**EXHIBIT 99.1****President’s Letter to Shareholders**To Our Shareholders:Revenue in Fiscal Year 2006 fell short of expectation as a result of events that took place in thefirst half of the year. Business that we expected to begin was delayed as a result of trials beingpushed out into the future and several of our larger cases came to an end early in the year. Whilesales in the first half of the year lagged, we rebounded in the last quarter and we were able tomake up some of our earlier losses.We continue to depend on very large cases. This year we completed *USA v Philip Morris et. al.,*representing the Department of Justice in their suit against the tobacco industry in which theyaccused the defendants of conspiring and committing fraud over a period of some 50 years. In thelast half of the year, we were hired on some new cases that are significant in size and scope. Webelieve these cases will help us build a stable base of business in 2007.To address the peaks and valleys associated with our dependency on large cases, we tasked ourexpanded sales force with the mission of increasing the number of cases in which our litigationsupport products and/or services are going to be used. The sales force met this challenge, writingcontracts on a record number of cases. Consequently, in the last half of the year, we had morecases in production than in our history. The average size of these cases was smaller, thetimeframes shorter and the type of work has changed. This shift in our business caused us toanalyze and address how we can more efficiently manage production.***Strengthening locally, nationally and globally***. Always a firm with national expertise, this yearwe put our efforts into penetrating local markets, specifically on the east and west coasts. Withlocal producers who have the support of a national production facility, we have seen an increase inbusiness in both locations. Our past efforts in the international market began to pay off thisyear as we obtained customer contracts for more business in Europe. We expect to see an increasein this business during fiscal 2007.***Improving processes to meet market needs.***To meet the needs of our global and regional clients weimproved our web-based communication software to virtually meet client demands anytime, anywhere.In addition, we updated our network and software to meet today’s market demands. We continue toprovide internal training sessions to educate our staff on new technologies and applications. Inresponse to a changing market, we are updating our administrative and production managementsoftware as we seek to more efficiently manage our business.***Expanding our services.***We have made a renewed commitment to our *On-Location*business and expectto see a greater increase in this part of our operations in the coming year. The on-location teamprovides trial presentation support operators, technical support specialists and artists for thewar room and courtroom. We offer trained operators in all presentation software programs inaddition to our own software, VuPoint.Our strength is in our ability to create innovative solutions to meet our clients’ needs. Webelieve that by listening to our clients and adapting to an ever-changing market, we can keepZ-Axis in the forefront of our industry and ensure our growth in the future.Stephanie Kelso