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<A HREF="#fa76301_cyoptics,_inc._consoli__fa702263">  CyOptics, Inc. Consolidated financial statements Contents</A><BR></font>
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<A HREF="#bg76301a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>As filed with the Securities and Exchange Commission on August&nbsp;12, 2011  </B></FONT></P>

<P ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B> Registration No.&nbsp;333-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </B></FONT></P>


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<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=5><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>  </B></FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Washington, D.C. 20549  </B></FONT></P>

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<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=5><B>FORM S-1<BR>  </B></FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>REGISTRATION STATEMENT<BR>
Under<BR>
The Securities Act of 1933  </B></FONT></P>

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<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=5><B>CyOptics,&nbsp;Inc.<BR>  </B></FONT><FONT  style="font-size:8pt;line-height:9pt;">(Exact name of Registrant as specified in its charter) </FONT></P>

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<TD ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Delaware</B></FONT><FONT  style="font-size:8pt;line-height:9pt;"><BR>
(State or other jurisdiction of<BR>
incorporation or organization)</FONT></TD>
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<TD ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B> 3674</B></FONT><FONT  style="font-size:8pt;line-height:9pt;"><BR>
(Primary Standard Industrial<BR>
Classification Code Number)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B> 95-4745030</B></FONT><FONT  style="font-size:8pt;line-height:9pt;"><BR>
(I.R.S. Employer<BR>
Identification Number)</FONT></TD>
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<P ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>9999 Hamilton Blvd.<BR>
Breinigsville, PA 18031<BR>
Tel: (484)&nbsp;391-2061<BR>
Fax: (484)&nbsp;397-2014</B></FONT><FONT  style="font-size:8pt;line-height:9pt;"><BR>
(Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) </FONT></P>

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<P ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Ettore J. Coringrato, Jr.<BR>
President and Chief Executive Officer<BR>
9999 Hamilton Blvd.<BR>
Breinigsville, PA 18031<BR>
Tel: (484)&nbsp;391-2061<BR>
Fax: (484)&nbsp;397-2014</B></FONT><FONT  style="font-size:8pt;line-height:9pt;"><BR>
(Name, address, including zip code, and telephone number, including area code, of agent for service) </FONT></P>

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<TD COLSPAN=3 ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Copies to:</B></FONT></TD>
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<TD ALIGN="CENTER" style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B> Caine Moss<BR>
Richard A. Kline</B></FONT><FONT  style="font-size:8pt;line-height:9pt;"><BR>
Goodwin Procter&nbsp;LLP<BR>
135 Commonwealth Drive<BR>
Menlo Park, CA 94025<BR>
Tel: (650)&nbsp;752-3100<BR>
Fax: (650)&nbsp;853-1038</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B> Jeffrey D. Saper<BR>
Robert D. Sanchez<BR>
Daniel S. Peale</B></FONT><FONT  style="font-size:8pt;line-height:9pt;"><BR>
Wilson Sonsini Goodrich&nbsp;&amp; Rosati<BR>
Professional Corporation<BR>
1700 K Street, NW, Fifth Floor<BR>
Washington, D.C. 20006<BR>
Tel: (202)&nbsp;973-8800<BR>
Fax: (202)&nbsp;973-8899<BR></FONT>
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<P ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Approximate date of commencement of proposed sale to the public:<BR>
As soon as practicable after this registration statement becomes effective.  </B></FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule&nbsp;415 under the Securities Act of 1933 check the
following box:&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT> </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">If this Form is filed to register additional securities for an offering pursuant to Rule&nbsp;462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering.&nbsp;&nbsp;&nbsp;&nbsp;<FONT
FACE="WINGDINGS">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">If this Form is a post effective amendment filed pursuant to Rule&nbsp;462(c) under the Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering.&nbsp;&nbsp;&nbsp;&nbsp;<FONT
FACE="WINGDINGS">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">If this Form is a post effective amendment filed pursuant to Rule&nbsp;462(d) under the Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering.&nbsp;&nbsp;&nbsp;&nbsp;<FONT
FACE="WINGDINGS">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>


