**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **Washington,
        DC 20549**
 
 **FORM
        10-QSB/A**
 **Amendment
        No. 1**
 
 [X]
              QUARTERLY
                  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                  OF
                  1934
 For
        the
        quarterly period ended October 31, 2006
 
 OR
 
 [ 
                  ]
              TRANSITION
                  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                  OF
                  1934
 For
        the
        transition period from _______ to _______
 
 
 Commission
        file number: None
 
 **PureDepth,
        Inc.**
 (Exact
        Name of Registrant as Specified in Its Charter)
 
 Delaware
                (State
                  or other jurisdiction of
                incorporation
                  or organization)
              20-4831825
                (I.R.S.
                  Employer Identification No.)
  255
        Shoreline Drive, Suite 610, Redwood City, California 94065
 (Address
        of principal executive offices)
 
 (650)
        632-0800
 (Issuer’s
        telephone number)
  (Former
        name, former address and former fiscal year, if changed since last
        report)
  
 Check
        whether the issuer: (1) filed all reports required to be filed by Section
        13 or
        15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
        (or
        for such shorter period that the issuer was required to file such reports),
        and
        (2) has been subject to such filing requirements for the past 90 days. Yes
        [X]
        No [  ]
 
 Indicate
        by check mark whether the registrant is a shell company (as defined by Rule
        12b-2 of the Exchange Act). Yes [  ] No [X]
 
 As
        of
        December 11, 2006 there were 65,681,099 shares of the issuer’s common stock,
        $0.001 par value, outstanding.
 
 Transitional
        Small Business Disclosure Format (check one): Yes [  ] No [X]
 
 
 **Restatement
        Explanatory Note**:  The undersigned Issuer hereby amends its
        Quarterly Report on Form 10-QSB for the quarter ended October 31, 2006 in
        order
        to (a) restate its previously issued financial statements for the quarter
        ended
        and nine months ended October 31, 2006 to correct the Company’s computations of
        stock-based compensation under Statement of Financial Accounting Standards
        No.
        123(R), (b) correct the computation of the depreciation expense, included
        in the
        quarter ended and nine months ended October 31, 2006 report, and (c) amend
        the
        Notes to the Financial Statement.
 
 
 **Part
        I Financial Information**
 
 Item
        1: Financial Statements
 The
        financial statements in the quarterly report are restated as
        follows:
 
 (a)
        the
        consolidated balance sheet is restated in the form of (i) a reduction in
        the
        accumulated deficit and additional paid in capital by the same amount, $725,981,
        to correct the Company’s computations of stock-based compensation, resulting in
        no net impact on total stockholders’ equity, and (ii) increasing net property
        and equipment and reducing the accumulated deficit by the same amount $101,539
        to correct the Company’s computations of depreciation expense,
 
 (b)
        the
        consolidated statements of operations for the three months ended October
        31,
        2006 are restated in the form of (i) an increase of operating expenses in
        sales
        and marketing in the amount of $38,224, a reduction in general and
        administrative in the amount of $172,841and an increase in research and
        development in the amount of  $10,530, and (ii) a reduction of
        depreciation expense in the amount of  $31,207 resulting in a
        reduction of the reported net loss  in the amount
        of  $155,294,
 
 (c)
        the
        consolidated statements of operations for the nine months ended
        October  31, 2006 are restated for operating expense reductions in
        stock based compensation and depreciation expense in the form of (i) a reduction
        in sales and marketing in the amount of  $33,296, (ii) a reduction in
        general and administrative in the amount of $620,571, (iii) a reduction in
        research and development in the amount of  $72,114, and (iv) a
        reduction of depreciation expense in the amount of  $101,539,
        resulting in a reduction of the reported net loss  in the amount
        of  $827,520,
 
 There
        is
        a “restated” notation in the attached financial statements, wherever there has
        been a restatement from the previously filed financial statements.
 
 The
        Notes
        to the consolidated financial statements have been restated to reflect, and
        Note
        2 has been added to describe, the restatement changes in the restated
        consolidated balance sheet, restated consolidated statement of operations
        and
        restated consolidated statements of cash flows.  A pro forma
        presentation has been added to the consolidated statement of operations to
        show
        the summary effect of the above changes to the reported net loss.
 
 In
        addition to the above restatements, immaterial corrections and changes to
        certain summations and presentations have been made or line items renamed
        for a
        more informative presentation.  These corrections and renaming changes
        did not have an impact on previously reported financial position, cash flow,
        or
        results of operations.
 
 Item
        2: Management’s Discussion and Analysis of Financial Condition and Results of
        Operations
 
 No
        Changes
 
 Item
        3: Controls and Procedures
 
 No
        Changes
 
 2
  **Part
        II Other Information**
 
 No
        Changes
 
 Except
        as
        described above, this Amendment does not include any other revisions to the
        original Quarterly Report and, accordingly, does not include any other updated
        information about changes in events, estimates or other developments subsequent
        to the filing date of the original Quarterly Report.
   3
 **PART
        I - FINANCIAL INFORMATION**
 
 **Item
        1. Unaudited Condensed Consolidated Financial Statements**
 
 **PUREDEPTH,
        INC. AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED BALANCE SHEET**
 **(unaudited)**
 
 **October
                  31,**
                **2006**
                **(Restated)****Unaudited****ASSETS**Current
                  assets:Cash
                  and cash equivalents
              
