I Execution Version Stock Purchase Agreement By And: Fill & Download for Free

This is where they have their Corporate Center:3160 NW 1st Avenue Pompano Beach, Florida 33169 Tel 786 235 9026 but they don’t answer their phone so you have to leave them a message.The Investor Contact is listed as:Patrick Greenish, presidentTel 786 235 [email protected] Statement Pursuant to the Pink Basic Disclosure GuidelinesLudwig Enterprises, Inc. A Nevada Corporation 1702 “A” Street #C-350 Sparks, Nevada 89431786-235-9026Ludwigent :: Home [email protected] 6162 End Third Quarter 2019 Report For the Period Ending:September 30, 2019 (the “Reporting Period”) [1][1][1][1]The Old History of its Financial Highlights[2][2][2][2]- The company was organized in 1988.- Became a public company in 2006- For the past 3 years has been fundedby an Angel Investor- Was issued a Patent in 2009 for itsrevolutionary Transmission Method- Has Authorized 75,000,000 CommonShares – Issued 74,420,999- The Float is 7,394,398 shares- Company has 554 shareholdersThe above data is not current, nor is it accurate so why doesn’t the SEC make sure that investors are protected by the current information and require the company to update its pubic web pages and data?From their old data:“Ludwig Enterprises, Inc.[3][3][3][3] is a revolutionary broadcasting company, offering programming that caters to a rapidly growing, multi-cultural market. They bridge the generations from hip youth culture forging new expressions of Americana to their grandparents who are the custodians of great worldwide traditions. These markets are largely excluded from today’s commercial broadcasters. Ludwig Enterprises is helping to move analogue radio into the digital age, harmonizing all ages and cultures as they add to America’s rich treasure of diversity.Ludwig Enterprises, Inc. is launching the first nationwide World radio network in the U.S. that really is for US! The One™ radio is bringing HD quality digital audio to a vast audience of diverse ages and origins, whose interests go unsatisfied by today’s domestic programming. The One™ radio is reaching out to a $1.5 trillion marketplace, and an audience which is almost completely ignored. The segment of listeners born abroad is over 30 million alone, which invites new for exciting programming and a new frontier for advertisers.Many listeners miss the classic the radio programs of the past, and just as radio played a vital role as a touchtone for American culture throughout the last century, so to The One™ radio is designed to be a centerpiece around which other cultures can unify and feel as much at home in the United States as they did in the countries they came from.It is estimated that 1 in 5 Americans are 55 and over. That means 70 million potential listeners are not able to enjoy the programming they love due to the homogenized formats that even satellite and internet radio offer. As listeners enter their golden years, radio plays an ever increasing role in ones window to the world and an important link to news and entertainment, especially if other areas of their lives become more limited. The One™ radio’s programming is designed to serve this, ever growing, abundant marketplace as well as providing youth culture with a vital link to its heritage.Ludwig Enterprises, Inc.[4][4][4][4] has developed a patented new radio that receives signals from the new Digital Television format (ATSC also known as HD-TV). The One™ radio offers 50 channels of diverse, HD quality, digital programming…Filipino, Pakistani, Hebrew, Chinese, Greek, Russian and many more, in addition to great English programming, old time radio shows, news 24 hours a day, audio books, educational and religious programming, as well as music ranging from Techno to Classical.The One™ radio receiver, developed by Ludwig Enterprises, Inc., is mobile, handheld and compatible with most docking stations, for your home, in the car or on the go.The One™ radio utilizes social networking capabilities to link advertisers and listeners via a unique technology that lets the advertiser know exact demographic / statistical data within 96 hours of playing a commercial in each of Ludwig’s 50 primarily markets, offering advertisers virtually real-time feedback for maximum market penetration. The privacy of the listener is protected as well because the regional data collected is not specific to the individual.INTELLECTUAL PROPERTYThe One™ radio’s unique patented technology utilizes a “carousel” that interleaves information streams in a repeating pattern for inclusion into a digital video broadcast (Digital TV: also known as HD TV), allowing Ludwig’s data carousel to deliver multiple dynamic digital audio programs, not just one.COMPETITIONThe nearest competitor to The One™ radio is Sirius/XM radio. There is very little overlap in our target audience since The One™ radio is reaching out to new markets that they do not serve, catering to expanding multicultural, 55 plus and emerging youth markets, with an emphasis on family unity.For legal reasons The One™ radio, like Sirius/XM, is considered a subscription based service. The similarities STOP there. Unlike Sirius/XM Ludwig does not charge a monthly fee. A small one-time subscription fee is charged upon activation and the unit itself is included free of charge. This is the benefit of utilizing existing terrestrial data transmission infrastructure rather than more costly satellite transmission, as well as Ludwig’s main source of revenue being derived from advertising and the sale of syndication time.”None of the above information is currently accurate, currently relevant or appropriate to the company.[5][5][5][5]The following information is from a press release which appears to have been syndicated on the financial news networks on December 19,2019:Ludwig Enterprises Inc., Acquires Direct Mortgage Investors Inc.[6][6][6][6]SPARKS, NV / ACCESSWIRE / December 19, 2019 / Ludwig Enterprises Inc., (OTC PINK:LUDG) Board of Directors is pleased to announce the positive consolidation efforts of Direct Mortgage Investors Inc. (Direct) and the Ludwig team. This is the first of several acquisitions that will allow the company to execute its business plan to roll-up mortgage companies and financial services companies related to the mortgage industry.Direct Mortgage Investors' management team has worked very hard to transition the daily tasks of the mortgage operation under LUDG. This transition has been deemed successful to date. Direct Mortgage Investors Inc[7][7][7][7]., is now a wholly owned subsidiary of Ludwig Enterprises Inc.Based in Chicago IL, Direct is a mortgage broker that was formed via multiple brokers and offices coming together in 2017. Direct is licensed in 14 states. The firm has approximately 80 loan officers in multiple offices in Illinois, Michigan and Florida. The principles of Direct, on average, have more than twenty years of experience in the mortgage business.During the 2018 fiscal year, Direct did $2.4 million in revenue and a little more than $100,000 in profit. For the first nine month of the 2019 year, Direct reported $3.99 million in revenue and $95,000 in net income. The acquisition of Direct is envisioned to be a positive transaction for the shareholders of Ludwig.Contact:Jean CherubinCEOLudwig Enterprises, Inc.[8][8][8][8][email protected]: Ludwig Enterprises Inc.But if you email or phone either contact listed in this answer, you get no response.Further Due Diligence from the most available SEC filings[9][9][9][9] doesn’t provide much more evidence of this company being anything but a shell company nor a fully going concern at the moment: Official site of OTCQX, OTCQB and Pink MarketsTHE COMPANY HAS TOO MANY NOTES TO ITS FILINGS WITH http://PINKSHEETS.COMLUDWIG ENTERPRISES, INC. CONSOLIDATED(A Development Stage Company)NOTES SEPTEMBER 30, 2019NOTE A – 1988 ‐Ludwig Enterprises was incorporated and issued 1,000 common shares at $1.00 per share.NOTE B – February 8, 2006 ‐ Ludwig Enterprises, Inc. a Nevada corporation was formed and capitalized at 75,000,000 authorized shares with 1,000 shares issued.NOTE C – March 28, 2006 ‐ Ludwig Enterprises, Inc. of Kentucky merged with its wholly owned Nevada subsidiary, the subsidiary survived and becoming the parent. The Kentucky corporation was dissolved.NOTE D ‐ March 28, 2006 ‐ Immediately following Ludwig Enterprise, Inc. of Kentucky’s merger into its Nevada subsidiary the company issued a 60,000 to 1 reverse split changing the issued shares from 1,000 common shares to 60,000,000 common shares.NOTE E – 1988 to February 25, 2007 ‐ the Company had 544 shareholders. February 25, 2007 five (5) additional shareholders were added to the shareholder list for a total of 549 total shareholders of record.NOTE F ‐ February 25, 2007 ‐ the company issued a total of 825,000 restricted shares to five individuals for services rendered.NOTE G – September 30, 2009 7,500,000 treasury shares were sold at $.01 per share.NOTE H ‐ May 1, 2009 MDI Corporate Actions at Nasdaq approved issuers request for a 100:1 reverse split. The split was effective this date. Issuer’s trading symbol was changed to LUDG with CUSIP number 54973P 20 3NOTE I – September 30, 2009 the company issued 7,500,000 restricted common shares from Treasury to retire a debt owing to Worthington Financial Services, Inc. in the amount of $75,000. Each share was exchanged at the rate of $0.01 per share.NOTE J ‐ September 30, 2009 September 30, 2009 the issuance of the shares below to retire debt triggered non‐dilution protection on 546,650 common shares. This action required the total issued share distribution to be increased to 74,421,000.NOTE K ‐ April 28, 2010 The Board of Directors of Issuer and New World Global, Inc. entered into a “debt for equity exchange” of $20,000.00 for 20,000,000 restricted common shares of Issuer. This action triggered Non dilution rights of Issuer’s largest shareholder, Worthington Financial, Inc. resulting in 77,636,612 additional shares being issued to Worthington. Additionally, other shareholders with Non‐Dilution rights received 99,196,785 shares. A total of 196,833,397 new common shares being issued.NOTE L ‐ June 21, 2011 Ludwig Enterprises, Inc. Board of Directors announces a Reverse Stock Split of one hundred to one (100:1) for is sole class of stock. The Board of Directors met (06/20/2011) and voted to recommend the action. A special shareholders meeting was held (06/20/2011) consisting of shareholders holding in excess of 50%+ of the company's stock, the action was voted on and approved with the effective date to be July 5th 2011 at 12:01 AM. The Reverse Split is proportional. No rights of any shareholder will be altered or diminished. All fractional shares resulting from the split will be rounded up to the nearest whole number. This action will result in a decrease of the issued number of shares from 271,254,396 to approximately 2,713,108 common shares.NOTE M ‐ July 5, 2011 Board of Directors voted unanimously to exchange $62,500.00 of debt for common shares at par value. This action triggered non‐dilution rights on 223,046,752 (pre split) shares due to lock‐up leak‐out agreements. July 6, 2011 was the effective date of reverse split.NOTE N – January 5, 2012 Issuer’s $73,500 Line of Credit was cancelled. Issuer was subsequently able to acquire up to $25,000 of short term funding from an alternate source to meet day‐to‐day expenses that tend to accelerate during the 1st Quarter of each year. It is Issuer’s position, as soon as possible, to convert the short‐term obligation into a long‐term instrument.NOTE 0 ‐ March 5, 2012 Board of Directors and a majority of the shareholders voted and affirmed a 350:1 reverse split. Future balance sheets will be adjusted to reflect a modification to the number of issued shares.NOTE P ‐ April 26, 2012 Debt for Equity Exchange $20,000 for 2,000,000 common shares. This action triggered certain non‐dilution rights.NOTE Q ‐June 29, 2012 Worthington Financial Services, Inc. and Issuer terminated their join Lock‐up/Leak‐ out agreement with non‐dilution protection.Note R ‐ June 29, 2012 Worthington Financial Services, Inc. exchanged $100,000 of debt owed to it for Ludwig common shares at par being equal to 100,000,000 common shares.Note S – May 2, 2014 Patron Corp. acquired Issuer’s Notes Payable from Worthington Financial, Inc.Note T – May 2, 2014 Patron Corp. purchased the portion of issuer held patent(s) / intellectual properties not owned by others for the sum of $150,000. This amount being the book value of patents at $14,785 plus $135,215 in excess of book. This amount being retired from debt held by Patron Corp. on the balance sheet of Issuer.Note U‐ December 16, 2016 the Board of Directors cancelled and rescinded a June 29, 2012 board resolution to reserve 35,000,000 common shares and or options for said shares. No shares or options had been issued.Note V ‐ Updates 2019:March 22, 2019 The company announced its hire of Cortil Duane Roberts as its new vice president in charge of acquisitions.April 2, 2019 The company executed a purchase agreement for Direct Mortgage Investors, Inc. Issuer executed a purchase agreement for Direct Mortgage Investors, Inc. subject to closing.May 31, 2019 Board of Directors Meeting approved a 2019 Equity Incentive Plan to distribute to current and future employees, officers, directors up to 12,000,000 common shares of the company. Shares authorization rights will be held in an Incentive Plan Trust to be disbursed by the company’s CEO in such amount and time as he directs. The company further authorized issuance of 32,200,000 shares to be used for acquisitions.May 1, 2019 The company and Direct Mortgage Investors, Inc. executed an extension for closing.May 31, 2019 Board of Directors Meeting approved a 2019 Equity Incentive Plan to distribute to current and future employees, officers, directors up to 40,000,000 common shares of the company. The shares will be issued and held in an Incentive Plan Trust to be disbursed by the company’s CEO in such amount and time as he directs. The company further authorized issuance of 30,000,000 shares to be used for acquisitions.June 12, 2019 Board of Directors approved an amendment to the acquisition agreement of Direct Mortgage Investors, Inc. June 20, 2019 Issuer acquired Direct Mortgage Investors, Inc.June 23, 2019 Issuer acquired Direct Mortgage Investors, Inc. as a 100% owned subsidiary for 32 million common shares of issuer.On or about September 9, 2019 Issuer entered into five short term convertible notes for a total of $55,000 due February 9, 2020 at an interest rate of 15% per annum.The notes are convertible into 100,000 common shares for each $1,000 of principle.Basis of Accounting The Corporation’s policy is to prepare its financial statements on the accrual basis of accounting in accordance with principles generally accepted in the United States of America. Financial StatementsThe financial statements and notes are representations of the Corporation’s management who is responsible for their integrity and objectivity. The accounting policies conform to the basis of accounting defined above and have been consistently applied in the preparation of the financial statements.Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.Property and Equipment The Company owns no real property or equipment.Personal property items (equipment and furniture) acquired by the Company are or will be recorded at cost. The property will be depreciated over its estimated useful life using the straight‐line method with and estimated zero salvage value.Intangible Assets The company holds certain license rights for the use of technology formerly held by Compress Technologies, Inc.’s (CTI) technologies those rights have been transferred to Thomas E. Terwilliger. Ludwig paid no cash for these rights. Ludwig and CTI exchanged a right to use of CTI’s technology for a Ludwig technology currently being developed.OTC Markets Group Inc. OTC Pink Basic Disclosure Guidelines (v2.0 February 2019) Page 22 of 22 NOTE K – Current Liabilities Contingent and Conditional Current liabilities include the following: Issuer has in the 3rd Quarter of 2019 entered into $55,000 of short term convertible notes.Line of Credit The company entered into an agreement for a Cash Access Account in the amount of $25,000. $20,357.95 of the Credit Line was expended during the 1st Quarter 2012. $4,642.05 remains available for operations. The line of credit is collateralized by future revenues of the. The interest rate is 15% annualized on funds withdrawn from the credit line. $20,000 of the $25,000 of borrowed funds has been converted to common stock in a debt for equity exchange.Sufficient Cash for Operations Issuer has $204,427 of cash or cash equivalents available. Based upon the current rate of consumption issuer could be able to operate at its current size for the next fiscal year without need for additional funding. Additional funds may be sought for future acquisitions.Patents May 2, 2014 Patron Corp. purchased the portion of issuer held patent(s) / intellectual properties not owned by others for the sum of $150,000. This amount being the book value of patents at $14,785 plus $135,215 in excess of book. This amount being retired from debt held by Patron Corp. on the balance sheet of Issuer. April 25, 2012 U.S. Patent and Trademark Office awarded Ludwig Enterprises patent # 8,166,190 Method and system for multiple data channel transfer using a single data stream. See Note T above. July 15, 2009 filings were sent to the US Patent and Trademark Office as required. The company filed US Provisional Application Serial Number 61/134/920 on July 15, 2008 regarding its proprietary technology.END OF NOTESTransfer Agent Name: Standard Registrar & Transfer Company, Inc. Phone: 801-571-8844 Email: [email protected]“As of January 1, 2019 the number of shares outstanding of our Common Stock was: 303,191,762 As of September 30, 2019, the number of shares outstanding of our Common Stock was: 335,391,762” [10][10][10][10]2006 Year Established Loans Funded $400m 70+ Loan OfficersLicensed in 12 States[11][11][11][11]View source version on Industry-Leading Flat-fee Press Release Service:Ludwig Enterprises Inc., Acquires Direct Mortgage Investors Inc.Latest Report09/30/2019 Quarterly ReportFiscal Year End12/31COMPANY OFFICERS & CONTACTSJean CherubinPresident, CEOThomas TerwilligerExecutive AssistantCOMPANY DIRECTORSJean CherubinChairman, President, CEOSERVICE PROVIDERSAccounting/Auditing FirmRonald La Duke, CPA3160 NW 1 AvenueSuite 3 Pompano Beach, FL 33064Securities Counsel Yates Law Firm8704 Zachary Circle Suite 3Louisville, KY 40214502-797-6861CONTACT THEM [email protected] [email protected] www.mtg101.comOak Lawn, IL Plantation, FL United StatesPhone:1-855-456-9782Phone: 954-919-1210Fax-Ph: +1 (800) 437-1490Securities Counsel Name: Frank Yates, Esq. Firm: Yates Law Firm Address 1: 202 Pheasant Ave., Ste 101 Address 2: Fairdale, Ky., 40118 Phone: 502-797-6861 Email: [email protected] or Auditor Name: Jean Cherubin Firm: Jean Cherubin Address 1: 3160 NW 1 Avenue Address 2: Pompano Beach, Florida Phone: 954-317-3355 Email: [email protected] Relations Consultant Pending News!Full Disclosures: Alex S. Gabor[12][12][12][12] at the time of this writing owns no shares directly or indirectly in this company mentioned in this answer.Footnotes[1] https://backend.otcmarkets.com/otcapi/company/financial-report/235378/content[1] https://backend.otcmarkets.com/otcapi/company/financial-report/235378/content[1] https://backend.otcmarkets.com/otcapi/company/financial-report/235378/content[1] https://backend.otcmarkets.com/otcapi/company/financial-report/235378/content[2] Ludwigent :: Home[2] Ludwigent :: Home[2] Ludwigent :: Home[2] Ludwigent :: Home[3] Direct Mortgage Investors, Inc.[3] Direct Mortgage Investors, Inc.[3] Direct Mortgage Investors, Inc.[3] Direct Mortgage Investors, Inc.[4] Direct Mortgage Investors Inc.[4] Direct Mortgage Investors Inc.[4] Direct Mortgage Investors Inc.[4] Direct Mortgage Investors Inc.[5] Ludwig Enterprises Inc. LUDG Board[5] Ludwig Enterprises Inc. LUDG Board[5] Ludwig Enterprises Inc. LUDG Board[5] Ludwig Enterprises Inc. LUDG Board[6] Ludwig Enterprises Inc., Acquires Direct Mortgage Investors Inc.[6] Ludwig Enterprises Inc., Acquires Direct Mortgage Investors Inc.[6] Ludwig Enterprises Inc., Acquires Direct Mortgage Investors Inc.[6] Ludwig Enterprises Inc., Acquires Direct Mortgage Investors Inc.[7] Direct Mortgage Investors, Inc.[7] Direct Mortgage Investors, Inc.[7] Direct Mortgage Investors, Inc.[7] Direct Mortgage Investors, Inc.[8] Direct Mortgage Investors Inc.[8] Direct Mortgage Investors Inc.[8] Direct Mortgage Investors Inc.[8] Direct Mortgage Investors Inc.[9] https://backend.otcmarkets.com/otcapi/company/financial-report/235378/content[9] https://backend.otcmarkets.com/otcapi/company/financial-report/235378/content[9] https://backend.otcmarkets.com/otcapi/company/financial-report/235378/content[9] https://backend.otcmarkets.com/otcapi/company/financial-report/235378/content[10] https://backend.otcmarkets.com/otcapi/company/financial-report/235378/content[10] https://backend.otcmarkets.com/otcapi/company/financial-report/235378/content[10] https://backend.otcmarkets.com/otcapi/company/financial-report/235378/content[10] https://backend.otcmarkets.com/otcapi/company/financial-report/235378/content[11] HOME | Dmidmi[11] HOME | Dmidmi[11] HOME | Dmidmi[11] HOME | Dmidmi[12] Alex S. Gabor[12] Alex S. Gabor[12] Alex S. Gabor[12] Alex S. Gabor

History(1850–1969) - In 1844, 23-year-old Henry Lehman, the son of a Jewish cattle merchant, immigrated to the United States from Rimpar, Bavaria.He settled in Montgomery, Alabama, where he opened a dry-goods store, "H. Lehman". In 1847, following the arrival of his brother Emanuel Lehman, the firm became "H. Lehman and Bro." With the arrival of their youngest brother, Mayer Lehman, in 1850, the firm changed its name again and "Lehman Brothers" was founded.During the 1850s, cotton was one of the most important crops in the United States. Capitalizing on cotton's high market value, the three brothers began to routinely accept raw cotton from customers as payment for merchandise, eventually beginning a second business trading in cotton. Within a few years this business grew to become the most significant part of their operation. Following Henry's death from yellow fever in 1855, the remaining brothers continued to focus on their commodities-trading/brokerage operations.The Lehmans were also involved in the Atlantic slave trade in the 1850s.By 1858, the center of cotton trading had shifted from the South to New York City, where factors and commission houses were based. Lehman opened its first branch office at 119 Liberty Street and 32-year-old Emanuel relocated there to run the office. In 1862, facing difficulties as a result of the Civil War, the firm teamed up with a cotton merchant named John Durr to form Lehman, Durr & Co Following the war the company helped finance Alabama's reconstruction. The firm's headquarters were eventually moved to New York City, where it helped found the New York Cotton Exchange in 1870; Emanuel sat on the board of governors until 1884. The firm also dealt in the emerging market for railroad bonds and entered the financial-advisory business.Lehman became a member of the Coffee Exchange as early as 1883 and finally the New York Stock Exchange in 87. In 1899, it underwrote its first public offering, the preferred and common stock of the International Steam Pump Company.Despite the offering of International Steam, the firm's real shift from being a commodities house to a house of issue did not begin until 1906. In that year, under Emanuel's son Philip Lehman, the firm partnered with Goldman, Sachs & Co., to bring the General Cigar Co. to market, followed closely by Sears, Roebuck and Company. During the following two decades, almost one hundred new issues were underwritten by Lehman, many times in conjunction with Goldman, Sachs. Among these were F.W. Woolworth Company, May Department Stores Company, Gimbel Brothers, Inc., R.H. Macy & Company, The Studebaker Corporation, the B.F. Goodrich Co. and Endicott Johnson Corporation.Following Philip Lehman's retirement in 1925, his son Robert "Bobbie" Lehman took over as head of the firm. During Bobbie's tenure, the company weathered the capital crisis of the Great Depression by focusing on venture capital while the equities market recovered.Traditionally a family-only partnership, in 1924, John M. Hancock became the first non-family member to join the firm, followed by Monroe C. Gutman and Paul Mazur in 1927. By 1928, the firm moved to its now famous One William Street location.In the 1930s, Lehman underwrote the initial public offering of the first television manufacturer, DuMont, and helped fund the Radio Corporation of America (RCA). It also helped finance the rapidly growing oil industry, including the companies Halliburton and Kerr-McGee. In the 1950s, Lehman underwrote the IPO of Digital Equipment Corporation. Later, it arranged the acquisition of Digital by Compaq.(1969–1984) - Robert Lehman died in 1969 after 44 years as the patriarch of the firm, leaving no member of the Lehman family actively involved with the partnership. Robert's death, coupled with a lack of a clear successor from within the Lehman family left a void in the company. At the same time, Lehman was facing strong headwinds amidst the difficult economic environment of the early 1970s. By 1972, the firm was facing hard times and in 1973, Pete Peterson, chairman and chief executive officer of the Bell & Howell Corporation, was brought in to save the firm.Under Peterson's leadership as chairman and CEO, the firm acquired Abraham & Co. in 1975, and two years later merged with the venerable, but struggling, Kuhn, Loeb & Co., to form Lehman Brothers, Kuhn, Loeb Inc., the country's fourth-largest investment bank, behind Salomon Brothers, Goldman Sachs and First Boston. Peterson led the firm from significant operating losses to five consecutive years of record profits with a return on equity among the highest in the investment-banking industry.By the early 1980s, hostilities between the firm's investment bankers and traders (who were driving most of the firm's profits) prompted Peterson to promote Lewis Glucksman, the firm's President, COO and former trader, to be his co-CEO in May 1983. Glucksman introduced a number of changes that had the effect of increasing tensions, which when coupled with Glucksman’s management style and a downturn in the markets, resulted in a power struggle that ousted Peterson and left Glucksman as the sole CEO.Upset bankers who had soured over the power struggle, left the company. Stephen A. Schwarzman, chairman of the firm's M&A committee, recalled in a February 2003 interview with Private Equity International that "Lehman Brothers had an extremely competitive internal environment, which ultimately became dysfunctional." The company suffered under the disintegration, and Glucksman was pressured into selling the firm.Merger with American Express (1984–1994) - Shearson/American Express, an American Express-owned securities company focused on brokerage rather than investment banking, acquired Lehman in 1984, for $360 million. On May 11, the combined firms became Shearson Lehman/American Express. In 1988, Shearson Lehman/American Express and E.F. Hutton & Co. merged as Shearson Lehman Hutton Inc.From 1983 to 1990, Peter A. Cohen was CEO and chairman of Shearson Lehman Brothers, where he led the one billion dollar purchase of E.F. Hutton to form Shearson Lehman Hutton. During this period, Shearson Lehman was aggressive in building its leveraged finance business in the model of rival Drexel Burnham Lambert. In 1989, Shearson backed F. Ross Johnson's management team in its attempted management buyout of RJR Nabisco but were ultimately outbid by private equity firm Kohlberg Kravis Roberts, who was backed by Drexel.Divestment and independence (1994–2008) - In 1993, under newly appointed CEO, Harvey Golub, American Express began to divest itself of its banking and brokerage operations. It sold its