<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the
definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule&nbsp;12b-2 of the Exchange Act. (Check one): </FONT></P>
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<TD ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Large&nbsp;accelerated&nbsp;filer&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Accelerated&nbsp;filer&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Non-accelerated&nbsp;filer&nbsp;<FONT FACE="WINGDINGS">&#253;</FONT><BR></FONT> <FONT  style="font-size:8pt;line-height:9pt;">(Do not check if a<BR>
smaller reporting company)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Smaller&nbsp;reporting&nbsp;company&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
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<P ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>CALCULATION OF REGISTRATION FEE  </B></FONT></P>

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<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:4pt;text-indent:-4pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
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<TH ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Title of each class of securities<BR>
to be registered</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Proposed maximum<BR>
aggregate offering<BR>
price(1)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Amount of<BR>
registration fee(2)</B></FONT><BR></TH>
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<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:4pt;text-indent:-4pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B> </B></FONT><FONT  style="font-size:8pt;line-height:9pt;">Common Stock, par value $0.001 per share</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$100,000,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$11,610</FONT></TD>
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<DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;">(1)</FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Estimated
solely for the purpose of calculating the registration fee in accordance with Rule&nbsp;457(o) under the Securities Act of 1933, as amended.
Includes offering price of shares that the underwriters have the option to purchase to cover over-allotments, if any.  </FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;">(2)</FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Calculated
pursuant to Rule&nbsp;457(o) under the Securities Act based on an estimate of the proposed maximum offering price. </FONT></DD></DL>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file&nbsp;a further
amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section&nbsp;8(a) of the Securities Act of 1933 or until the registration
statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section&nbsp;8(a), may determine.  </B></FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B> <div style="width:100%;border-top:solid #000000 1.0pt;padding:0in 0in 0in 0in;font-size:3.0pt;"></div>
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 </B></FONT><FONT COLOR="#B10021" SIZE=2><B>The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any
jurisdiction where the offer or sale is not permitted. </B></FONT></P>

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 </B></FONT><FONT SIZE=2><B>Prospectus</B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>SUBJECT TO COMPLETION, DATED August&nbsp;12, 2011  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=4><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares  </I></B></FONT></P>

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<IMG SRC="g991679.jpg" ALT="GRAPHIC" WIDTH="282" HEIGHT="120">
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<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=4><B><I>Common Stock  </I></B></FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>This is the initial public offering of common stock of CyOptics,&nbsp;Inc. We are
offering&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock. The estimated initial
public offering price is between $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>We
intend to apply to have our common stock listed on The NASDAQ Global Select Market under the symbol "CYOP." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B>Investing in our common stock involves risks. See "Risk factors" beginning on page&nbsp;11 of this prospectus.  </B></FONT></P>
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<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="74pt" style="font-family:arial;"></TD>
<TD WIDTH="36pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="74pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Per share </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Total </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Initial public offering price</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Underwriting discounts and commissions</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Proceeds to CyOptics (before expenses)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>We
have granted the underwriters a 30-day option to purchase up to&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;additional shares of common stock from us
on the same terms and conditions set forth above to cover
over-allotments, if any. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
underwriters expect to deliver the shares on or about&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2011. </FONT></P>
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<TD WIDTH="31%" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="31%" style="font-family:arial;"></TD>
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<TD VALIGN="BOTTOM" style="font-family:arial;"><BR><FONT SIZE=4><B> J.P. Morgan</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=4><B><BR>&nbsp;</B></FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:arial;"><BR><FONT SIZE=4>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=4><B><BR>&nbsp;</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><BR><FONT SIZE=4><B>Barclays Capital</B></FONT></TD>
</TR>
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 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><I>