              $
              9,877,476Restricted
                  cash
              
              
              60,298Accounts
                  receivable
              
              
              52,700Prepaid
                  expenses
              
              
              209,056**Total
                  current assets**
              
              
              **10,199,530****Property
                  & Equipment (net) (restated)**
              
              
              **395,588**Other
                  Assets:Intellectual
                  property (net)
              
              
              2,561,630Other
                  assets held for sale
              
              
              796**Total
                  other assets**
              
              
              **2,562,426****Total
                  assets (restated)**
              
              **$**
              **13,157,544****LIABILITIES
                  AND STOCKHOLDERS' EQUITY**Current
                  liabilities:Current
                  portion - notes payable
              
              $
              108,661Accrued
                  interest
              
              
              60,811Accounts
                  payable
              
              
              201,690Accrued
                  expenses
              
              
              310,886Accrued
                  payroll
              
              
              97,283Deferred
                  revenue
              
              
              750,000**Total
                  current liabilities**
              
              
              **1,529,331**Note
                  payable
              
              
              554,726Deferred
                  revenue - non-current portion
              
              
              2,971,154**Total
                  liabilities**
              
              
              **5,055,211**Commitments
                & Contingencies
              
              
              -**Stockholders'
                  equity:**Preferred
                  stock, $0.001 par value,   10,000,000 shares authorized, no
                  shares outstandingCommon
                  stock, $0.001 par value, 190,000,000 shares authorized, 65,681,099
                  shares
                  issued and outstanding
              
              
              65,681Additional
                  paid-in-capital (restated)
              
              
              31,626,603Accumulated
                  deficit (restated)
              
              
              (22,879,050
              )Accumulated
                  other comprehensive loss
              
              
              (710,901
              )**Total
                  stockholders' equity (restated)**
              
              
              **8,102,333****Total
                  liabilities and stockholders' equity (restated)**
              
              **$**
              **13,157,544**
  The
        accompanying notes are an integral part of these unaudited financial
        statements
 4
 **PUREDEPTH,
        INC. AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF OPERATIONS and COMPREHENSIVE
        (LOSS)**
 **(Unaudited)**
  **Three
                  Months
                  Ended**
                **October
                  31,**
              
              
              **Nine
                  Months
                  Ended**
                **October
                  31,****2006**
                **(Restated)**
              
              
              **2005**
              
              
              **2006**
                **(Restated)**
              
              
              **2005**Net
                  sales
              
              $
              81,496
              
              
              $
              -
              
              
              $
              81,496
              
              
              $
              -Cost
                  of goods sold
              
              
              55,178
              
              
              
              -
              
              
              
              55,178
              
              
              
              -Gross
                  profit
              
              
              26,318
              
              
              
              -
              
              
              
              26,318
              
              
              
              -**Operating
                  expenses**Depreciation
                  and amortization (restated)
              
              
              83,542
              
              
              
              83,782
              
              
              
              236,551
              
              
              
              286,526Sales
                  and marketing (restated)
              
              
              484,863
              
              
              
              196,856
              
              
              
              1,480,112
              
              
              
              550,337Professional
                  fees
              
              
              184,124
              
              
              
              22,582
              
              
              
              559,668
              
              
              
              154,105Loss
                  on fixed asset disposal
              
              
              18,092
              
              
              
              -
              
              
              
              18,092
              
              
              
              5,444General
                  and administrative (restated)
              
              
              1,494,147
              
              
              
              843,197
              
              
              
              4,114,210
              
              
              
              1,771,924Research
                  and development (restated)
              
              
              306,642
              
              
              
              367,100
              
              
              
              1,855,291
              
              
              
              1,255,658**Total
                  operating expenses (restated)**
              
              ****
              **2,571,410**
              
              
              ****
              **1,513,517**
              
              
              ****
              **8,263,924**
              
              
              ****
              **4,023,994****Operating
                  loss (restated)**
              
              ****
              **(2,545,092**
              **)**
              
              ****
              **(1,513,517**
              **)**
              
              ****
              **(8,237,606**
              **)**
              
              ****
              **(4,023,994**
              **)****Other
                  income (expense)**Interest,
                  net
              
              
              59,827
              
              
              
              (51,759
              )
              
              
              69,901
              
              
              
              (101,644
              )Grant
                  receipts
              
              
              -
              
              
              
              -
              
              
              
              1,850
              
              
              
              7,324Foreign
                  exchange gain (loss)
              
              
              (14,305
              )
              
              
              (7,850
              )
              
              
              34,922
              
              
              
              72,051Other
                  income
              
              
              2,039
              
              
              
              66,654
              
              
              
              86,269
              
              
              
              157,450**Total
                  other net income (loss)**
              
              ****
              **47,561**
              
              
              ****
              **7,045**
              
              
              ****
              **192,942**
              
              
              ****
              **135,181****Loss
                  before income tax (restated)**
              
              ****
              **(2,497,531**
              **)**
              
              ****
              **(1,506,472**
              **)**
              
              ****
              **(8,044,664**
              **)**
              
              ****
              **(3,888,813**
              **)**Income
                  tax provision
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -**Loss
                  from continuing operations (restated)**
              
              ****
              **(2,497,531**
              **)**
              
              ****
              **(1,506,472**
              **)**
              
              ****
              **(8,044,664**
              **)**
              
              ****
              **(3,888,813**
              **)**Income
                  (loss) from discontinued operations, net of income tax
              
              
              
              
              
              
              -
              
              
              
              15,279
              
              
              