retail brokerage and asset management operations to Primerica and in 1994 it spun off Lehman Brothers Kuhn Loeb in an initial public offering, as Lehman Brothers Holdings, Inc.Despite rumors that it would be acquired again, Lehman performed quite well under chairman and CEO Richard S. Fuld, Jr.. By 2008, Fuld had been with the company for 30 years, and would be the longest-tenured CEO on Wall Street. Fuld had steered Lehman through the 1997 Asian Financial Crisis, a period where the firm's share price dropped to $22 USD in 1998, but he was said to have underestimated the downturn in the US housing market and its effect on Lehman's mortgage bond underwriting business. Fuld kept his job as the subprime mortgage crisis took hold, while CEOs of rivals like Bear Stearns, Merrill Lynch, and Citigroup were forced to resign. In addition, Lehman's board of directors, which included retired CEOs like Vodafone's Christopher Gent and IBM's John Akers were reluctant to challenge Fuld as the firm's share price spiraled lower.Fuld had a succession of "number twos" under him, usually titled as president and chief operating officer. Chris Pettit was Fuld's second-in-command for two decades until November 26, 1996, when he resigned as president and board member. Pettit lost a power struggle with his deputies (Steve Lessing, Tom Tucker, and Joseph M. Gregory) back on March 15 that year that caused him to relinquish its COO title, likely brought about after the three men found out about Pettit's extramarital affairs, which violated Fuld's unwritten rules on marriage and social etiquette. Bradley Jack and Joseph M. Gregory were appointed co-COOs in 2002, but Jack was demoted to the office of the chairman in May 2004 and departed in June 2005 with a severance package of $80 million, making Gregory the sole COO. While Fuld was considered the "face" of Lehman brothers, Gregory was in charge of day-to-day operations and he influenced culture to drive the bottom line. Gregory was demoted on June 12, 2008 and replaced as president and COO by Bart McDade, who had been serving as head of Equities, and McDade would see Lehman through bankruptcy. McDade would later be one of a handful of Lehman executives offered a position with Barclays after their acquisition; he would step down after less than two months.In 2001, the firm acquired the private-client services, or "PCS", business of Cowen & Co.and later, in 2003, aggressively re-entered the asset-management business, which it had exited in 1989.[45] Beginning with $2 billion in assets under management, the firm acquired the Crossroads Group, the fixed-income division of Lincoln Capital Management and Neuberger Berman. These businesses, together with the PCS business and Lehman's private-equity business, comprised the Investment Management Division, which generated approximately $3.1 billion in net revenue and almost $800 million in pretax income in 2007. Prior to going bankrupt, the firm had in excess of $275 billion in assets under management. Altogether, since going public in 1994, the firm had increased net revenues over 600% from $2.73 billion to $19.2 billion and had increased employee headcount over 230% from 8,500 to almost 28,600.At the 2008 ALB China Law Awards, Lehman Brothers was crowned:• Deal of the Year – Debt Market Deal of the Year• Deal of the Year – Equity Market Deal of the YearResponse to September 11, 2001 attacks - On September 11, 2001, Lehman occupied three floors of World Trade Center where one of its employees was killed in the terrorist attacks of that day. Its global headquarters in Three World Financial Center were severely damaged and rendered unusable by falling debris, displacing over 6,500 employees. The bank recovered quickly and rebuilt its presence. Trading operations moved across the Hudson River to its Jersey City, New Jersey, facilities, where an impromptu trading floor was built in a hotel and brought online less than forty-eight hours after the attacks. When stock markets reopened on September 17, 2001, Lehman's sales and trading capabilities were restored.In the ensuing months, the firm fanned out its operations across the New York City metropolitan area in over 40 temporary locations. The investment-banking division converted the first-floor lounges, restaurants, and all 665 guestrooms of the Sheraton Manhattan Hotel into office space.The bank also experimented with flextime (to share office space) and telecommuting via virtual private networking. In October 2001, Lehman purchased a 32-story, 1,050,000-square-foot (98,000 m2) office building for a reported sum of $700 million. The building, located at 745 Seventh Avenue, had recently been completed, and not yet occupied, by rival Morgan Stanley.With Morgan Stanley's world headquarters located only two blocks away at 1585 Broadway, in the wake of the attacks the firm was re-evaluating its office plans which would have put over 10,000 employees in the Times Square area of New York City. Lehman began moving into the new facility in January and finished in March 2002, a move that significantly boosted morale throughout the firm.The firm was criticized for not moving back to its former headquarters in lower Manhattan. Following the attacks, only Deutsche Bank, Goldman Sachs, and Merrill Lynch, of the major firms, remained in the downtown area. Lehman, however, pointed to the facts that it was committed to stay in New York City, that the new headquarters represented an ideal circumstance where the firm was desperate to buy and Morgan Stanley was desperate to sell, that when the new building was purchased, the structural integrity of Three World Financial Center had not yet been given a clean bill of health, and that the company could not have waited until May 2002 for repairs to Three World Financial Center to conclude.After the attacks, Lehman's management placed increased emphasis on business continuity planning. Unlike its rivals, the company was unusually concentrated for a bulge-bracket investment bank. For example, Morgan Stanley maintains a 750,000-square-foot (70,000 m2) trading-and-banking facility in Westchester County, New York. The trading floor of UBS is located in Stamford, Connecticut. Merrill Lynch's asset-management division is located in Plainsboro Township, New Jersey. Aside from its headquarters in Three World Financial Center, Lehman maintained operations-and-backoffice facilities in Jersey City, space that the firm considered leaving prior to 9/11. The space was not only retained, but expanded, including the construction of a backup-trading facility. In addition, telecommuting technology first rolled out in the days following the attacks to allow employees to work from home was expanded and enhanced for general use throughout the firmJune 2003 SEC litigation - In June 2003, the company was one of ten firms which simultaneously entered into a settlement with the U.S. Securities and Exchange Commission (SEC), the Office of the New York State Attorney General and various other securities regulators, regarding undue influence over each firm's research analysts by its investment-banking divisions. Specifically, regulators alleged that the firms had improperly associated analyst compensation with the firms' investment-banking revenues, and promised favorable, market-moving research coverage, in exchange for underwriting opportunities. The settlement, known as the "global settlement", provided for total financial penalties of $1.4 billion, including $80 million against Lehman, and structural reforms, including a complete separation of investment banking departments from research departments, no analyst compensation, directly or indirectly, from investment-banking revenues, and the provision of free, independent, third-party, research to the firms' clients.Rise of mortgage origination (1997-2006) - Lehman was one of the first Wall Street firms to move into the business of mortgage origination. In 1997, Lehman bought Colorado-based lender, Aurora Loan Services, an Alt-A lender. In 2000, to expand their mortgage origination pipeline, Lehman purchased West Coast subprime mortgage lender BNC Mortgage LLC. Lehman quickly became a force in the subprime market. By 2003 Lehman made $18.2 billion in loans and ranked third in lending. By 2004, this number topped $40 billion. By 2006, Aurora and BNC were lending almost $50 billion per month. Lehman had morphed into a real estate hedge fund disguised as an investment bank. By 2008, Lehman had assets of $680 billion supported by only $22.5 billion of firm capital. From an equity position, its risky commercial real estate holdings were three times greater than capital. In such a highly leveraged structure, a 3 to 5 percent decline in real estate values would wipeout all capital.Collapse - A March 2010 report by the court-appointed examiner indicated that Lehman executives regularly used cosmetic accounting gimmicks at the end of each quarter to make its finances appear less shaky than they really were. This practice was a type of repurchase agreement that temporarily removed securities from the company's balance sheet. However, unlike typical repurchase agreements, these deals were described by Lehman as the outright sale of securities and created "a materially misleading picture of the firm’s financial condition in late 2007 and 2008."Subprime Mortgage Crisis - In August 2007 the firm closed its subprime lender, BNC Mortgage, eliminating 1,200 positions in 23 locations, and took an after-tax charge of $25 million and a $27 million reduction in goodwill. Lehman said that poor market conditions in the mortgage space "necessitated a substantial reduction in its resources and capacity in the subprime space".In 2008, Lehman faced an unprecedented loss to the continuing subprime mortgage crisis. Lehman's loss was a result of having held on to large positions in subprime and other lower-rated mortgage tranches when securitizing the underlying mortgages; whether Lehman did this because it was simply unable to sell the lower-rated bonds, or made a conscious decision to hold them, is unclear. In any event, huge losses accrued in lower-rated mortgage-backed securities throughout 2008. In the second fiscal quarter, Lehman reported losses of $2.8 billion and was forced to sell off $6 billion in assets. In the first half of 2008 alone, Lehman stock lost 73% of its value as the credit market continued to tighten. In August 2008, Lehman reported that it intended to release 6% of its work force, 1,500 people, just ahead of its third-quarter-reporting deadline in September.In September 2007, Joe Gregory appointed Erin Callan as CFO. On March 16, 2008, after rival Bear Stearns was taken over by JP Morgan Chase in a fire sale, market analysts suggested that Lehman would be the next major investment bank to fall. Callan fielded Lehman's first quarter conference call, where the firm posted a profit of $489 million, compared to Citigroup's $5.1 billion and Merrill Lynch's $1.97 billion losses which was Lehman’s 55th consecutive profitable quarter. The firm's stock price leapt 46 percent after that announcement.On June 9, 2008, Lehman Brothers announced US$2.8 billion second-quarter loss, its first since being spun off from American Express, as market volatility rendered many of its hedges ineffective during that time. Lehman also reported that it had raised a further $6 billion in capital. As a result, there was major management shakeup, in which Hugh "Skip" McGee III (head of investment banking) held a meeting with senior staff to strip Fuld and his lieutenants of their authority. Consequently, Joe Gregory agreed to resign as president and COO, and afterward he told Erin Callan that she had to resign as CFO. Callan was appointed CFO of Lehman in 2008 but served only for six months, before departing after her mentor Joe Gregory was demoted. Bart McDade was named to succeed Gregory as president and COO, when several senior executives threatened to leave if he was not promoted. McDade took charge and brought back Michael Gelband and Alex Kirk, who had previously been pushed out of the firm by Gregory for not taking risks. Although Fuld remained CEO, he soon became isolated from McDade's team.On August 22, 2008, shares in Lehman closed up 5% (16% for the week) on reports that the state-controlled Korea Development Bank was considering buying the bank. Most of those gains were quickly eroded as news came in that Korea Development Bank was "facing difficulties pleasing regulators and attracting partners for the deal." It culminated on September 9, when Lehman's shares plunged 45% to $7.79, after it was reported that the state-run South Korean firm had put talks on hold.Investor confidence continued to erode as Lehman's stock lost roughly half its value and pushed the S&P 500 down 3.4% on September 9. The Dow Jones lost 300 points the same day on investors' concerns about the security of the bank. The U.S. government did not announce any plans to assist with any possible financial crisis that emerged at Lehman.The next day, Lehman announced a loss of $3.9 billion and its intent to sell off a majority stake in its investment-management business, which includes Neuberger Berman. The stock slid seven percent that day. Lehman, after earlier rejecting questions on the sale of the company, was reportedly searching for a buyer as its stock price dropped another 40 percent on September 11, 2008.Just before the collapse of Lehman Brothers, executives at Neuberger Berman sent e-mail memos suggesting, among other things, that the Lehman Brothers' top people forgo multimillion-dollar bonuses to "send a strong message to both employees and investors that management is not shirking accountability for recent performance."Lehman Brothers Investment Management Director George Herbert Walker IV dismissed the proposal, going so far as to actually apologize to other members of the Lehman Brothers executive committee for the idea of bonus reduction having been suggested. He wrote, "Sorry team. I am not sure what's in the water at Neuberger Berman. I'm embarrassed and I