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<BR></FONT></P>
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<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TD WIDTH="187pt" style="font-family:arial;"></TD>
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<TD VALIGN="BOTTOM" style="font-family:arial;"><BR><FONT SIZE=2> Oppenheimer&nbsp;&amp;&nbsp;Co.</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:arial;"><BR><FONT SIZE=2>Raymond James</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><BR><FONT SIZE=2>Roth Capital Partners</FONT></TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>Prospectus
dated&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2011 </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg76301a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="BG76301A_main_toc"></A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="bg76301_table_of_contents"> </A>
<BR></FONT><FONT SIZE=4><B>  Table of contents  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><A
NAME="BG76301_TOC"></A> </FONT></P>
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<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="30pt" style="font-family:arial;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Page</B></FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#ca76301_prospectus_summary"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Prospectus summary</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#ca76301_prospectus_summary"><FONT SIZE=2>1</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#cc76301_summary_consolidated_financial_data"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Summary consolidated financial data</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#cc76301_summary_consolidated_financial_data"><FONT SIZE=2>8</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#da76301_risk_factors"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Risk factors</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#da76301_risk_factors"><FONT SIZE=2>11</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#de76301_special_note_regarding_forward__spe02700"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Special note regarding forward-looking statements and industry
data</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#de76301_special_note_regarding_forward__spe02700"><FONT SIZE=2>33</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#de76301_use_of_proceeds"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Use of proceeds</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#de76301_use_of_proceeds"><FONT SIZE=2>34</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#de76301_dividend_policy"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Dividend policy</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#de76301_dividend_policy"><FONT SIZE=2>34</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#de76301_capitalization"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Capitalization</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#de76301_capitalization"><FONT SIZE=2>35</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#dg76301_dilution"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Dilution</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#dg76301_dilution"><FONT SIZE=2>37</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#dg76301_selected_consolidated_financial_data"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Selected consolidated financial data</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#dg76301_selected_consolidated_financial_data"><FONT SIZE=2>39</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#di76301_management_s_discussion_and_an__man03466"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Management's discussion and analysis of financial condition and results of
operations</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#di76301_management_s_discussion_and_an__man03466"><FONT SIZE=2>42</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#do76301_business"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Business</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#do76301_business"><FONT SIZE=2>71</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#du76301_management"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Management</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#du76301_management"><FONT SIZE=2>95</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#dw76301_compensation_discussion_and_analysis"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Compensation discussion and analysis</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#dw76301_compensation_discussion_and_analysis"><FONT SIZE=2>103</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#ec76301_certain_relationships_and_related_party_transactions"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Certain relationships and related party transactions</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#ec76301_certain_relationships_and_related_party_transactions"><FONT SIZE=2>124</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#ee76301_principal_stockholders"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Principal stockholders</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#ee76301_principal_stockholders"><FONT SIZE=2>127</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#eg76301_description_of_capital_stock"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Description of capital stock</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#eg76301_description_of_capital_stock"><FONT SIZE=2>131</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#ei76301_shares_eligible_for_future_sale"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Shares eligible for future sale</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#ei76301_shares_eligible_for_future_sale"><FONT SIZE=2>134</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#ek76301_material_united_states_federal__mat03460"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Material United States federal income tax consequences to non-U.S.
holders</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#ek76301_material_united_states_federal__mat03460"><FONT SIZE=2>137</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#em76301_underwriting"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Underwriting</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#em76301_underwriting"><FONT SIZE=2>141</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#em76301_legal_matters"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Legal matters</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#em76301_legal_matters"><FONT SIZE=2>150</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#em76301_experts"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Experts</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#em76301_experts"><FONT SIZE=2>150</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#em76301_where_you_can_find_more_information"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Where you can find more information</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#em76301_where_you_can_find_more_information"><FONT SIZE=2>150</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#Consolidated_financial_statements"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Consolidated financial statements</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#Consolidated_financial_statements"><FONT SIZE=2>F-1</FONT></A></TD>
</TR>
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 <P style="font-family:arial;"><FONT SIZE=2>You should rely only on the information contained in this prospectus and in any free writing prospectus prepared by or on behalf of us. We have not, and the
underwriters have not, authorized anyone to provide you with information different from, or in addition to, that
contained in this prospectus or any related free writing prospectus. This prospectus is an offer to sell only the shares offered hereby but only under circumstances and in jurisdictions where it is
lawful to do so. The information contained in this prospectus is current only as of its date. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B>Through and including,&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2011 (the 25th&nbsp;day after the date of
this prospectus), all dealers effecting transactions in these securities, whether or not
participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to an
unsold allotment or subscription</B></FONT><FONT SIZE=2>. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>For
investors outside the United States: neither we nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction
where action for that purpose is required, other than the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of
this prospectus. </FONT></P>