              -**Net loss
                  (restated)**
              
              **$**
              **(2,497,531**
              **)**
              
              **$**
              **(1,506,472**
              **)**
              
              **$**
              **(8,029,385**
              **)**
              
              **$**
              **(3,888,813**
              **)**Other
                  comprehensive income gain/lossNet
                  loss per statement of operations (restated)
              
              $
              (2,497,531
              )
              
              $
              (1,506,472
              )
              
              $
              (8,029,385
              )
              
              $
              (3,888,813
              )Foreign
                  currency gain (loss) adjustments
              
              
              -
              
              
              
              
              
              
              
              33,132
              
              
              
              (138,206
              )Total
                  comprehensive loss (restated)
              
              $
              (2,497,531
              )
              
              $
              (1,506,472
              )
              
              $
              (7,996,253
              )
              
              $
              (4,027,019
              )**Pro
                  forma Information for restatement:**Net
                  loss as previously reported
              
              $
              (2,652,825
              )
              
              
              
              
              
              $
              (8,856,905
              )Adjustment
                  in stock based compensation
              
              
              124,087
              
              
              
              
              
              
              
              725,981Adjustment
                  in depreciation expense
              
              
              31,207
              
              
              
              
              
              
              
              101,539Net
                  loss, (restated)
              
              $
              (2,497,531
              )
              
              
              
              
              
              $
              (8,029,385
              )
 
 The
        accompanying notes are an integral part of these unaudited financial
        statements
 5
 
 **PUREDEPTH,
        INC. AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF OPERATIONS and COMPREHENSIVE
        (LOSS)**
 **(Unaudited)**
 
 **Three
                  Months
                  Ended**
                **October
                  31,**
              
              
              **Nine
                  Months
                  Ended**
                **October
                  31,****2006**
                **(Restated)**
              
              
              **2005**
              
              
              **2006**
                **(Restated)**
              
              
              **2005****Basic
                  and diluted loss per share**Loss
                  from continuing operations (restated)
              
              $
              (0.04
              )
              
              $
              (0.06
              )
              
              $
              (0.14
              )
              
              $
              (0.14
              )Net loss
                  (restated)
              
              $
              (0.04
              )
              
              $
              (0.06
              )
              
              $
              (0.14
              )
              
              $
              (0.14
              )Weighted
                  average shares outstanding basic & diluted
              
              
              57,261,454
              
              
              
              27,177,371
              
              
              
              57,182,066
              
              
              
              27,089,894
 
 The
        accompanying notes are an integral part of these unaudited financial
        statements
 
 6
 **PUREDEPTH,
        INC. AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF CASH FLOWS**
 **(Unaudited)**
 **Nine
                  months ended October 31,****2006**
                **(Restated)**
              
              
              **2005****Cash
                  flows from operating activities:**Net loss
              
              $
              (8,029,385
              )
              
              $
              (3,888,813
              )Adjustments
                  to reconcile net loss to net cash provided byoperating
                  activities:Depreciation
                  and amortization
              
              
              236,551
              
              
              
              286,526Stock-based
                  compensation expense
              
              
              3,368,809
              
              
              
              1,209,618Non-cash
                  interest expense
              
              
              -
              
              
              
              68,978Loss
                  on disposal of fixed assets
              
              
              18,092
              
              
              
              5,444Foreign
                  exchange (gain)
              
              
              (34,922
              )
              
              
              (72,051
              )Changes
                  in operating assets and liabilities:(Increase)
                  decrease in accounts receivable, trade
              
              
              19,295
              
              
              
              (54,642
              )(Increase)
                  in prepayments
              
              
              (155,572
              )
              
              
              (241,680
              )Increase (decrease)
                  in accounts payable
              
              
              (90,686
              )
              
              
              393,271Increase
                  in deferred revenue
              
              
              3,721,154
              
              
              
              -Increase
                  (decrease) in payable in accrued expenses
              
              
              323,399
              
              
              
              (75,165
              )Increase in
                  accrued interest
              
              
              55,674
              
              
              
              1,546**Net
                  cash used in operating activities**
              
              ****
              **(567,591**
              **)**
              
              ****
              **(2,366,968**
              **)****Cash
                  flows from investing activities:**Payments
                  for purchases of fixed assets
              
              
              (270,613
              )
              
              
              (178,352
              )Expenditures
                  - intellectual property
              
              
              (223,260
              )
              
              
              (222,581
              )**Net
                  cash used in investing activities**
              
              ****
              **(493,873**
              **)**
              
              ****
              **(400,933**
              **)****Cash
                  flows from financing activities:**Proceeds
                  from issuance of common stock, net
              
              
              10,123,845Proceeds
                  from short-term borrowing
              
              
              -
              
              
              
              65,873Increase (decrease)
                  in short-term borrowings
              
              
              (29,585
              )
              
              
              -Issuance
                  of related party note payable
              
              
              -
              
              
              
              2,555,377Stock
                  subscriptions received
              
              
              -
              
              
              
              307,490**Net
                  cash provided by financing activities**
              
              ****
              **10,094,260**
              
              
              ****
              **2,928,740**Effect
                  of exchange rate changes on cash and cash equivalents
              
              
              46,980
              
              
              
              76,727**Net
                  increase in cash and cash equivalents**
              
              ****
              **9,079,776**
              
              
              ****
              **237,566**Cash
                  and cash equivalents at beginning of period
              
              
              857,998
              
              
              