apologize."Short-selling allegations - During hearings on the bankruptcy filing by Lehman Brothers and bailout of AIG before the House Committee on Oversight and Government Reform, former Lehman Brothers CEO Richard Fuld said a host of factors including a crisis of confidence and naked short-selling attacks followed by false rumors contributed to both the collapse of Bear Stearns and Lehman Brothers. House committee Chairman Henry Waxman said the committee received thousands of pages of internal documents from Lehman and these documents portray a company in which there was "no accountability for failure".An article by journalist Matt Taibbi in Rolling Stone contended that naked short selling contributed to the demise of both Lehman and Bear Stearns. A study by finance researchers at the University of Oklahoma Price College of Business studied trading in financial stocks, including Lehman Brothers and Bear Stearns, and found "no evidence that stock price declines were caused by naked short selling".Bankruptcy - On Saturday, September 13, 2008, Timothy F. Geithner, then the president of the Federal Reserve Bank of New York, called a meeting on the future of Lehman, which included the possibility of an emergency liquidation of its assets. Lehman reported that it had been in talks with Bank of America and Barclays for the company's possible sale; however, both Barclays and Bank of America ultimately declined to purchase the entire company, in the former case because the British government (in particular, the Chancellor of the Exchequer Alastair Darling and the CEO of the Financial Services Authority Hector Sants) refused to allow the transaction at the last minute, quoting stockholder regulations in the UK, despite a deal having apparently been completed.The next day, Sunday, September 14, the International Swaps and Derivatives Association (ISDA) offered an exceptional trading session to allow market participants to offset positions in various derivatives on the condition of a Lehman bankruptcy later that day. Although the bankruptcy filing missed the deadline, many dealers honored the trades they made in the special session.Shortly before 1 am Monday morning (UTC−5), Lehman Brothers Holdings announced it would file for Chapter 11 bankruptcy protection citing bank debt of $613 billion, $155 billion in bond debt, and assets worth $639 billion. It further announced that its subsidiaries would continue to operate as normal. A group of Wall Street firms agreed to provide capital and financial assistance for the bank's orderly liquidation and the Federal Reserve, in turn, agreed to a swap of lower-quality assets in exchange for loans and other assistance from the government. The morning witnessed scenes of Lehman employees removing files, items with the company logo, and other belongings from the world headquarters at 745 Seventh Avenue. The spectacle continued throughout the day and into the following day.Later that day, the Australian Securities Exchange (ASX) suspended Lehman's Australian subsidiary as a market participant after clearing-houses terminated contracts with the firm. Lehman shares tumbled over 90% on September 15, 2008. The Dow Jones closed down just over 500 points on September 15, 2008, which was at the time the largest drop in a single day since the days following the attacks on September 11, 2001.In the United Kingdom, the investment bank went into administration with PricewaterhouseCoopers appointed as administrators. In Japan, the Japanese branch, Lehman Brothers Japan Inc., and its holding company filed for civil reorganization on September 16, 2008, in Tokyo District Court. On September 17, 2008, the New York Stock Exchange delisted Lehman Brothers.On March 16, 2011 some three years after filing for bankruptcy and following a filing in a Manhattan U.S. bankruptcy court, Lehman Brothers Holdings Inc announced it would seek creditor approval of its reorganization plan by October 14 followed by a confirmation hearing to follow on November 17.LiquidationBarclays acquisition - On September 16, 2008, Barclays PLC announced that they would acquire a "stripped clean" portion of Lehman for $1.75 billion, including most of Lehman's North America operations. On September 20, 2008, a revised version of the deal, a $1.35 billion (£700 million) plan for Barclays to acquire the core business of Lehman (mainly its $960-million headquarters, a 38-story office building in Midtown Manhattan, with responsibility for 9,000 former employees), was approved. Manhattan court bankruptcy Judge James Peck, after a 7-hour hearing, ruled: "I have to approve this transaction because it is the only available transaction. Lehman Brothers became a victim, in effect the only true icon to fall in a tsunami that has befallen the credit markets. This is the most momentous bankruptcy hearing I've ever sat through. It can never be deemed precedent for future cases. It's hard for me to imagine a similar emergency."Luc Despins, then a partner at Milbank, Tweed, Hadley & McCloy, the creditors committee counsel, said: "The reason we're not objecting is really based on the lack of a viable alternative. We did not support the transaction because there had not been enough time to properly review it."[citation needed] In the amended agreement, Barclays would absorb $47.4 billion in securities and assume $45.5 billion in trading liabilities. Lehman's attorney Harvey R. Miller of Weil, Gotshal & Manges, said "the purchase price for the real estate components of the deal would be $1.29 billion, including $960 million for Lehman's New York headquarters and $330 million for two New Jersey data centers. Lehman's original estimate valued its headquarters at $1.02 billion but an appraisal from CB Richard Ellis this week valued it at $900 million." Further, Barclays will not acquire Lehman's Eagle Energy unit, but will have entities known as Lehman Brothers Canada Inc, Lehman Brothers Sudamerica, Lehman Brothers Uruguay and its Private Investment Management business for high-net-worth individuals. Finally, Lehman will retain $20 billion of securities assets in Lehman Brothers Inc that are not being transferred to Barclays. Barclays acquired a potential liability of $2.5 billion to be paid as severance, if it chooses not to retain some Lehman employees beyond the guaranteed 90 days.Nomura acquisition - Nomura Holdings, Japan's top brokerage firm, agreed to buy the Asian division of Lehman Brothers for $225 million and parts of the European division for a nominal fee of $2. It would not take on any trading assets or liabilities in the European units. Nomura negotiated such a low price because it acquired only Lehman's employees in the regions, and not its stocks, bonds or other assets. The last Lehman Brothers Annual Report identified that these non-US subsidiaries of Lehman Brothers were responsible for over 50% of global revenue produced.Sale of asset management businesses - On September 29, 2008, Lehman agreed to sell Neuberger Berman, part of its investment management business, to a pair of private-equity firms, Bain Capital Partners and Hellman & Friedman, for $2.15 billion. The transaction was expected to close in early 2009, subject to approval by the U.S. Bankruptcy Court, but a competing bid was entered by the firm's management, who ultimately prevailed in a bankruptcy auction on December 3, 2008. Creditors of Lehman Brothers Holdings Inc. retain a 49% common equity interest in the firm, now known as Neuberger Berman Group LLC. In Europe, the Quantitative Asset Management Business has been acquired back by its employees on November 13, 2008 and has been renamed back to TOBAM.Financial fallout - Lehman's bankruptcy was the largest failure of an investment bank since Drexel Burnham Lambert collapsed amid fraud allegations 18 years prior. Immediately following the bankruptcy filing, an already distressed financial market began a period of extreme volatility, during which the Dow experienced its largest one day point loss, largest intra-day range (more than 1,000 points) and largest daily point gain. What followed was what many have called the "perfect storm" of economic distress factors and eventually a $700bn bailout package (Troubled Asset Relief Program) prepared by Henry Paulson, Secretary of the Treasury, and approved by Congress. The Dow eventually closed at a new six-year low of 7,552.29 on November 20, followed by a further drop to 6626 by March of the next year. Durvexity spiked, due to funding issues at the major investment banks.The fall of Lehman also had a strong effect on small private investors such as bond holders and holders of so-called Minibonds. In Germany structured products, often based on an index, were sold mostly to private investors, elderly, retired persons, students and families. Most of those now worthless derivatives were sold by the German arm of Citigroup, the German Citibank now owned by Crédit Mutuel.Ongoing litigation - On March 11, 2010, Anton R. Valukas, a court-appointed examiner, published the results of its year-long investigation into the finances of Lehman Brothers. This report revealed that Lehman Brothers used an accounting procedure termed repo 105 to temporarily exchange $50 billion of assets into cash just before publishing its financial statements. The action could be seen to implicate both Ernst & Young, the bank's accountancy firm and Richard S. Fuld, Jr, the former CEO. This could potentially lead to Ernst & Young being found guilty of financial malpractice and Fuld facing time in prison.According to The Wall Street Journal, in March 2011, the SEC announced that they weren't confident that they could prove that Lehman Brothers violated US laws in its accounting practices.[In October 2011 the administrators of Lehman Brothers Holding Inc. lost their appeal to overturn a court order forcing them to pay £148 million into their underfunded pensions plan.As of January 2016, Lehman has already paid more than $105 billion to its unsecured creditors. In addition, JPMorgan will pay $1.42 billion in cash to settle a lawsuit accusing JPMorgan of draining Lehman Brothers liquidity right before the crash. The settlement would permit another $1.496 billion to be paid to creditors and a separate $76 million deposit.Source: Lehman Brothers - Wikipedia

Kodak has become a byword for failure — generally believed to be failure to innovate, however the real story is a lot more complex and nuanced than that. While Kodak dominated the film industry, in fact Kodak also invented digital imaging, and pretty much led the field for innovation for 30 years.So what went wrong?Credit for the invention of the original imaging chip — the Charge Coupled Device (CCD) — actually belongs to Bell Laboratories researchers Willard Boyle and George E. Smith. The pair had conceived of a simple shift register device that simply transferred electrical charge from one cell to another like a bucket brigade, and which would become the basis of the CCD image sensor.A part of AT&T’s 1956 consent decree with the Justice Department required Bell Laboratories to openly share it’s research and license it’s patents. As a division of AT&T, Bell Labs itself produced nothing but research — AT&T products were traditionally manufactured by Western Electrical, which was another division of AT&T. Every year, Bell Labs would hold a presentation to all of it’s technology licensees at an auditorium at Bell Labs.It was a young Bell Labs scientist called Gil Amelio, responsible for some of the fundamental work behind the CCD patents, that became responsible for sharing the CCD research. In the audience for his 1971 presentation on CCDs was John Atala of Fairchild Semiconductor. Amelio also presented CCDs at an International conference in Scotland, and later to Toshiba and Sony in Japan, amongst others.Following an invitation from John Atala, Amelio followed the opportunity to pursue his research all the way through to a product at Fairchild. There, he led the team that would product the World’s first imaging sensors — a linear 500 ‘pixel’ device, and a 100 x 100 pixel CCD array, first announced by Fairchild Semiconductor on November 22, 1973. Collectively, Gil Amelio and the Fairchild team ended up taking numerous patents on CCD design and manufacture, which would ultimately be almost the only money Fairchild ever made on the technology.The first commercial application for CCD technology was a 1,728 element linear sensor developed by Fairchild for Xerox fax machines.Originally developed at the request of the U.S. Navy, it was Fairchild’s first crude 100 x 100 CCD sensor array that seems to have piqued the most interest, however.In December 1974, a Kodak executive named Gareth A. Lloyd was interested enough to ask a freshly recruited 23-year old with a Masters Degree in Electrical Engineering, “Why don't you see if you can do some imaging with this device?”Steven Sasson was starting from scratch in uncharted territory. He ordered two of Fairchild’s Type 201 100 x 100 pixel CCD sensors. These chips were so early in their development cycle that the instructions included in the box were hand-written. It would be another six months before academic papers started to appear on the use of these devices. (It wasn’t until June 1975, for example, that the Jet Propulsion Laboratory (JPL) published one of the first academic papers that explored the use of a CCD for imaging).Steven Sasson later recounted in an interview with journalist Stewart Wolpin, “I started to look around how these things worked and read whatever I could about them. Then I thought about how to capture images, then maybe building a camera. It became really came clear to me that if I could digitise an image, freeze it and hold it and analyse it and store it and look at it, that was sort of the goal.”There was no blueprint, no prior art that Sasson could follow. Taking image capture as his starting point, he used a 4-bit Motorola analogue-to-digital converter, and a dozen 4-kilobit dynamic ram (DRAM) chips to capture the meagre output of the CCD chip. He worked to coordinate the