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<A HREF="#bg76301a_main_toc">Table of Contents</A> </FONT></P>

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<A NAME="toc_ca76301_1"> </A>
<BR></FONT><FONT SIZE=4><B>  Prospectus summary  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I>This summary highlights information contained elsewhere in this prospectus and does not contain all of the
information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our consolidated financial
statements and the related notes thereto and the information set forth under the sections "Risk factors" and "Management's discussion and analysis of financial condition and results of operations," in
each case appearing elsewhere in this prospectus.</I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Company overview  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We are a leading platform-based provider of core optical technologies enabling bandwidth for high-speed networks. Our
solutions provide the fundamental building blocks&#151;the creation, modulation, routing and detection of light&#151;that enable high-performance and
cost-effective optical networking. We produce active components that create and detect light, passive components that guide and combine light, and packaging solutions that integrate active
and passive components into high-performance, power-efficient, cost-effective, compact products. Through our vertically integrated technology and manufacturing platforms, we
design, fabricate and package a broad portfolio of optical components&#151;lasers, detectors, transmitters, receivers and modulators&#151;for module manufacturers and systems providers,
including original equipment manufacturers, or OEMs, who sell to communication service providers and enterprises in the Access, Enterprise/Data Center and Long Haul/Metro segments of the
communications network, and for other emerging end market applications, such as defense and avionics, high performance computing, medical and security. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Network
traffic continues to increase rapidly in volume, volatility and complexity, driven by unprecedented demand for bandwidth-intensive, rich content such as streaming and real-time
video, the growth of online social networking and cloud-based computing services, and the proliferation of mobile devices. Optical networking is becoming the de facto transport technology with its
attractive bandwidth capacity, reach, reliability, low power consumption and network intelligence capabilities. Within the optical networking value chain, innovation at the optical component level is
driving increased functionality, performance and cost savings, and gradually capturing an increasing percentage of optical networking spending. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
are one of the few companies in our industry with vertically integrated technology and manufacturing platforms that span from Indium Phosphide and Silica-on-Silicon
fabrication to proprietary, highly automated assembly and test facilities. Our in-house capabilities allow us to offer a dependable supply of quality optical components and modules. Our
photonic integrated circuits, or PICs, and components on board, or COB, solutions incorporate greater functionality and intelligence at the component level, which enables us to serve
next-generation, higher speed networks. We continue to leverage and expand upon more than 25&nbsp;years of research, development and investments, including by the former optoelectronics
divisions of Lucent Technologies and Bell Labs, which we obtained through our acquisition of a division of TriQuint Semiconductor,&nbsp;Inc. in 2005, and our broad portfolio of proprietary
technologies, which form the foundation of our technical expertise and extensive know-how. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
sell our products to a global, diversified customer base that includes module manufacturers and OEMs, who in turn sell to communication service providers and enterprises, and to defense </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>1</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>and
avionics contractors. Our customers include Cambridge Industries Group, Ltd., Ciena Corporation, Finisar Corporation, Huawei Technologies&nbsp;Co.,&nbsp;Ltd., Lockheed Martin Corporation,
Source Photonics,&nbsp;Inc. and Superxon Technology,&nbsp;Ltd. We believe that greater than 70% of our revenue was sole-sourced in 2010, which we believe demonstrates the
differentiation of our products and gives us significant insight into our customers' product and technology roadmaps. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
believe we have an attractive financial profile, with superior top-line performance and strong quarter over quarter revenue visibility. We have grown our revenue at a 31.3% compound
annual growth rate, or CAGR, from 2005 to 2010 and 44.0% quarter over quarter from March&nbsp;31, 2010 to March&nbsp;31, 2011. We have also experienced significant margin expansion, as our income
(loss) from operations margin increased from 7.3% in the three months ended March&nbsp;31, 2010 to 12.0% in the three months ended March&nbsp;31, 2011. In addition, our non-GAAP adjusted income
(loss) from operations margin increased from 9.8% in the three months ended March&nbsp;31, 2010 to 13.2% in the three months ended March&nbsp;31, 2011. Adjusted income (loss) from operations
margin is not calculated in accordance with generally accepted accounting principles in the United States, or GAAP, and should not be considered as an alternative to income (loss) from operations
margin calculated and presented in accordance with GAAP. A reconciliation of this non-GAAP measure to income (loss) from operations margin calculated and presented in accordance with GAAP
is included in this prospectus in "Management's discussion and analysis of financial condition and results of operations&#151;Key business metrics&#151;Use of non-GAAP financial