              114,817**Cash
                  and cash equivalents at end of period**
              
              **$**
              **9,937,774**
              
              
              **$**
              **352,383****Supplemental
                  cash information:**Notes
                  and accrued interest converted to stock
              
              $
              774,330
              
              
              $
              4,824,890Cash
                  paid for interest
              
              $
              19,215
              
              
              $
              801Cash
                  paid for income taxes
              
              $
              -
              
              
              $
              -Warrants
                  issued for stock issuance costs (restated)
              
              $
              1,840,779
              
              
              $
              -
 
 The
        accompanying notes are an integral part of these unaudited financial
        statements
 7
 **PUREDEPTH,
        INC. AND SUBSIDIARIES**
 **NOTES
        TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
        STATEMENTS**
 
 **Note
        1 - Basis of Presentation**
 
 The
        accompanying unaudited financial statements of PureDepth, Inc. (“the Company")
        are presented in accordance with the requirements for Form 10-QSB and Article
        10
        of Regulation S-X and Regulation S-B. Accordingly, they do not include all
        of
        the disclosures required by generally accepted accounting principles in the
        United States of America. In the opinion of management, all adjustments (all
        of
        which were of a normal recurring nature) considered necessary to fairly present
        the financial position, results of operations, and cash flows of the Company
        on
        a consistent basis, have been made.
 
 These
        results have been determined on the basis of generally accepted accounting
        principles and practices applied consistently with those used in the preparation
        of the Company's Annual Financial Statements for the ten months ended January
        31, 2006 and year ended March 31, 2005. Operating results for the nine months
        ended October 31, 2006 are not necessarily indicative of the results that
        may be
        expected for the fiscal year ending January 31, 2007.
 
 The
        accompanying condensed consolidated financial statements for the interim
        period
        should be read in conjunction with the Company’s audited consolidated financial
        statements and notes thereto for the year ended January 31, 2007 included
        in the
        Company’s Annual Report on Form 10-KSB filed with the Commission on May 31,
        2007.  Those statements contain a summary of significant accounting
        policies.
 
 Certain
        amounts in the prior periods have been reclassified to conform to the current
        presentation.
 
 **Note
        2 – Restatement**
 
 The
        Company’s management concluded after reviewing the computations related to stock
        based compensation and the activity related to fixed asset depreciation,
        that it
        needed to restate its previously filed Forms 10-QSB for the nine months ended
        October 31, 2006 to correct the Company’s computations of stock based
        compensation and to correct depreciation expense.
  The
        consolidated balance sheets at October 31, 2006 will be corrected by increasing
        net property and equipment by $101,539 for the depreciation correction, reducing
        accumulated deficit by $827,520 for the cumulative net loss adjustment and
        reducing additional paid in capital by $725,981 for the stock based compensation
        correction resulting in net increases in total assets and stockholders’ equity
        of $101,539.
  The
        consolidated statements of operations for the three months ended, and nine
        months ended October 31, 2006 will be corrected by reducing total operating
        expenses by $31,207 and $101,539 respectively for depreciation expense and
        $124,087 and $725,981 respectively for stock based compensation expense,
        resulting in a restated net loss of $2,497,531 and $8,029,385,
        respectively.
  The
        restatement resulted in a decrease in the loss per share from $(0.05) to
        $(0.04)
        per share for the three months ended October 31, 2006 and no change in the
        loss
        per share for the nine months ended October 31, 2006.
  **Note
        3 -Description of Business**
 
 *The
        Company - Description of Business*
  PureDepth,
        Inc., along with our wholly owned subsidiaries, PureDepth Limited (PDL) and
        PureDepth Incorporated Limited (PDIL) develops, manufactures, markets and
        supports multi-layer display technology. We believe our technology has gaming,
        military, automotive and handheld video display applications.
 
 Prior
        to
        our entry into a significant licensing revenue contract during the quarter
        ended
        October 31, 2006, we were considered a development stage enterprise and reported
        our financial information in accordance with Statement of Financial Accounting
        Standards (SFAS) No. 7 *Accounting and Reporting by Development Stage
        Enterprises.* The contract resulted in the Company no longer being
        considered development stage under SFAS No. 7.
 
 8
 **Note
        4 - Merger**
 
 On
        March
        31, 2006 and pursuant to an Agreement and Plan of Merger and Reorganization
        dated March 16, 2006, PureDepth, Inc., a California corporation (PDI-CA)
        entered
        into a merger with PureDepth Technologies, Inc., a Delaware corporation and
        wholly owned subsidiary of Diamond One, Inc., a Colorado corporation quoted
        on
        the OTC Bulletin Board. As a result of the merger, PureDepth Technologies,
        Inc.
        succeeded to the business of PDI-CA, and survived as a wholly owned operating
        subsidiary of Diamond One, Inc. The merger was effected by the filing of
        a
        certificate of merger with the Delaware Secretary of State on March 31,
        2006.
  At
        the effective time of the merger,
        the legal existence of the PDI-CA ceased and all of the 23,311,855 shares
        of the
        PDI-CA’s common stock that were outstanding immediately prior to the merger were
        cancelled. Simultaneously, PDI-CA’s former stockholders received an aggregate of
        233,118.55 shares of Diamond One, Inc’s Series A Preferred Stock, representing
        approximately 89% of the registrant’s outstanding voting power after the merger.
        In addition, all securities convertible into and exercisable for shares of
        the
        PDI-CA’s common stock (e.g. options and warrants) that were outstanding
        immediately prior to the merger were cancelled, and their holders received
        similar securities for the purchase of Diamond One, Inc. common
        stock.
 