clocking of the CCD chip wit the A/D converter and memory chips. The CCD sensor needed a 20V supply, which dictated 16 AA batteries, while the logic circuitry needed only 5V. All of the development was done using just an oscilloscope to check that the CCD circuitry was functioning correctly, but having captured impulses from the CCD, he still had no persistent storage. Sasson added the lens from a Kodak XL55 Super-8mm movie camera, a Memodyne Model 300 data cassette recorder, and effectively created the World’s first portable digital camera.By December 1975, Steven Sasson had captured, stored and displayed the first digital camera image — of lab technician Joy Marshall, working down the hall at Kodak’s apparatus laboratories.Unlike Kodak’s consumer film cameras, this was no polished product. It looked like something made from Meccano, weighed 4 Kg, and was about the size of a toaster. “It's an odd-looking beast," Sasson himself noted. “Odd today and really odd in 1975.” A lot of the internal connections were wire-wrap connections on bread-board circuits, and as often as not, these connections failed, rendering the camera useless.Like Kodak’s film cameras however, this crude device could capture and store 30 images, although each image was a 4-bit, grayscale image, just 100 x 100 pixels, and took 23 seconds to load to tape. Kodak was granted the first of it’s patents for an “electronic still camera” in 1978, but outside Kodak’s apparatus lab, where Sasson worked, the project was still top-secret.Kodak was not the only company interested in the CCD.By the time Sasson had displayed his first images, there had been an IEEE conference on CCDs in San Diego, CA. that October, that had attracted no less than 48 presentations. Fairchild, Bell Northern, Intel, Sony, Texas Instruments, NEC, Matsushita Electrical (Panasonic) and RCA were all actively pursuing CCD development.By June 1975 RCA had unveiled an experimental ‘tubeless’ TV camera, that featured a CCD sensor (SID 5000) with 512 x 380 pixels. The camera utilised 3 of these sensors to deliver NTSC-standard colour output.In December 1976 a satellite named Kennan was launched containing the first the first real-time imaging device in space, based on linear CCD sensor technology. Because the satellite is always in motion, a linear array enabled the satellite to essentially “scan” the surface of the Earth. The Lawrence Livermore Laboratory had also applied RCA’s CCDs to X-Ray detection.After seeing Gil Amelio make his presentation in Japan, Sony invested years developing their own CCD sensor capability. In 1981 Sony launched the Mavica — a still camera with 570 x 490 pixel resolution. The Mavica recorded images onto a 2” floppy disk, and could replay them on a TV, but it was still not a digital camera. A CCD sensor is an analogue device, with electrical output proportional to the light falling on the sensor, and the Mavica recorded analogue signal on it’s disks. Sony would not have a digital Mavica (FD5 model) in market until 1997.Canon introduced their RC701 and Nikon launched the QV 1000C in 1988, but both of these cameras, like the Sony Mavica, were analogue cameras writing to special 2” floppy disks.Steve Sasson’s crude digital camera prototype was literally still years ahead of the competition.By 1987, Kodak had perfected a 1-megapixel (1,320 x 1,025) sensor, called the M-1, and by 1988 Kodak’s Federal Systems Division had adapted it to a 35mm Canon F1 film camera.Adapting a standard 35mm camera to a digital sensor was relatively easy. The focal plane (the point in the camera on which the image is focused), is easily exposed by opening the back of the camera, and the standard flash contacts signal the point at which the shutter is wide-open. Kodak replaced the standard camera back with a CCD panel, sandwiched to a thermo-electric cooling panel, to improve the signal-to-noise ratio. The camera was then connected by a ribbon cable to the digital mechanism. That mechanism was a breadbox-sized device that contained, among other things, a lead-acid battery, 100Mb hard drive and controller — hardly a practical field camera.Attaching a CCD sensor to a mature camera like a Canon F1, with it’s complement of lenses and attachments, made perfect sense. It remained a one-off proof-of-concept experiment however.Kodak tried again with a more compact version, once again based on the Canon F1, in 1989. Using solid-state memory, and avoiding the thermoelectric cooler, made for a much more compact and rugged system, although it was still a two-device tethered system, and once again remained a proof-of-concept project. Just two devices were made.An all-in-one device called the ‘Hawkeye’ followed, based on the Nikon F3 camera. It was Kodak’s first non-tethered device, based on solid state memory, and it appeared no bigger or bulkier on the F3 than Nikon’s optional MD-4 motor drive.The ‘Hawkeye’ at least appeared field-ready, although there was another version, called the ‘Hawkeye II’ that featured the modular, tethered design of the first FSD prototypes. The final Hawkeye prototype featured Kodak’s new M3 sensor, providing an RGB colour image for the first time. Only a handful of any of these cameras were ever produced, however one of these machines was carried aboard the space shuttle Atlantis, in November 1991.In an attempt to consolidate all of the work being done by the Federal Systems and Professional divisions of the company, by 1989 Kodak had established an Electronic Photography Division. The intent was to coordinate research and development and create products that Federal and Professional divisions could take to their respective markets.The first fruit of the combined effort was a product called the D-5000, or ECAM.Developed by a team that included Steve Sasson and Robert Hills, the D-5000 was actually the first digital SLR camera to look and function pretty much like a modern DSLR. The D-5000 used Kodak’s own 1,280 x 1,024 pixel colour CCD sensor, and offered storage with removable flash memory cards. The D-5000 had access to the full range of Pentax K-mount lenses and accessories, including through-the-lens flash photography, but appears to have been another prototype and was never officially marketed.Kodak’s last modular, tethered camera hit the market as the DCS 100, in 1991. Based on Nikon’s F3 camera body, which could still be used with Nikon’s MD4 motor drive in tethered configuration, the DCS 100 was based on Kodak’s latest M3, 1,280 x 1,024 CCD sensor. The DCS 100 could be purchased in any of six model variants, in colour and monochrome versions, with or without a JPEG compression board included.The physical bulk of the system was dictated by components such as sealed lead-acid batteries, and a 200 Mb hard disk drive, good for 1,609 uncompressed or 600 compressed images. Connectivity was via a 50-pin SCSI port on the unit, which also supported NTSC video output.Kodak boasted that professionals could switch to digital without switching cameras, but the tethered systems alone were a lot more equipment than most journalists were accustomed to carrying around — and that was just the camera! To make this system a palatable option for photojournalists, Kodak sold them with a nylon courier bag, and a hard travel case. By the time the system was deleted in 1994, just 987 units had been sold.For customers coming of age in a Photoshop-and-Pagemaker world, Kodak launched the DCS 200 at the annual MacWorld event in 1992. Based on Nikon’s N8008 camera, which was then the cheapest Nikon with a removable back, the maturity of Kodak’s capability in digital photography enabled them to take the DCS 200 to market in less than a year, surprising even Nikon, who were not aware that their N8008 had even been adapted in this way.Once again, the technology dictated the size of the package, and the new 2.5” hard drives supported 80 Mb of storage, or 50 images, on-board below the adapted camera. Rechargeable batteries gave way to AA batteries in both the camera body and in the camera back, and 3,240 DCS 200s in various configurations are thought to have been sold by 1994.The most important feature of the DCS 200 was actually it’s architecture. With only minor modifications, the DCS architecture became the basis for the NCS 2000 series, DCS 4XX and EOS DCS X systems. The built-in hard 2.5” drive was substituted for PCMCIA-format slots that supported the new 1” micro-drives as well as emerging flash memory options. The same basic architecture supported CCD sensors from 1.2 to 6 megapixels, with 12-bit A/D conversion and SCSI support.In another development, Nikon and Kodak finally formed a closer technical partnership, which would spawn numerous new models, based on Nikon camera bodies. The new Kodak DCS4XX series digital cameras were all based on Nikon’s new N90 body, as was the NC 2000 model, produced exclusively for Associated Press members.In total the DCS410/DCS460 range was responsible for about 5,000 unit sales, and was Kodak’s most successful foray into digital photography up to that time. If those don’t seem like massive volumes, it’s worth remembering the unit price of these cameras: the AP version sold for US$17,500 each. (At the time a standard Nikon N90 camera body retailed for just US$1,090).The DCS 460 debuted Kodak’s M6 CCD — a new 6-megapixel sensor that made the DCS460 “the World’s highest resolution portable digital camera.” The most famous DCS 460 is undoubtedly the one that astronaut John Glenn carried into space aboard the space shuttle Atlantis in March 1996. That hardly justified the US$35,600 list price though, and by 2000 when the model was closed out it retailed for US$2,500.Kodak’s Federal Systems Division adapted DCS 4XX cameras with GPS technology, and even repackaged the electronics for underwater configurations and ‘rugged’ applications.In another development of the DCS 200 architecture, a version was produced for Canon, who could hardly ignore the opportunity to offer their own customers digital technology. Canon adapted their EOS 1N bodies to take Kodak’s NC2000 camera back, and created the EOS DCS 1, 3 and 5 series cameras, ranging from 1.2 to 6 megapixels, in monochrome, colour and infrared versions. Canon also marketed the EOS DCS 1 and 3 versions, and all in all, about 1,000 of all variations of this model were sold.Better than anyone, Kodak understood that professional segment of the market relied on larger medium-format cameras, and introduced a digital back for medium format cameras like the Hasselblad. Really a modified DCS 460, the DCS 465 sold a modest 200 units.At Tokyo MacWorld in 1994, Apple launched the QuickTake 100 — ostensibly the first ‘consumer’ market digital camera. The QuickTake 100 offered 640 x 480 pixels (0.3 megapixels!) of 24-bit colour resolution, could store just 8 images in it’s 1Mb memory, and download to a Macintosh computer via an AppleTalk serial network at a maximum of 230 Kb/sec!The QuickTake 100 was actually manufactured for Apple by Kodak, and while Kodak might initially have been less interested in the consumer end of the market, the AppleTalk connection with Macintosh computers rounded out Apple’s desktop publishing vision. The SD-video 640 x 480 pixel resolution seemed light even then, but for US$749 it represented good value for money, and there was nothing else of that quality in the consumer market. Kodak later brought out it’s own almost identical DC40 model, with a 756 x 504 pixel sensor.‘Hybrid’ technology might have been a blind spot for Kodak. For all their innovation in digital technology, Kodak didn’t appear to have considered ways in which digital technology might have augmented the traditional film business. Digital technology was about to transform and improve the traditional photography product in a more subtle way. If digital photography threatened film sales, photo-processing was actually where the silver was hidden. Processing traditionally earned the industry more than twice as much as film sales.For years the byline of Kodak advertising had been George Eastman’s original promise, “You press the button, we do the rest.” Kodak had perfected a vertically integrated imaging system — cameras, film, developing and printing. The brand implied an assurance that this system would produce the best results, and there was indeed some truth to that. Independent tests proved that Kodak, Fuji and Agfa had all optimised their film and photographic paper to complement the subtle colour biases in each.It was Fuji that first introduced the digital minilab in 1996.The Fuji Frontier SP-1000 used a conventional film processing system and a revolutionary new digital printer. Fuji’s Frontier digital minilab succeeded in breaking Kodak’s virtual monopoly, and was ultimately the innovation that commoditised both film, and retail processing.The Frontier SP-1000 minilab comprised a conventional film processor, a digital scanner and an LED-based photo printer. The introduction of digital technology into the process meant that images could easily be previewed and corrected for basic image issues such as exposure and colour balance. Negatives were pre-scanned and the results displayed on a monitor so that the operator could correct colour balance and exposure settings before the images were sent to the laser printer, which used LED lasers to expose conventional photographic paper. The exposed paper was then developed in a conventional ‘wet’ photographic printer.Among other features, Fuji’s Frontier recognised the DX barcode below the sprocket holes of almost all film, and adapted the scanning and output profile for each film type.Fuji didn’t just offer competition, the Frontier minilab attacked Kodak’s core brand values. The Frontier minilab was the stroke of genius that enabled Fuji to better even Kodak’s brand promise, adapting to not just the film type, but compensating for the exposure and colour characteristics of an individual image also. The Fuji Frontier promised better results from almost any brand of film, under almost any conditions, lowering the ‘rejection rate,’ making for happier customers.The