1052489--3/31/2006--AMERICAN_BANK_NOTE_HOLOGRAPHICS

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{property, intellectual, protect}

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Important Factors Regarding Forward-Looking Statements VISA s decision to discontinue the use of the current version of HoloMag had a material adverse effect on our results of operations and financial condition in the quarter ended December 31, 2005 and will continue to impact our results of operations and financial condition in 2006. We may be subject to claims arising from the suspension of sales of HoloMag for VISA transaction cards. We depend on sales to transaction card companies for a substantial portion of our revenue, the loss of which would have a material adverse effect on our business. We depend on sales to MasterCard for a substantial portion of our revenue, the loss of which would have a material adverse effect on our business. Our quarterly and annual operating results may fluctuate and the price of our common stock may change in response to those fluctuations. We are in a competitive, highly-fragmented industry with many companies competing to deliver a highly-specialized product, which may lead to declining sales or reduced prices for our products. If we are not able to successfully protect our intellectual property our business could be materially and adversely affected. If our products infringe on the intellectual property rights of third-parties, our business may suffer if we are sued for infringement or cannot obtain licenses to these rights on commercially acceptable terms. We depend on third-party suppliers and subcontractors for some key products and processes, and we may not be able to find alternative sources in a timely manner if those suppliers or subcontractors fail to supply us. Our common stock trades on the OTC Bulletin Board, which may adversely affect the price of our common stock. If we were unable to continue to attract and retain qualified employees, our business, operating results and financial condition could be materially and adversely affected. We may be subject to significant product liability in connection with the products which we provide to our customers. Since a significant percentage of our sales are derived from overseas customers, our exports and business may be subject to some risks related to doing business internationally. Our business is subject to environmental regulation and is always subject to environmental liability. The issuance of shares of our common stock upon exercise of outstanding options, together with the potential sales of such shares in the public market, could result in substantial dilution of your investment, a detrimental effect on our liquidity and ability to raise additional capital, and a significant decline in the market value of our common stock. Crane Co. Inc. has certain rights which could adversely affect the market price of our common stock. Our principal stockholders, executive officers and directors have substantial influence over all matters requiring stockholder approval, including a change of control that you might otherwise approve. Effects of anti-takeover provisions could inhibit the acquisition of ABNH.

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1052489--3/31/2006--AMERICAN_BANK_NOTE_HOLOGRAPHICS_INC