Trading Statement

Kazoo3D PLC
26 January 2001

PRESS ANNOUNCEMENT

FOR IMMEDIATE RELEASE

26 January 2001

KAZOO3D PLC ('Kazoo3D' or the 'Company')

TRADING STATEMENT AND STRATEGIC REVIEW

The board of Kazoo3D (the 'Board') announces that it is reviewing all
strategic options in response to Kazoo3D's e-commerce website,
www.kazoo3d.com, performing significantly below management's expectations in
terms of both the number of visitors to the site and revenues in the five
months since the website's launch on 29 August 2000.

At the time of the launch, Kazoo3D's initial strategy was to establish itself
as a leading supplier of 3D content to the consumer digital imaging market. As
such, Kazoo3D targeted digital imaging web merchants in order to drive
customer traffic to Kazoo3D's website. However, click through rates to
Kazoo3D's website and the subsequent conversion rate of visitors to customers
have been extremely disappointing.

Before committing to further investment in the website, new content and other
potential market applications for Kazoo3D's products, the Company commissioned
an independent market review and customer survey from a specialist market
research company in order to understand the underlying reasons behind the poor
performance of the website. The survey set out to re-evaluate the potential
level of consumer interest in the Kazoo3D proposition and the effectiveness of
the internet as a distribution channel to consumers for Kazoo3D's products in
the context of the developing digital imaging market. The survey concluded
that the market segment targeted by Kazoo3D is now likely to be significantly
smaller than that assumed within the original Kazoo3D business model.

Although the Board believes that the Kazoo3D business is still in the early
stages of development and that Kazoo3D has made significant progress in terms
of technology development, partnership arrangements and licensing deals, it
has concluded that the current Kazoo3D business model is unlikely to generate
the level of sales originally envisaged at the time of the Company's flotation
in March last year.

The Board is therefore reviewing all strategic options, ranging from potential
acquisitions that may allow Kazoo3D to develop as part of a broader business
model to the possible return of cash to shareholders. At the same time, the
Board is taking action to minimise current operating costs and overheads.

As at 31 December 2000, the Company had net cash of £6.9 million.

Further announcements will be made as soon as possible. Kazoo3D intends to
announce its preliminary results for the year ended 31 December 2000 towards
the end of February 2001.

Enquiries:

Kazoo3D plc                                                  Tel: [phone]
Gordon Oliver, Chairman

Stuart Green, Chief Executive Officer

John Warden, Chief Financial Officer

Arthur Andersen Corporate Finance                            Tel: [phone]
Philip Evans

Jim Whittaker

Hogarth Partnership                                          Tel: [phone]
James Longfield

Chris Matthews