new, smaller scale and lower operating costs of the next-generation mini-labs also enabled Fuji to broaden their distribution of retail outlets in a way that nobody seems to have anticipated. Fuji quickly achieved mass market penetration, offering 60-minute in-store processing, soon picking up distribution deals with the likes of Wal-Mart and Walgrens pharmacy chains. Fuji soon dominated the OEM and generic film sales.At a shareholders meeting in 1978, Kodak had demonstrated technology that digitised film to produce high-quality prints, and was not far behind Fuji with a digital minilab of their own, but were naturally wary of attacking their existing distribution chain. Fuji of course had nothing to protect and everything to gain, and ultimately it was Kodak’s protected customer base that was under attack.Even in the digital era, for years there was nothing that came close to traditional photographic printing for the resolution, quality or traditional look and feel of it’s prints. Twenty years later, photographic prints are all digital — either from scans of film, or digital source files. Traditional ‘wet’ photographic printing has all but given way to inkjet technology in so called ‘dry’ minilabs.Inevitably, digital minilab capability became all about software. Just one company, Noritsu, finally ended up making minilab hardware for Kodak, Agfa and Fuji!If the future of film was starting to look a little ‘pixelated,’ Kodak had far from thrown in the towel. In 1995 Kodak applied to the Court Of Appeals to terminate both the 1921 and 1954 consent decrees that had restrained the company in the market. The purpose of the original decrees had long since been served. Competition had become well-established, and Kodak now held a much less than commanding share of the marketEven the Appeals Court agreed that Kodak no longer had any real market power. By 1995, the Court noted, Kodak was just one of at least five companies, including Fuji, Konica, Agfa, and 3M, that had all established successful photographic businesses in America. By that stage Kodak’s share of the worldwide market was 36%, and Fuji had raised it’s stake to 34%.In America, Kodak still commanded a 67% market share, against Fuji’s 12%, although Fuji also supplied house brand product for K-Mart and Wal-Mart, who were thought to retail half of all film sold, albeit at significant discounts.The strength of Kodak’s brand meant that Kodak still commanded 75% of film sales by value, but Kodak’s dominance, and it’s price premium, had clearly been decimated. In the USA Kodak’s “small and declining market premium” had been slowly eroded to only an average of 4.5% over Fuji, but the court believed that was evidence of Fuji’s aggressive discounting strategy, rather than any perceived strength in the Kodak brand.The court found that Kodak was often unable to achieve any kind of premium in the mass market, whereas just five years previously they had achieved an average of 6.3%. The court believed that if Kodak were to raise it’s US prices by just 5% they would likely lose a further 10% market share. Elsewhere, it was Kodak that was forced into a much more aggressive posture. Around the World, Kodak product was cheapest in Japan, where the company held only 10% market share against a dominant Fuji.After nine days of deliberations, the Court unshackled Kodak and terminated the consent decrees, but that was really only a pyrrhic victory for Kodak at that point.It looks like a distraction now, but in 1996 there was yet another photographic format in market. The Advanced Photo System was an initiative between Kodak (Advantix), Fuji (Nexia), Agfa (Futura), Konica (Centuria), Nikon (Pronea), Canon (EOS IX) and Minolta (Vectis), based on a smaller frame size, with a correspondingly smaller, lighter cameras. Beginning in 1991, the thinking apparently went that the 35mm format had become ‘stale,’ and that some innovation might stimulate demand for film, for cameras and for photography in general.This was a US$500 million dollar initiative, that somehow remained the industry’s best-kept secret for almost 5 years. The project was even awarded the Project Management Institute “Project Of The Year Award” in 1997.The secrecy was critical. As depressed as the photographic industry may have been, news of a new format could have stalled the market entirely.The 24mm-wide APS film stock covered only 58% of the image area of a conventional 35mm film, which in itself impacted on quality enough that it never captured the attention of serious users. A lot of “innovation” in film had failed on exactly the same point— think the 126 or 110 formats, or Kodak’s disc-format camera. Reduced negative sizes did not deliver comparable, or even adequate quality prints.APS came with some novelty features however. APS film cassettes recorded camera data which could be used in photo processing, or even printed on the back of the print. APS film cassettes had no leader, and automatically threaded the film through the film transport mechanism of the camera. When the negatives had been processed, they were actually returned to the film cassette for safekeeping, and the prints indexed with a serial number that corresponded with the cassette and frame number for re-printing.Canon, Minolta and Nikon all created new families of lightweight, compact SLR cameras to cater for the new format, sometimes including smaller, lighter lenses. Most manufacturers, like Canon and Nikon, produced relatively conventional scaled-down SLR cameras, as well as smaller, lightweight ‘novelty’ cameras, and some pocket, point-and-shoot models as well. There was no shortage of hardware options to support the new format.The APS format had all the hallmarks of a category breakthrough, but the cameras were neither functional or rugged enough to engage serious photographers, or novel enough to attract new customers to photography. APS cameras predominantly found favour with point-and-shoot customers who appreciate their compactness and light weight.The bigger issue of course was that digital cameras had started to capture mindshare.Investing in film at this point must have seemed like a regretful spend. Nikon ceased production of their Pronea in 2000, Canon stopped production of their EOS IX in 2001, Kodak stopped making even simple APS cameras in 2004, and both Fuji and Kodak discontinued APS film production in 2011.Meanwhile, Kodak had well and truly exploited their proven DCS 200 digital architecture. After four years in market, a lot had been learned, and it was time for an overhaul.Kodak engineers decided that new base architecture would be based on CCD sensors as before, although brand-new sensor designs and materials improved the colour balance, and a PowerPC chip was added to handle JPEG processing on the fly. The bulky and unpopular SCSI interface made way for the new, faster and more compact IEE 1394 ‘FireWire’ standard connection. Other changes included a colour LCD display with a new graphic menu.First cameras to adopt the new architecture were Kodak DCS 5XX and Canon EOS DXXX models. Canon supplied modified EOS 1N bodies with the film transport mechanism removed, and both Canon and Kodak marketed their respective models. The 2-megapixel Kodak DCS 520 and Canon EOS D2000 were identical, for example, as were the 6-megapixel DCS560 and Canon EOS D6000 models. Kodak launched the DCS 520 at the annual PMA show in New Orleans in February 1998. If the price of digital technology was falling, the US$14,995 list price of the DCS520 was still well beyond the reach of the mass market.Also in 1998 Kodak launched the DCS 315. Based on Nikon’s smaller, lighter Pronea APS-format film camera, the DCS 315 was a 1.5 megapixel machine that was the first digital camera to feature an on-board LCD image display, and built-in JPEG image processing. Like other DCS models, the 315 was based on a simple substitution of the Pronea camera back for the Kodak module, which more than doubled the bulk of the original Pronea. The Pronea was the functional equivalent of Nikon’s F70 camera, intended for a different price point in the market, but the DCS 315 still retailed for US$4,995 on release. The DCS 330, released the following year, featured 3 megapixels, but did not support JPEG compression.The DCS 315 and DCS 330 deserve mention now only because they were the forerunners of the modern APS-C format digital cameras. Nikon, Canon, Fuji and most others manufacturers have long produced lightweight digital SLR cameras that take advantage of smaller CMOS sensors, in the same way that the Nexia, Pronea and EOS IX took advantage of the APS format. While these crop-sensor cameras lack the wide-angle or low-light versatility of the full-frame cameras like Nikon’s D5 or the Canon 1D Mk X, their light weight and smaller profile found favour with a new market of amateur photographers.At the 1999 PMA exhibition in Las Vegas, Kodak launched their all-new DCS 620 camera.For the first time, the DCS 620 was a properly integrated, all-in-one digital camera, based this time on Nikon’s F5 film camera. Nikon supplied an F5 camera body adapted to Kodak’s design, and the electronics were fitted at Kodak’s Rochester, N.Y, facility. Already a staple of the press and professional markets, the rugged and sophisticated F5 gave Kodak’s digital cameras a new legitimacy. Kodak even promoted the DCS 6 Series as the, “Affordable, high-performance NIKON F5 SLR.”It seems likely that Kodak rushed their DCS 620 to market to try and capitalise on what demand premium they could, before Nikon and Canon, with their obvious cost advantages, entered the market on their own. It wouldn’t have taken a crystal ball to see that coming. It can’t have escaped Nikon's attention, for instance, that their F5 could be bought retail for US$1,850 while the DCS 620 was US$14,995.In a similar vein, on the 31st of January 2000, Fuji announced their FinePix S1 Pro DSLR.The FinePix was based on Nikon’s F60/N60 film camera body, and featured Fuji’s own CCD sensor that cleverly extrapolated a 6-megapixel image from a 3.4-megapixel CCD sensor. The FinePix Pro was rated with sensitivity from ASA 320—1600, and produced JPEG or 8-bit TIFF files in-camera.The execution of the FinePix also looked rushed. It needed no less than 3 battery types — two CR123A Lithium batteries to power the camera, 4 x AA cells to power the digital electronics, and a CR2025 button cell to maintain camera settings like date and time.Users rated the FinePix for it’s natural results, but ultimately it seems that Fuji expected to sell on price. Unlike any of the other digital SLRs on the market at that point, the FinePix Pro was unashamedly plastic. The first announcements pegged the price at US$4,000, but on launch it was US$3,500 and within months of launch could be bought for US$3,000.Few people doubted that Nikon would have their own digital camera in market, and it had become a question of when, not if. At the 1999 PMA exhibition, Nikon finally offered a glimpse of the future, offering a non-working mock-up of the camera that would become the D1. The machine was locked in a glass display case, alongside F5 and F100 models, with whom it shared an obvious and reassuring familial resemblance.Nikon representatives on the exhibition stand were giving nothing away with regard to the specification of the final product, or a delivery date, but the intention could not have been more clear. Nikon would soon have their own, likely more affordable, ‘digital F5’ in market in the near future. Nikon said that it would continue to honour it’s agreements with Kodak, but the announcement of the Nikon D1 effectively stalled Kodak’s market.If Nikon’s PMA exhibit had just the one talking point, Kodak’s exhibition stand was a little busier. Aside from the DCS 620, Kodak seemed intent on taking the fight to Fuji, and exhibited their RFS 3570 film scanner, a digital multi-printer production system and the second-generation Professional LED II Production System. Kodak also demonstrated some increasingly mature software products. such as ‘Kodak Portraits & More.’Finally however, Nikon ended all speculation. On the 31st of August 1999, at the annual Seybold desktop publishing conference in San Francisco, Nikon unveiled details of their much-anticipated D1. Offering 2.74-megapixels, 50 milliseconds shutter latency, a 4.5 frame/second shooting rate, and a 21-frame buffer, the D1 appeared to be a mature camera, usefully differentiated from it’s competition. First deliveries of the new camera were anticipated to be in September.Elsewhere, an event so inconspicuous it likely went unnoticed, actually marked the beginning of a trend that would eventually transform all photography forever.Friends Kamran Mohsenin and Lisa Gansky decided that digital photography had the potential to change the way that people could store, view, edit, share and print their photos. They launched their new, on-line service, called Ofoto in June 1999.Digital users could upload their photos directly, using Ofoto’s free software, while film users could mail in their rolls of film and have them processed, scanned and uploaded for just US$3.95 per roll. Users could edit their photos, or customise them with Ofoto’s digital frames and cards. Conventional silver-halide photographic prints were available for anything from US$0.50 to US$20 each, depending on print size, and CD-ROMs were available for US$10 each. The service was free, provided users made at least one purchased every 12 months.Ofoto piqued the interest of investors, raising US$16 million in venture capital in 2000, and then US$41 million in another round of funding, before being acquired by Kodak in April 2001. By that point, Ofoto had 1.2 million registered members and employed 121 people. An independent analysis of on-line photo services by research company ARS Inc. rated Ofoto’s service best in terms off ease of use, service and price competitiveness. Ofoto was even endorsed by Microsoft, being one of three photo processing services bundled with WindowsXP.At least two of Ofoto’s competitors were other Kodak