measures." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Industry  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Network traffic continues to increase rapidly in volume, volatility and complexity. To address this trend, communication service
providers and enterprises are expanding and upgrading their existing network infrastructures. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Optical
networking is becoming the de facto transport technology due to its attractive bandwidth capacity, reach, reliability, low power consumption and network intelligence capabilities. Optical
components and modules provide the fundamental building blocks&#151;the creation, modulation, routing and detection of light&#151;of the optical network ecosystem, from Long Haul/Metro,
Access to the Digital Home through fiber-to-the-home, or FTTH, to Enterprise/Data Center. Ovum, a third-party industry analyst, estimates the market for optical components and modules was
$5.6&nbsp;billion in 2010 and is forecasted to grow to $10.5&nbsp;billion in 2015, representing a 13.4% CAGR. However, we believe there are specific market segments and geographies we address that
are expected to meaningfully exceed that growth rate. These include: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Access network segment.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Access networks increasingly use
high-speed optical fiber in new deployments and as a replacement for copper lines in legacy networks. Passive optical networks, or PONs, are currently the fastest-growing broadband Access
technology. Gigabit PON, or&nbsp;GPON, is expected to continue to gain market share over prior PON technologies. According to Ovum,&nbsp;GPON transceiver sales are projected to grow from
$288.5&nbsp;million in 2010 to $576.7&nbsp;million in 2015, representing a 14.9% CAGR. However, with China's aggressive FTTH rollout, Dell'Oro, a third-party industry analyst, expects&nbsp;GPON
revenue in China to grow by as much as 40% year-over-year in 2011. </FONT></DD></DL>
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<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Enterprise/Data Center network segments.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Fueled primarily by
server virtualization and cloud computing, server-to-switch connection rates are moving rapidly from 1 gigabit Ethernet, or GbE, to 10GbE. The adoption of 10GbE is accelerating
the migration of copper to optical fiber and the need for 40GbE and 100GbE on data center core uplinks. Traditional architectures are no longer adequate for 40GbE and 100GbE, which require
multi-channel architectures to meet the requirements of next-generation switches. According to Ovum, 100GbE transceiver sales will increase from $51.6&nbsp;million in 2010 to
$712.6&nbsp;million in 2015, representing a 69.1% CAGR.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Long Haul/Metro network segments.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Communication service
providers are accelerating deployments of next-generation 40 gigabits per second, or Gbps, and 100Gbps networks. A key emerging technology for next-generation 40Gbps and
100Gbps networks is coherent detection. According to Ovum, revenue from 100Gbps coherent modules will increase from $35.3&nbsp;million in 2010 to $786.5&nbsp;million in 2015, representing an 86.0%
CAGR, while revenue from 40Gbps and 100Gbps Long Haul/Metro receivers is forecasted to grow from $66.0&nbsp;million in 2010 to $494.8&nbsp;million in 2015, representing a 49.6% CAGR. </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Other emerging end market applications.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Optical components
and modules are increasingly being used in emerging end market applications, such as defense and avionics, high performance computing, medical and security, which require high-speed,
high-bandwidth data transmission, higher levels of integration and/or high performance laser/receiver solutions. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>Demand
for increased bandwidth capacity and lower costs is driving higher levels of integration at the module and system level to achieve increased faceplate density, lower power dissipation and
greater system functionality. This trend is creating an opportunity for optical component manufacturers to deliver next-generation optical modules and optical COB solutions directly to
OEMs.&nbsp;We believe that innovation at the optical component level is driving increased functionality, higher performance and cost savings in optical networking solutions. Innovative optical
component solutions, many of which are based on PICs, such as multi-channel coherent components and tunable lasers, are expected to comprise an increasing percentage of total optical system capital
expenditures. For example, according to Cisco Systems, while optical components represent approximately 19% of capital expenditures for 10Gbps systems, they represent approximately 68% for 100Gbps
systems. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
believe optical module manufacturers and OEMs&nbsp;face many challenges, such as meeting demand for high-performance, high-speed optical solutions, increasing system
complexity, decreasing time to market, and reducing capital investment and operating expenses for service providers. We believe these challenges present opportunities that our solutions can address. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Our solutions  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We design, fabricate and package a broad portfolio of optical components, including lasers, detectors, transmitters, receivers and
modulators. The key benefits of our solutions include: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>High levels of photonic integration.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our in-house
Indium Phosphide and Silica-on-Silicon technology platforms and diverse toolbox of device elements enable the efficient design and scalable, high volume fabrication of a broad
variety of highly integrated PICs that allow us to produce small, reliable and power-efficient solutions. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>3</FONT></P>