 Prior
        to
        the merger and pursuant to authority granted to it by the registrant’s articles
        of incorporation, as amended, Diamond One, Inc’s board of directors approved and
        adopted a Certificate of Designation relating to a new class of preferred
        stock
        denominated Series A Preferred Stock.**On May 10, 2006 all
        outstanding shares of Series A Preferred Stock automatically converted into
        shares of common stock on a 229.021-for-1 basis upon the effectiveness of
        an
        additional amendment to Diamond One, Inc’s articles of incorporation which
        increased the number of shares of authorized common stock.  In total,
        former holders of PDI-CA securities now hold approximately 93% of the
        outstanding common stock of Diamond One, Inc. on a fully diluted
        basis.
 
 The
        merger represented a change in control of Diamond One, Inc. as greater than
        50%
        of the issued and outstanding voting stock of the registrant on a post-merger
        basis is now held by the former holders of PDI common stock. In addition,
        and
        simultaneously with the effectiveness of the merger, the board of directors
        of
        Diamond One, Inc. was reconstituted by the appointment of Messrs. David Hancock,
        Fred Angelopoulos and Mark Kalow to its Board of Directors, and the resignation
        of Messrs. Troy Fullmer and Robert Chramosta.  Messrs. Fullmer and
        Chramosta also resigned their positions as officers. In their place, Fred
        Angelopoulos was appointed as its Chief Executive Officer and President,
        and
        Kristin Bowman was appointed as Chief Operating Officer, Secretary and acting
        Chief Financial Officer.   All prior operations of Diamond One,
        Inc. were divested to the former directors of that company.
 
 On
        May 8,
        2006 the name of PureDepth Technologies, Inc., the surviving reincorporation
        merger entity, was changed to PureDepth, Inc. On May 30, 2006, PureDepth,
        Inc.
        (f/k/a Diamond One, Inc.) consummated a short-form merger with a wholly owned
        Delaware subsidiary, pursuant to which it reincorporated in the State of
        Deleware. After the reincorporation, the Company’s name remains “PureDepth,
        Inc.”.
 
 For
        a
        full description of the merger transaction refer to the Form 8-K and Form
        8-K/A
        filed with the Securities and Exchange Commission on April 6, 2006 and June
        16,
        2006, respectively.
 
 The
        merger was accounted for as a reverse acquisition in accordance with SFAS
        No.
        141 *Business Combinations in which*PDI was identified as the acquiring
        entity and Diamond One, Inc was identified as the acquired
        entity.  Any remaining identifiable assets and liabilities of Diamond
        One, Inc. were assigned fair values at the acquisition date. No goodwill
        was
        recognized.  The assets of the Company were incorporated into the
        group financial statements at their pre-merger carrying values at the date
        of
        the business combination.  Comparative financial information for
        periods prior to the merger is presented for the former PDI entity.
 
 9
 The
        following is pro-forma results of operations as if the transaction had occurred
        at the beginning of each period presented:
  Nine months
                  ended October 31,2006
                (Restated)
              
              
              2005Net
                  Sales
              
              $
              81,496
              
              
              $
              --Operating
                  loss
              
              
              (8,237,606
              )
              
              
              (4,023,994
              )Other
                  income (expense)
              
              
              192,942
              
              
              
              135,181Income/(loss)
                  from discontinued operations
              
              
              15,279
              
              
              
              (45,447
              )Pro-forma
                  net loss
              
              
              (8,029,385
              )
              
              
              (3,934,260
              )Pro-forma
                  net loss per share * (restated)
              
              $
              (0.14
              )
              
              $
              (0.12
              )Pro-forma
                  weighted average shares outstanding
              
              
              57,182,066
              
              
              
              32,345,294
  *
              Pro-forma
                  net loss per share is computed as if all preferred shares are converted
                  as
                  of the beginning of the period.
  **Note
        5 – Discontinued Operations**
 
 *Divestiture
        of Former Business*
 
 Prior
        to
        the merger, Diamond One, Inc. had assigned all of its assets and liabilities,
        specifically including the coin and exchange business owned and operated
        by
        Diamond One, Inc., to Numismatic Capital Group. As part of the merger agreement
        on May 9, 2006, the former officers of Diamond One, Inc. exercised an option
        to
        acquire Numismatic Capital Group at the net book value.  The Company
        recorded income from operations of the discontinued coin and exchange operation
        of $15,279 for the nine months ended October 31, 2006.
 
 **Note
        6 - Stockholder’s Equity**
 
 On
        February 23, 2006, in connection with a private placement offering, the Company
        issued common stock and warrants to its majority shareholder, K1W1, in exchange
        for the forgiveness of debt totaling $774,330.  In this transaction
        the Company issued 772,286 shares of common stock, 386,143 three-year A-warrants
        to purchase 386,143 shares of common stock at an exercise price of $2.75
        per
        share and 386,143 one-year B-warrants to purchase 386,143 shares of common
        stock
        at an exercise price of $2.00 per share.
 