initiatives, such as Kodak-sponsored "You've Got Pictures,” offered via America OnLine, Kodak PhotoNet Online, and the Kodak Picture Center online at CVS.com. According to Neilsen research, these sites were averaging a total of 782,000 unique visitors in the three months leading up to the Ofoto acquisition.In a press release, Willy Shih, president of Kodak's Digital and Applied Imaging unit, said, “The acquisition enhances our leadership in the growing market for online photo services. By combining Kodak's and Ofoto's technology, marketing and distribution assets, we will be able to deliver the most comprehensive, easy-to-use online photography services to customers and consumers. This will accelerate Kodak's growth and drive more rapid adoption of online photography. This move will result in greater speed to market for new features and reinforce Kodak's position as the market leader.”Kodak re-branded the service 'Kodak Gallery,’ by 2003 had expanded the service to the United Kingdom, and added Kodak’s Perfect Touch image optimisation software to the options available to users.Kodak also appeared to realise the connection between connectivity and their digital services, and in 2005 launched the WiFi-enabled EasyShare One camera, although the point-and-shoot model didn’t last long in Kodak’s line-up.Ofoto and it’s peers were simply a little ahead of their time. Today of course there are more photographs created, edited and distributed on-line than by any other means. Smartphones and increasingly also cameras are being network-enabled, able to capture, edit and upload photos virtually in real-time.Following Kodak’s divestiture in 2012, it’s on-line services ended up being a part of Shutterfly.Elsewhere too, Kodak was doubling down on digital. Intending to get out of the professional market at some point, Kodak was not yet ready to give up. Late in 1999, the DCS 5 and 6 Series received a firmware upgrade that made more intuitive sense of the user interface. (Kodak would continue issuing firmware updates for their DCS range until they exited the SLR business in 2005).By 2001, the DCS 6XX series was altogether superseded by the 7-Series. The DCS 7-series was effectively Kodak’s third generation of digital technology. The entire architecture had been optimised to get the sensor closer to the circuitry, lowering the signal-to-noise ratio and increasing the camera’s speed and sensitivity to light. A Texas Instruments digital signal processor had been added to complement the upgraded 75 MHz PowerPC chip, and dual PCI card slots supported a variety of storage options. The 7-Series was supposed to support JPEG compression, but was finally shipped with only RAW format support.The DCS 720 was a 2-megapixel model, but the real breakthrough was the DCS 760, which featured 6-megapixels, and listed at just US$7,995. The 7-Series wasn’t the only news. Kodak shipped it’s brand-new Professional DCS software, offering photographers much greater flexibility and control over their raw images. The DCS 760s earned an enviable reputation for it’s reliability and image quality, and second-hand DCS760s still trade at reasonable values on the internet.To some extent Kodak seemed to be playing to it’s heritage, offering a ‘photographic system’ — the camera, software, and it’s legacy network of processing and printing. The DCS 760 finally put digital photography within reach of a whole new market segment, and more importantly, was much closer to the price point that Nikon was expected to hit when their new D1 finally hit the market.While Kodak’s digital technology had been revolutionary, the key to great images was still actually the camera, in which Kodak had literally no IP or expertise. Adapting Canon and Nikon models had been fast and simple to do. Kodak was able to leverage the installed base of lenses and accessories for these cameras, and address the professional market most likely to value their digital technology.No doubt Nikon and Canon both learned from their exposure to Kodak’s technology, but the honeymoon couldn’t last forever. The drive to digital was absorbing capital in Nikon and Canon’s traditional customer base. Every camera Canon or Nikon sold to Kodak, was absorbing perhaps 7-10 times as much revenue from their own customers. Ultimately both Nikon and Canon would have to plug the leak in their market with digital cameras of their own.The Nikon D1 and Canon 1D were intended to be those cameras, but Kodak was proving to be a determined competitor.In September 2002 at Germany’s Photokina exhibition in Cologne, Kodak debuted the DCS Pro 14n camera. At 13.89-megapixels, the Pro 14n was the highest-resolution digital camera available to that point, and only the third camera ever to offer a full-frame 24 x 36mm sensor (after Canon’s 1Ds and an unsuccessful Contax camera).Based on Nikon’s N80 camera, the Pro 14n was a departure from all of Kodak’s previous digital cameras in that it featured a CMOS sensor, developed and manufactured exclusively for Kodak by the Belgian firm FillFactory. The Pro 14n offered a 2-frame/second exposure rate, an 8-shot burst (later upgraded to 18 shots) and could transfer data via it's Firewire interface at 12 Mb/ps.Kodak also finally offered qualified on-board support for JPEG compression. The issue with JPEG compression is that it achieves reduced file sizes at the expense of image data. That in itself is not a problem, but it destroys the latitude available for adjustment of the images in post-processing. Kodak offered an extended-range (ERI) version of JPEG that preserved a full two stops of latitude in exposure and colour control. From the Kodak press release, “The ERI-JPEG format provides professional photographers ease-of-use of JPEG files with the image quality and colour/exposure control of Kodak's highly regarded DCR format raw camera files, to create the best quality images.” The intent was clear — Kodak was well aware of the issues associated with JPEG files, but also anxious to offer some of the advantages of image compression.Kodak had also seized on the flexibility of it’s software-based digital architecture. “Because the features of the DCS Pro 14n are based on Kodak Professional firmware and not hard-wired within the camera, the camera can be enhanced and easily upgraded with free firmware downloads from Kodak Professional. Free firmware upgrades essentially give photographers a "new" camera whereas other manufacturers require the purchase of an entirely new camera system to receive the latest enhancements.” Previous upgrades had added menus, additional languages and so on to the user interface of the DCS 5, 6 and 7-Series cameras.The DCS Pro 14n was a game-changer. Kodak led the market on innovation — and finally also, on price. The Pro 14n debuted at US$5,000, it’s nearest competition being Canon’s 11-megapixel 1Ds that launched at US$8,995. If the standard N80 was a modest camera, lacking the speed, exposure and focus options of the F5, there was nothing that could touch the DCS Pro14n.By 2001 there were reportedly 15 million digital cameras in America, and in 2003, sales of digital cameras finally outstripped film cameras. The traditional film-and-paper photographic industry generally is thought to have peaked at about this time. In September 2003, Kodak announced a new strategy, intended to “broaden our digital presence in consumer, commercial and healthcare markets. These three ‘pillars’ represent the foundation of our business, and are areas where Kodak already has a base from which to grow. We also announced we would select future business opportunities, notably in the display and inkjet markets, that build on our core competencies and our solid base of intellectual property.”By 2004 the Pro14n had been superseded by the Pro SLRn, still based on the Nikon N80, but with much improved low-light sensitivity boosted all the way up to ISO 1,600, and exposures up to 60 seconds possible. The really good news for Pro14n owners was that their cameras, for US$1,495, could be upgraded at Kodak to SLRn spec, losing only the new power management and some of the processing speed of the new SLRn.The key to the SLRn was a re-designed sensor, with a dye-based colour filter rather than the dichroic types common to other sensors. The change helped to deal with the chromatic aberrations that were sometimes visible, with particularly wide-angle lenses.Kodak’s relationship with Canon seems to have soured following the release of the EOS 1D. Canon’s original contract with Kodak is rumoured to have been exclusive, and actually precluded Canon from developing their own DSLRs. Whatever the truth of that, Kodak’s Canon-compatible equivalent of the Pro SLRn, called the SLRc, was based on Sigma’s SD9 camera, and launched in 2004.Kodak’s Pro SLR cameras received rave reviews. The only real criticisms concerned the bulk of the digital machines, and the control layout (particularly the SLRc, which was not as familiar to Canon users as the layout of the N80 was to Nikon’s customers). It would be 2007 before Nikon would have a full-frame camera in the market, and so the Pro 14n and SLR models had been enthusiastically received by Nikon owners. In one review, CNET noted, “Superb resolution; 35mm-size sensor obviates focal-length conversions; significantly improved high-ISO performance; improved battery life; powerful software and user-installable firmware.” Their conclusion; “this dSLR offers outstanding resolution to portrait, school, commercial, and architectural photographers who own Nikon F-mount lenses.” Layout issues aside, the image quality of the SLR/c also compared favourably with Canon’s more expensive 11-megapixel 1Ds.By the third quarter of 2005, Kodak’s digital products earned more money than it’s film products for the first time. By then however, on May 31st, Kodak had already announced that it would cease manufacture of it’s Pro digital cameras.It’s an interesting decision. Having created a competitive product, and at a price that seemed well received in the market and which promised some real sales volumes, it seems like a curious time to pull the pin. The Pro SLR range were ‘halo’ products that validated Kodak’s leadership in digital technology. It would be another 2 years, for example, before Nikon had a full-frame sensor in market, with their D3 model — and even that was only a 12.2-megapixel machine. It looks now like a reaction to Kodak’s first-ever losses.There were a number of factors in play however.For almost 20 years, Kodak had developed and manufactured it’s own CCD sensors, but by the time Kodak started development of the DCS Pro range, it was clear that the next ‘leap’ in performance would need to be based on CMOS technology. While Kodak led the design of the sensor for the DCS 14n, manufacturing it’s own CMOS sensors would require a quantum leap in chip manufacturing technology that Kodak was not prepared to make. More pixels means finer manufacturing tolerances and bigger die sizes, and a lot of semiconductor companies had already failed to deliver CMOS technology reliably in volume. Kodak partnered with FillFactory and IBM to manufacture CMOS sensors to it’s designs.It wasn’t a foregone conclusion that Kodak would need to manufacture their own sensors to remain competitive. Nikon for example, has only ever made a few of their own sensors, typically relying instead on Sony sensors.Neither was it necessarily a deciding factor that Kodak didn’t make their own cameras. Traditionally, some of Kodak’s most famous 35mm cameras, like their Retina and Retinette, were assembled in Germany, with key elements such as shutters and lenses sourced from third parties. Nikon’s camera bodies were a relatively small part of the overall price of a digital camera. Just $400 over the counter would get you an N80, when the DCS Pro SLR sold for $5,000, although Nikon also manufactured the specially adapted magnesium chassis that Kodak needed for it’s electronic components. Sigma started making cameras primarily to sell their lenses, and third-party manufacturers such as Seiko and Copal already manufactured the key shutter mechanisms for other manufacturers.With the benefit of 20/20 hindsight, pulling the pin on the Pro SLR range seems premature, but Kodak’s heritage is in the mass consumer market. The high-end professional market is a very small part of the overall photographic market, and in the digital age increasingly less likely to print anything. The real silver was buried in the mass market, and Kodak’s decision to support it’s retail distribution network with affordable cameras should have supported it’s processing chemistry and photographic paper business.Far from ignoring digital technology, Kodak seemed intent on continuing to lead. An “Image Sensor Solutions Group” was created to concentrate on sensor development, manufacture and supply to the OEM market. Kodak acquired the imaging business of National Semiconductor, and then also engaged IBM in a partnership to build CMOS sensors.Kodak made a case for it’s CMOS sensors with a unique design, called “Pixelux.” In these sensors, Kodak introduced a fourth “transfer gate” transistor to the circuit design, making it possible to electrically isolate the actual photo-sensing diode, and enable the processor to sample each pixel more than once. It also enabled the processor to read each pixel separately, or to read two or four pixels at a time. This technology gave Kodak’s sensors better sensitivity and improved colour in low-light situations that are particularly important to consumers.By 2005, the joint venture was starting to bear fruit. The first new KAC-3100 and KAC-5000 CMOS sensors were being manufactured at IBM’s Burlington, VT, chip plant. Those were miniature 3 and 5-megapixel sensors, focussed on the consumer video and smart device market, but Kodak was quoting US$15 on quantities of 1,000 chips.The sensor is only half the story with CMOS technology however. A CMOS sensor requires an image processor, and here again, Kodak partnered with Texas Instruments to deliver their OMAP 2 image processors. “Kodak has a strong