capabilities is its Mantis™ realtime scene

management software suite with viXsen™ sensor simulation option.
----------------------------------------------------------------------

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Chinese national sentenced for committing economic espionage with

intent to benefit China Navy Research Center
First sentencing under the Economic Espionage Act of 1996 and first

conviction involving military source code under the Arms Export

Control Act

SAN JOSE - Xiaodong Sheldon Meng, 44, a software engineer born in

China and currently a resident of Cupertino, Calif., was sentenced

today to two years in prison by the Honorable Jeremy Fogel, U.S.

District Court Judge in San Jose. Meng was also ordered to serve a

three-year term of supervised release following his prison term; pay a

fine of $10,000, and forfeit computer equipment seized in the case.

The sentence, the first handed down for a violation of the Economic

Espionage Act of 1996 (18 USC Section 1831), was announced by Patrick

Rowan, Acting Assistant Attorney General for National Security; Joseph

P. Russoniello, U.S. Attorney for the Northern District of California;

Arthur Cummings, Executive Assistant Director for the FBI's National

Security Branch; and Julie L. Myers, Department of Homeland Security

Assistant Secretary for U.S. Immigration and Customs Enforcement

(ICE).

On Aug. 1, 2007, Meng pleaded guilty to two national security

violations: one count of violating the Economic Espionage Act and one

count of violating the Arms Export Control Act and the International

Traffic in Arms Regulations. Meng's conviction was the first involving

military source code under the Arms Export Control Act and marked the

second case in which there was a conviction under the Economic

Espionage Act for misappropriating a trade secret with the intent to

benefit a foreign government.

According to court records based on the nearly four-year investigation

by ICE and the FBI, Meng committed economic espionage by

misappropriating a trade secret, known as "Mantis 1.5.5," from his

former employer, Quantum3D Inc., with the intent to benefit a foreign

government, specifically the People's Republic of China (PRC) Navy

Research Center in Beijing. He did so by using the Mantis 1.5.5 trade

secret as part of a demonstration project in attempting to sell

products of his new employer, Orad, Hi-Tec Systems Ltd., which was a

direct competitor of Quantum3D. The trade secret at issue, known as

"Mantis," is a Quantum3D product used to simulate real world motion

for military training and other purposes.

In addition, Meng violated the Arms Export Control Act by knowingly

and willfully exporting to the PRC a defense article on the United

States Munitions List (defense article viXsen) without authorization

from the United States. The product viXsen is a Quantum3D visual

simulation software program used for training military fighter pilots

who use night visual sensor equipment, including thermal imaging.

According to court documents, the investigation established that Meng

had, in fact, misappropriated two defense articles (specifically

nVSensor, in addition to viXsen described above), at least six source

code products which were also trade secrets, and more than one hundred

materials and utilities belonging to his former employer, Quantum3D.

Many of these misappropriated Quantum3D products were intended

primarily for military purposes. For example, nVSensor is a Quantum3D

product used to provide night vision simulation and is exclusively

used in military applications for precision training and simulation

applications.

The investigation also established that defendant Meng was assisting

in developing two separate military proposals for two separate Air

Forces in Southeast Asia involving visual simulation equipment and

source code. Copies of two F-16 Full Mission Simulator proposals

involving two different countries were found on Meng's laptop.

"Today's case demonstrates the importance of safeguarding sensitive

U.S. military technology as well as trade secrets. It should also

serve as a warning to others who would compromise our national

security for profit," said Patrick Rowan, Acting Assistant Attorney

General for National Security.

Joseph P. Russoniello, U.S. Attorney for the Northern District of

California, stated, "In this case, a Silicon Valley trade secret was

used in a demonstration project in Beijing with the intent to benefit

the PRC Naval Research Center. Source code for military visual

simulation programs to train military fighter pilots and restricted

defense articles were also willfully exported outside the United

States. We will continue to enforce the criminal laws against those

who violate export restrictions and misappropriate our trade secrets.

Many of the systems we protect are designed to safeguard our men and

women in harm's way and compromising them significantly adds to the

perils that they face in defending us. It is imperative that we

vigilantly protect the intellectual property developed in the Silicon

Valley and elsewhere in the country so as to maintain as our nation's

military defense advantages, and to deter acts of aggression against

vital American interests."

"ICE is committed to shutting down those who are willing to put

America's national security on sale for a profit," said Julie L.

Myers, Department of Homeland Security Assistant Secretary for ICE.

"The export of U.S. military products and sensitive technology is

controlled for good reason - in the wrong hands, these items could be

used to harm America or its allies. Enforcing U.S. export laws is one

of ICE's top priorities, and we will continue to work with our

partners in law enforcement and industry to ensure that those who put

our country at risk are brought to justice."

FBI Executive Assistant Director for the National Security Branch,

Arthur Cummings stated, "Protecting our nation's most sensitive trade

secrets and critical technology is at the core of the FBI mission. The

FBI is committed to safeguard our country's economic well-being and

national security."

Quantum3D, Inc., based in San Jose, California, has cooperated fully

in the government's investigation. Quantum3D produces hardware and

software components for simulation systems for commercial and military

customers. Some of the products include high-end visual simulation

systems, and interactive, open-architecture visual computing

solutions, image generators, and embedded graphics subsystems.

Defendant Meng was ordered to surrender for this prison term on Aug.

18, 2008. He has been out of custody after a $500,000 bond, secured by

cash and real property, was posted at the beginning of the case.

-- ICE--

--

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