 On
        March
        1, 2006, in a private placement offering, the Company issued common stock
        and
        warrants for cash of totaling $4,264,480 net of issuance costs of
        $3,021,299.  Also included in the transaction is the issuance of
        350,000 shares of subscribed capital received in January 2006.  In
        this offering the Company issued 5,795,000 shares of common
        stock,  three-year A-warrants to purchase 2,897,500 shares of common
        stock at an exercise price of $2.75 per share and one-year B-warrants to
        purchase 2,897,500 shares of common stock at an exercise price of $2.00 per
        share. In connection to the private placement and included in the issuance
        costs
        the Company also issued three-year C-warrants (adjusted to reflect the March
        31,
        2006 merger transaction) to purchase 1,082,811 shares of common stock at
        an
        exercise price of $0.44 per share in the amount of $1,840,779 for services
        related to the private placement.
 
 On
        March
        31, 2006 the Company issued 31,800 shares of common stock pursuant to the
        exercise of common stock options for a former employee at an exercise price
        of
        $0.65 per share for cash totaling $20,670.
 
 On
        March
        31, 2006, the effective date of the merger, the Company converted 23,311,855
        shares of the Company’s common stock that were outstanding immediately prior to
        the merger to an aggregate of 233,118.55 shares of Series A Preferred Stock
        at a
        one-for-hundred   ratio.
 
 On
        March,
        31, 2006 the Company issued 6,255,400 shares of common stock in exchange
        for the
        6,255,400 shares of the common stock of Diamond One, Inc. surrendered at
        the
        time of the merger.
 
 10
 On
        May 9,
        2006 the Company converted all 233,118.55 shares of the Series A Preferred
        Stock
        issued in the acquisition of Diamond One into an aggregate of 53,389,045
        shares
        of common stock at a 229.01-for-one ratio.  The conversion was
        effected pursuant to the terms of the Certificate of Designation for the
        registrant’s Series A Preferred Stock, which provided that all outstanding
        preferred shares of that series would automatically convert upon an increase
        in
        the number of shares of common stock authorized for issuance under the
        registrant’s articles of incorporation.  Pursuant to the merger,
        warrants were automatically converted and their respective post merger exercise
        prices became $1.20 for A-warrants and $0.87 for B-warrants.
 
 On
        May 9,
        2006 pursuant to the exercise of an Option Agreement held by the Company,
        dated
        March 16, 2006, the Company transferred all of the outstanding membership
        interests in its wholly owned subsidiary, Numismatic Capital Group, LLC to
        Messrs. Charmosta and Fullmer, the former officers of Diamond One, Inc.,
        in
        exchange for 1,000,000 shares of our common stock held by them.  The
        transaction was accounted for at the net book value of the assets transferred
        with no gain or loss recognized. The Company subsequently cancelled these
        shares.
 
 On
        July
        11, 2006 the Company accepted an in-process stock subscription relating to
        the
        March 2006 private placement and issued common stock and warrants for cash
        totaling $50,000.  In this offering, the Company issued 114,510 shares
        of common stock, three-year A-warrants to purchase 57,255 shares of common
        stock
        at an exercise price of $1.20 per share and one-year B-warrants to purchase
        57,255 shares of common stock at an exercise price of $0.87 per
        share.
 
 On
        July
        31, 2006 in a private placement transaction with existing investors who were
        holders of B-warrants, the Company exercised B-warrants and issued common
        stock
        and warrants for cash totaling $5,860,717, net of issuance costs.  In
        this transaction, the B-warrant holders exercised their B-warrant for $0.87
        in
        exchange for a share of common stock and one three-year
        D-warrant.  The Company issued 6,716,044 shares of common stock and
        three-year D-warrants to purchase 6,716,044 shares of common stock at an
        exercise price of $1.20 per share.
 
 On
        September 6, 2006 the Company  issued D-warrants to purchase 344,000
        shares of common stock at an exercise price of $1.20 per share for professional
        services valued at $675,960.
 
 In
        September 2006 the Company issued 206,100 shares of common stock pursuant
        to the
        exercise of stock options for cash totaling $58,035 at an exercise price
        of
        $0.28 per share.
 
 **Note
        7 - Stock Option Plan**
 
 Prior
        to
        the merger, and effective March 31, 2006, the Board of Directors of PureDepth,
        Inc. approved and authorized an amendment and restatement of its Second Amended
        and Restated Executive Share Option Plan No. 3 (the “Prior Plan”) into the 2006
        Stock Incentive Plan (the “Plan”) and entered into agreements with each of the
        existing option holders whereby such option holders agreed that the Plan
        would
        thereafter govern their respective options. The amendment had no effect upon
        the
        number of options or the strike prices.
 
 As
        a
        result of the merger, all unvested stock options issued under the Plan vested
        upon the effective date of the merger, March 31, 2006. The option shares
        are not
        currently registered under Form S-8 but, when registered, they would be
        available for sale into the market.
  Options
        issued under the Company’s Prior Plan, except those issued to David Hancock and
        Keith Phillips, carried certain anti-dilution rights with respect of company
        securities issued prior to the merger transaction. Upon closing of the private
        placement offering of PureDepth, Inc. on March 1, 2006, further options were
        deemed to be issued to various holders under the Plan holding anti-dilution
        rights with subsequent vesting of those options occurring under the accelerated
        vesting provisions on the reverse acquisition date, being March 31, 2006.
        These
        anti-dilution rights terminated at the effective time of the merger, and
        were
        not carried forward under the Plan.
  11
 A
        summary
        of option activity under the Plan as of October 31, 2006 is presented
        below:
  **Options**
              
              **Shares**
              
              
              **Weighted-**
                **Average**
                **Exercise**
                **Price**Outstanding
                  at beginning of period
              
              
              12,450,570
              
              
              $
              0.29Granted
              
              
              955,200
              
              
              $
              3.04Exercised
              
              
              (206,100
              )
              