reputation for delivering high quality digital imaging devices, and we are excited that a reference design is now available that combines Kodak's new CMOS image sensors with TI's industry-leading OMAP processors," said Avner Goren, marketing director of TI's Cellular Systems Business. “With this powerful combination, manufacturers will be able to bring new features and capabilities to cell phones as we see the imaging, communications and the electronic markets converge.”The strategy appeared to be paying dividends when in 2006 Kodak reached an agreement with Motorola to supply the imaging technology for Motorola’s next generation of mobile pones. Taiwan semiconductor also licensed Kodak’s CMOS sensor design.In spite of Kodak’s efforts to have the Pixelux CMOS sensors adopted by other manufacturers, the first Pixelux-based product reached the consumer in July 2007, when Kodak rolled out the first-ever sub-US$100 CMOS digital camera. The new EasyShare 513 featured 5-megapixel resolution, a 3x optical zoom lens, and a 2.4-inch LCD screen. Novel for the time, the EasyShare 513 also offered a digital image stabilisation feature, intended to reduce image blur caused by camera movement. Another novel feature for the time was audio-video capture.With the EasyShare 513, Kodak had really taken digital technology full-circle, from a nascent lab experiment, through specialised products, to mass-market consumer solution, in just 30 years. Kodak also focussed on it’s mass-market ‘EasyShare’ digital cameras, and even manufactured a range of digital cameras for Canon.Kodak's CCD sensor business was also still growing, but only slowly. Kodak persevered with development and manufacture of CCD sensors. Aside from numerous industrial and process applications, Olympus’ digital cameras featured Kodak’s CCD sensors. The legendary Leica M8 and M9 cameras both carried Kodak CCD sensors. The Leaf and PhaseOne medium-format digital cameras both featured Kodak CCD sensors, as did the Pentax 645D. These were all somewhat exclusive products however, and the CCD sensor business was fast becoming marginalised by the relative speed and lower cost of CMOS devices.In November 2005, Nikon debuted their D200 model, built around a 10.2-megapixel Sony sensor, which would prove to be Nikon’s last CCD camera.The impact of digital photography was coming sharply into focus against a background of turbulent times in the photographic industry. Polaroid was declared insolvent in 2001, and then again in 2008. Konica and Minolta merged in 2003. Agfa sold it’s photography business in a management buy-out in 2004, which was then forced to file for bankruptcy in 2005. Kyocera announced that it would stop making cameras that year, including their Konica and Contax brands, hoping to salvage something from their photography businesses when Konica-Minolta announced a deal to jointly develop digital cameras with Sony.Kodak also suffered it’s first-ever losses in 2005. It was the beginning of a tide of red ink. As fast as the company retrenched it’s International operations, and exited some of it’s less strategic businesses such as inkjet printers, revenues continue to decline.The intellectual capital of the digital era was not chemistry, but silicon manufacturing techniques. After working for years to develop their own CCD sensors, Sony had developed a huge business supplying CMOS sensors to other manufacturers, along with a nice line in SLR, mirrorless still and video cameras. Samsung and Panasonic also had their own sensors and drove hard for volume to recoup their costs. Kodak still had great brand identity, and was working hard to complement their products with services, on-line and at retail, but digital photography was generating nothing like revenue or margins associated with the heyday of the film industry.Like most businesses invested in research and technology, writing patent applications had been a full-time business at Kodak. The current stock ran to more than 11,000 patents, of which about 1,000 patents related to digital photography. A lot of those patents were preliminary patents, filed in the early stages of sensor and camera development, and they were very broad. Contemporary estimates assumed that 85% of digital cameras were using some of Kodak’s patents. Companies such as Olympus, LG, Sharp, Matsushita Electric (Panasonic), Motorola, Samsung, Sanyo, Sony and Sony Ericsson all licensed Kodak’s patents.Pentax had used Kodak patents and technology, prior to being taken over by Ricoh, and was one of a number of companies that Kodak began suing to assert it’s rights. Ricoh ended up shelling out US$75.8 million to settle Kodak’s claims, the victory helping to seal the validity of Kodak’s patent rights. In January 2012 Apple filed suit against Fuji alleging infringement of five of it’s patents after the Japanese had failed to reach agreement, and at the same time filed suit against smartphone maker HTC. At about the same time, Apple reluctantly entered into a license agreement for five Kodak patents covering aspects of Apple’s iPad 2, iPhone 3G, iPhone 3GS, iPhone 4, iPhone 4S, and the iPod touch (4th generation) products.It had started to look like the portfolio would earn more through licensing that it would realise through a sale. Between 2003 and 2011 Kodak had earned Kodak US$3 billion in patent licensing deals and settlements, but by the end of 2012 the fate of Kodak and it’s patent portfolio was in the hands of it’s bankers.In 1997 Kodak’s share price had hit an all-time high of US$94/share, but by 2004 the company was removed from the Dow Jones Index when it’s shared had plummeted to US$25.38. Restructuring and divestments meant the company was shedding staff, expenses and revenue. The payroll that had once numbered more than 145,300 employees, was now down around 13,100 people, but the payroll wasn’t shrinking as fast as revenue. Kodak was profitable only once between 2004 and 2012. By January 2012 Kodak stock had become a “penny dreadful,” selling for just US$0.36¢/share. Time had finally run out.Kodak finally filed for Chapter 11 protection on the 18th of January, 2012.By any measure, this was a significant insolvency, involving about US$6.75 billion in debt, and by Kodak’s estimates, about US$5.1 billion in assets. There was a relatively small unfunded liability (US$700million) in the company’s American 401K pension plan, but the biggest creditor was the UK pension scheme, which was unfunded to the tune of about US$2.8 billion.Under the terms of it’s insolvency, Citigroup advanced Kodak a loan of US$950 million to enable the company to continue to operate, while it restructured it’s business.Among the conditions of that loan was that Kodak arrange the sale of it’s patent portfolio. An independent assessment, based on discounted cashflow analysis of licensing revenues, valued Kodak’s patent portfolio at about US$2.6 billion. As the business continued to tank, the patent portfolio started to look like one of the company’s few remaining assets.The fatal blow came just days before the patent auction was due to commence.The US International Trade Commission did an about-face and ruled against Kodak in a patent infringement case that the company had brought against Apple and RIM. The patent, known as “218” covered a method of capturing still images while previewing motion. The ruling was right out of left-field. The same patent had already been re-examined more than once, and had also been licensed by at least LG and Samsung (reportedly for almost US$1 billion). While licensing deals are typically irrevocable, the new USITC ruling undermined the value of the balance of Kodak’s portfolio, and there was simply no time, or money, to sort it out.Potential bidders had organised themselves into two camps: Microsoft, Adobe, Apple and Facebook squared off against a consortium that included Amazon, Google, HTC, Samsung, and the photo-printing website Shutterfly. The problem was that while Kodak was leading the negotiations, the company no longer had any equity. Both parties knew the the company had lost it’s autonomy to it’s lenders, who simply needed to cover their loan exposure.Naturally, neither consortium wanted to pay a cent more than necessary to secure the patents they needed, and neither did any of the parties need Kodak’s entire treasure trove of digital patents. Kodak put the portfolio up for auction on the 8th of August 2012, and had expected to announce a winner on August 20th, but the low-ball bids came as a surprise. The two consortiums are believed to have opened their bidding at around the US$150 - US$250 million mark. Kodak delayed the announcement until the 30th of August, then the 7th of September, and then again until the 19th of September, but this was clearly a buyers’ market, and Kodak no longer had any leverage. The court-sanctioned delays only made the company’s creditors more anxious.Checkmate finally came when the two consortiums joined forces, and added Fuji, Huawei and RIM to their ranks in the process. Everyone who might have been interested in Kodak’s patent portfolio was now effectively represented by a single bid, and inevitably, a deal was finally struck. In December 2012 Kodak announced that an expanded patent portfolio — not just the 1,100 digital photography patents — had been sold to the consortium for US$527 million. The consortium had negotiated to pay just enough to force Kodak to complete the sale, but the low-ball bid meant that Kodak would need to dig even deeper and realise additional assets.The Personal Imaging and Document Imaging businesses were sold to the British pension plan (knows as KPP) which settled the US$2.8 billion claim against Kodak and produced another US$650 million in cash and non-cash consideration. That business became Kodak Alaris.Kodak’s on-line services were sold to Shutterfly for US$23.8 million. IMAX acquired Kodak’s patents for laser projection. Kodak had to unravel a US$74 million sponsorship deal for naming rights at the Academy awards venue — now known as the Dolby Theatre. The gelatine business was sold off. The Japanese Brother company bought some of Kodak’s imaging assets.The disappointing result from the patent auction obviously contributed to a shortfall however, and unsecured creditors shared only 4-5% of the US$3.25 billion they were owed.The reorganisation plan was filed with the Bankruptcy Court in New York on 30 April 2013, and was formally approved on the 20th of August, 2013. In a press release, chief executive Antonio Perez said, “We have emerged as a technology company serving imaging for business markets - including packaging, functional printing, graphic communications and professional services. We have been revitalised by our transformation and restructured to become a formidable competitor - leaner, with a strong capital structure, a healthy balance sheet, and the industry's best technology.”It’s tempting to look for simple answers to even the most complex situations, but the evidence doesn’t support some of the most common perceptions. While it’s certainly true that Kodak management may have struggled to understand the impact of digital, the fact remains that Kodak, almost in spite of itself, demonstrably led the development of digital imaging, all the way through not just one, but two generations of sensor technology.The other factor that can’t be denied is that Kodak’s technology represented the pinnacle of CCD sensor technology. Kodak’s sensors were buried deep within the most prestigious products, such as cameras from Leica, Olympus, Pentax and PhaseOne, and the Kodak-designed sensors in the company’s own Pro SLR range were considered industry leading.Some of the markets that Kodak had once practically owned, and which made Kodak one of the World’s most recognised brands, simply don’t exist today. Traditional silver halide photography, although it still exists and is even seeing a small resurgence, is a tiny proportion of today’s photography market.Unprecedented collusion between Kodak’s competitors robbed the company of the better part of the value of it’s research and development. With practically all of Kodak’s potential licensees in a single consortium, determined to take advantage of the company’s insolvency, there was no chance for the beleaguered company to redeem almost any of the value of it’s research.Kodak retained the same rights to it’s intellectual property as the successful bidders in the insolvency auction, and therefore still has one of the richest caches of intellectual capital of any company. The new management is working hard to capitalise on innovation that Kodak never originally delivered to market, and interestingly is still a US$2 billion business, focussed primarily on printing and packaging, and some legacy photographic opportunities, such as movie film stock, which will continue to be in demand for some time yet.At Rochester, N.Y., Kodak had created their own “River Rouge” — a vertically integrated plant that turned wood, cellulose, gelatin, silver and other chemicals, into photographic film, paper and chemistry. By late 2013, most of that complex was surplus to even Kodak’s requirements, and some of the oldest buildings had to be demolished. Today, the area is known as Eastman Business Park, and still comprises about 1.5 million sq.metres (16 million sq.ft) of manufacturing, distribution and office space, spread over a 485 hectare (1,200 acre) campus area, housing more than 60 companies, employing more than 6,600 staff — along with what remains of Kodak.More recently still, Kodak has pioneered the use of blockchain technology to secure digital photographs, essentially doing for photographers and the photographic industry what Apple’s Digital Rights Management technology did for the recording industry. The Kodak systems will allow photographers to register work that they can license and then receive payment. Securing the property rights of photographers and graphic artists everywhere is a curious twist given Kodak’s history, but the company may yet feature prominently in the future of commercial imaging.