              $
              0.28Forfeited
                  or expired
              
              
              (385,994
              )
              
              $
              0.28Outstanding
                  at October 31, 2006
              
              
              12,813,676
              
              
              $
              0.56Exercisable
                  at October 31, 2006
              
              
              11,858,476
              
              
              $
              0.28
  The
        following table summarizes significant ranges of outstanding and exercisable
        options as of October 31, 2006:
 
 **Stock
                  Options Outstanding**
              
              
              **Stock
                  Options Exercisable****Range
                  of Exercise Price**
              
              
              **Number**
                **Outstanding**
              
              
              **Weighted**
                **Average**
                **Remaining**
                **Contractual**
                **Life
                  (In Years)**
              
              
              **Weighted**
                **Average**
                **Exercise**
                **Price
                  per**
                **Share**
              
              
              **Aggregate**
                **Intrinsic**
                **Value
                  ($000)**
              
              
              **Number**
                **Exercisable**
              
              
              **Weighted**
                **Average**
                **Exercise**
                **Price
                  per**
                **Share**
              
              
              **Aggregate**
                **Intrinsic**
                **Value
                  ($000)**$0.28
                  - $0.44
              
              
              
              11,858,476
              
              
              
              5.9
              
              
              
              $0.28
              
              
              
              $37,080
              
              
              
              11,858,476
              
              
              
              $0.28
              
              
              
              $37,080$2.07
                  - $2.95
              
              
              
              346,800
              
              
              
              6.8
              
              
              
              $2.51
              
              
              
              312
              
              
              
              0
              
              
              
              -
              
              
              
              -$3.03
                  - $3.41
              
              
              
              608,400
              
              
              
              7.0
              
              
              
              $3.33
              
              
              
              49
              
              
              
              0
              
              
              
              -
              
              
              
              -Total
              
              
              
              12,813,676
              
              
              
              6.0
              
              
              
              $0.52
              
              
              
              $37,441
              
              
              
              11,858,476
              
              
              
              $0.28
              
              
              
              $37,080
 
 The
        aggregate intrinsic value in the preceding table represents the total pretax
        intrinsic value based on the Company’s closing stock price of $3.41 as of
        October 31, 2006.
 
 *Stock
        Compensation*
  We
        currently use the Black-Scholes option pricing model to determine the fair
        value
        of stock options. The determination of the fair value of stock-based payment
        awards on the date of grant using an option-pricing model is affected by
        our
        stock price as well as assumptions regarding a number of complex and subjective
        variables. These variables include our expected stock price volatility over
        the
        term of the awards, actual and projected employee stock option exercise
        behaviors, risk-free interest rate and expected dividends.
  We
        estimate the volatility of our common stock by using our limited historical
        data
        and similar entities.  We base the risk-free interest rate that we use
        in the option valuation model on U.S. Treasury issues with remaining terms
        similar to the expected term on the options. We do not anticipate paying
        any
        cash dividends in the foreseeable future and therefore use an expected dividend
        yield of zero in the option valuation model. We are required to estimate
        forfeitures at the time of grant and revise those estimates in subsequent
        periods if actual forfeitures differ from those estimates. All stock-based
        payment awards are amortized on a straight-line basis over the requisite
        service
        periods of the awards, which are generally the vesting periods. To determine
        the
        expected term of out employee awards granted we utilized the simplified approach
        as defined by SEC Staff Accounting Bulletin No. 107, Share-Based Payment
        (SAB107).
  12
 **Note
        8 - Income Taxes**
 
 For
        the
        three months and nine months ended October 31, 2006, we incurred operating
        losses of approximately $2.5 million and $8.0 million, respectively, and
        accordingly we made no provision for income taxes has been recorded. In
        addition, we recorded no benefit for income taxes due to the uncertainty
        of the
        realization of any tax assets.
 
 At
        January 31, 2006, PureDepth, Inc. (California) had both a federal and state
        net
        operating loss carry-forward of $1,016,582. Further, there were foreign net
        operating loss carry-forwards of $3,102,917 in respect of PureDepth, Inc’s.
        foreign subsidiaries.
 
 In
        addition, at January 31, 2006, Diamond One, Inc. reported approximately $43,000
        of federal and state net operating losses, but has not assessed the current
        status of net operating loss carry-forwards following
        reorganization.
 
 Net
        operating loss carry-forwards, if not utilized, will begin to expire within
        twenty years for federal purposes and within ten years for California purposes.
        The foreign net operating tax loss carry-forward can be carried forward
        indefinitely unless a change in ultimate control of the loss companies
        results.
 
 For
        financial reporting purposes, we have incurred a loss in each period since
        its
        inception. Based on the available objective evidence, including the history
        of
        losses, management believes it is currently more likely than not that the
        net
        deferred tax assets will not be fully realizable. Accordingly, we provided
        a
        full valuation allowance against its net deferred tax assets.
 
 **Note
        9 - Related Parties**
 
 On
        February 23, 2006, in connection with a private placement offering, the Company
        issued common stock and warrants to its majority shareholder, K1W1, in exchange
        for the forgiveness of debt totaling $774,330.  In this transaction
        the Company issued 772,286 shares of common stock, 386,143 three-year A-warrants
        to purchase 386,143 shares of common stock at an exercise price of $2.75
        per
        share and 386,143 one-year B-warrants to purchase 386,143 shares of common
        stock
        at an exercise price of $2.00 per share.
 
 On
        March
        31, 2006 the Company issued options to purchase 232,932 shares of common
        stock
        at an exercise price of $0.44 to Mark Kalow pursuant to his agreement to
        serve
        as a director.
 
 On
        May 9,
        2006 pursuant to the exercise of an Option Agreement held by the Company,
        dated
        March 16, 2006, the Company transferred all of the outstanding membership
        interests in its wholly owned subsidiary, Numismatic Capital Group, LLC to
        Messrs. Charmosta and Fullmer, the former officers of Diamond One, Inc.,
        in
        exchange for 1,000,000 shares of our common stock held by them.  The
        transaction was accounted for at the net book value of the assets transferred
        with no gain or loss recognized. The Company subsequently cancelled these
        shares.
 
 On
        August
        4, 2006, the Board of Directors of PureDepth, Inc. issued Robert O’Callahan,
        Chief Financial Officer, and Mark Kalow, Director, each the first tranche
        of a
        stock option to purchase shares of PureDepth common stock. The total stock
        options involved represent 500,000 and 167,067 shares for Messrs. O’Callahan and
        Kalow, respectively. The option grants have an exercise price of market price
        as
        of grant date per share and are otherwise subject to the PureDepth, Inc.
        stock
        option plan. The grant issuance will occur in five tranches with 1/5 (or
        approximately 1/5) of the total stock options involved issuing at the closing
        price on five dates: August 4, September 5, October 5, November 6, and December
        5, 2006. Mr. Kalow did not participate in the Board action regarding his
        grants.
 
 On
        September 7, 2006 the Board of Directors appointed Mr. John Floisand and
        Mr.
        Thomas L. Marcus as directors to fill vacancies on the Board. Each of Mr.
        Floisand and Mr. Marcus will receive an annual fee of $20,000 as director
        payable in semi-annual installments and at the beginning of each semi annual
        period. The Board granted each director an option (the “Initial Option”) to
        purchase an aggregate of 100,000 shares of the Company’s common stock pursuant
        to the Company’s 2006 Stock Incentive Plan ("Plan"). The Initial Option will be
        issued in five equal tranches of 20,000 shares on the following dates: September
        7, October 5, November 6, December 5 and January 5.
 
 13
 
 **Note
        10 – Revenue Recognition**
 
 In
        October 2006, we entered into a contract licensing our technology to IGT
        exclusively for certain markets. A minimum fee was paid and further license
        fees
        will be paid once a minimum threshold is exceeded.
 
 *Revenue
        Recognition*
  Revenue
        is derived from licensing sales.  Licensing revenues are primarily
        royalties paid by licensees related to use of intellectual property which
        include technical transfer, implementation and integration of both hardware
        and
        software solutions, post contract support, training, and
        consulting.
 
 Revenues
        are recognized on licensing (royalties) transactions using the criteria in
        Staff
        Accounting Bulletin 104, *Revenue Recognition* (SAB 104).  For
        revenue transactions that involve software or software related products,
        we
        recognize revenue under the guidance established by Statement of Position
        No.
        97-2, *Software Revenue Recognition* (SOP 97-2).  Both SAB 104
        and SOP 97-2 state that revenue must be recognized when persuasive evidence
        of
        an arrangement exists, delivery of the product or performance of the service
        has
        occurred, no significant company obligations with regard to implementation
        or
        integration exist, the fee is fixed or determinable and collectibility is
        reasonably assured.  Arrangements for which the fees are not deemed
        reasonably assured for collection are recognized upon cash
        collection.
 
 Royalties
        derived from the licensing of intellectual property are recognized when all
        revenue recognition criteria have been met.
 
 Deferred
        revenue represents payments from customers of non-refundable licensing fees
        that
        are ultimately expected to be recognized as revenue, but for which not all
        revenue recognition criteria have been met.  As the revenue
        recognition criteria is met, deferred revenue is amortized in accordance
        with
        the terms of the license agreement on the greater of the straight line basis
        over the life of the agreement or the units of production method.
 
 **Note
        11 – Major Customer**
  One
          customer accounted for 100% of the Company’s licensing revenues during the three
          and nine months ended October 31, 2006. The same customer accounted for
          the
          entire ending balance of deferred revenue at October 31,
          2006.
 
 **Note
        12 - Restricted Cash**
  Restricted
        cash at October 31, 2006 represents time deposits held at financial institutions
        as collateral for our potential use of credit limits on credit cards
        issued.
 
 14
  **SIGNATURES**
 
 In
        accordance with the requirements of the Exchange Act of 1934, the registrant
        caused this report to be signed on its behalf by the undersigned, thereunto
        duly
        authorized.
  PUREDEPTH,
                  INC.Date: September
                  12, 2007
              By:
              /s/ Thomas
                  L. MarcusThomas
                  L. Marcus
                *Interim
                  Chief Executive Officer*
 
 By:
              /s/ Jonathan
                  J. McCamanJonathan
                  J. McCaman
                  *Chief
                    Financial Officer and*
                  *Chief
                    Accounting
                    Officer*
 
 
 
 
 **Index
        to Exhibits Filed with this Report**
 
 Exhibit
                  No.
              Description31.1
              Certification
                  of Chief Executive Officer31.2
              Certification
                  of Chief Financial Officer32.1
              Certifications
                    of Chief Executive Officer and Chief Financial Officer pursuant
                    to Section
                    906 of the Sarbanes-Oxley Act of
                    2002.
   15