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<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>High bit rate products.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our high bit rate, bidirectional
optical subassembly, or BOSA, products are used in next-generation Access networks (10Gbps or higher), while our PIC-based components and next-generation modules
are used for communication switches in high capacity Enterprise/Data Center (40Gbps or higher) and coherent Long Haul/Metro (40Gbps or higher) networks.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Cost-effective solutions.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our industry-leading
levels of automation in chip fabrication and packaging operations enable us to manufacture our products at high yields and low labor cost, while the re-usability,
re-configurability and scalability of our assembly and test equipment reduces our on-going capital needs.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Tailored solutions.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We leverage our in-house
hybrid and monolithic photonic integration techniques, highly-automated assembly and test manufacturing, cooled and uncooled Indium Phosphide laser fabrication capabilities, and our array of device
and packaging technologies, to tailor our products to each communications network segment.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Superior quality.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our automated manufacturing and control
systems that we have built into our device fabrication, packaging and testing processes enable us to deliver products with stable performance, high quality and a high level of reliability. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=3><B> Competitive strengths  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We believe our key competitive strengths include the following: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Strong institutional knowledge base and track record of technology
innovation.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We develop industry-leading optical components, including PIC-based components and next-generation modules, by leveraging and
expanding upon more than 25&nbsp;years of investments including those made by the former optoelectronics divisions of Lucent Technologies and Bell Labs, which we obtained through our acquisition of
a division of TriQuint Semiconductor,&nbsp;Inc. in 2005, and our broad portfolio of proprietary technologies, which form the foundation of our extensive technical expertise and know-how. </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Greater intelligence at the component level.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;As the industry
migrates to higher speed networks, increased system-level consolidation and integration is expected to increase optical components' share of capital expenditures and enhance opportunities for
differentiation. Our PICs and COB solutions, which provide significant performance and cost advantages, are well positioned to capture a larger share of the optical value chain bill of materials at
higher network speeds.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Vertical integration.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We are one of the few companies in our
industry with vertically integrated technology and manufacturing platforms that span from Indium Phosphide and Silica-on-Silicon fabrication to proprietary, highly automated
assembly and test facilities. Our comprehensive in-house capabilities allow us to offer our customers a dependable supply of quality optical components and modules, giving us significant
time-to-market, time-to-volume and cost advantages and the ability to respond more quickly to changing market and customer requirements. </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Industry-leading market position.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We are a leader in several
of our served market segments and are positioned to be a leader in next-generation COB and PIC solutions. For example, we believe that our FTTH BOSA, TO-cans and devices were
deployed in 49.5% of all&nbsp;GPON and </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>4</FONT></P>

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<UL>

<P style="font-family:arial;"><FONT SIZE=2>Ethernet
PON, or EPON, Optical Line Terminals, or OLTs, and 47.3% of all&nbsp;GPON Optical Network Units, or ONUs, sold worldwide in 2010.  </FONT></P>

</UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Diversity across network segments, products and
customers.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our revenues are diversified across network segments, allowing us to capitalize on growth in investment cycles in the communications network, and across
products, with more than 2,500 products across six product families. We also have a large, global and diversified customer base.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Experienced management team with strong execution
track-record.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Each of our executive officers has more than 15&nbsp;years of relevant industry experience, with the substantial majority having more than
25&nbsp;years of relevant experience. Members of our management team and board of directors also played integral roles in leading Lucent Technologies' optoelectronic components business in 2000,
when the division's revenues exceeded $1&nbsp;billion. We have acquired and successfully integrated five businesses since 2003, and have grown sales from $27.8&nbsp;million in 2005 to
$108.3&nbsp;million in 2010, representing a 31.3% CAGR. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=3><B> Our strategy  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our goal is to become the leading provider of high-performance optical technologies that enable the rapid growth in
high-speed optical networking communications. Key elements of our strategy are as follows: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Extend leadership in FTTH.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We intend to maintain our strong
position in our core&nbsp;GPON FTTH markets and extend&nbsp;GPON market share by winning new customers and introducing next generation products. We plan to take advantage of market disruption and
product cycle transitions by providing an alternative to traditional transceiver vendors through our BOSA offerings and by addressing emerging FTTH applications.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Capture an increasing share of the Enterprise/Data Center and Long-Haul/Metro market
segments.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We intend to leverage our technology leadership, Indium Phosphide and Silica-on-Silicon integration and
high-performance packaging to establish leadership in 40Gbps and 100Gbps Ethernet multi-channel PICs, receivers and miniaturized tunable lasers for coherent applications and tunable 10Gbps
TOSA for both module manufacturers and OEM customers. Our goal is to become the market leader in these segments through a combination of high performance, on-time delivery and low manufacturing cost. </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Continue to grow our defense and avionics business and other emerging end market
applications.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We intend to continue to leverage our differentiated technologies and U.S.-based design and manufacturing to address the growing demand
for optical components and modules in defense and avionics and other emerging end market applications.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Continue our gross margin expansion.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We intend to continue
our gross margin improvement through increased scale, manufacturing efficiencies and continued introduction of higher performance products with greater component-level intelligence and integrated
functionality to module manufactures and OEMs.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Selectively pursue complementary acquisitions.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We intend to
continue to selectively pursue acquisitions that accelerate our revenue growth, complement our strengths, help us execute our strategies and grow our addressable markets. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>5</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=3><B> Risk factors  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our business is subject to numerous risks and uncertainties, such as those highlighted in "Risk factors" immediately following this
prospectus summary, including: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>We are subject to the cyclical nature of the markets in which we compete and any future downturn may reduce demand for our
products and revenue;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>If spending for optical communications networks does not continue to grow as expected, our business may suffer; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Given the high fixed cost associated with our vertically integrated business, a reduction in demand for our products may
adversely impact our gross profits and our results of operations;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>We are dependent on our key customers for a significant portion of our revenue and the loss of, or a significant reduction
in orders from, any of our key customers may reduce our revenue and adversely impact our results of operations;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>We face intense competition and continuous pricing pressure in our industry, which could negatively impact our results of
operations and market share; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>We must continually achieve new design wins and enhance existing products or our business may be harmed. </FONT></DD></DL>


<P style="font-family:arial;"><FONT SIZE=3><B> Corporate information  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We were incorporated in the State of Delaware in 1999. Our principal executive offices are located at 9999 Hamilton Boulevard,
Breinigsville, Pennsylvania 18031, and our telephone number is (484)&nbsp;391-2061. Our website address is www.cyoptics.com. Information contained on our website is not incorporated by
reference into this prospectus, and you should not consider information contained on our website as part of this prospectus or in deciding whether to purchase shares of our common stock. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
name is a trademark of CyOptics,&nbsp;Inc. for which we are seeking registration in the United States and selected international jurisdictions. This prospectus contains additional trade names
and trademarks of ours and of other companies. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I>This summary highlights selected information appearing elsewhere in this prospectus and does not contain all the information you should consider before investing in our common
stock. You should carefully read this prospectus in its entirety before investing in our common stock, including "Risk factors," and our consolidated financial statements and related notes included
elsewhere in this prospectus.</I></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>6</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg76301a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="cc76301_the_offering"> </A>
<A NAME="toc_cc76301_1"> </A>
<BR></FONT><FONT SIZE=4><B>  The offering  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Common stock offered by us:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares<BR>
Common stock to be outstanding after this offering:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Use of proceeds  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We intend to use the net proceeds from this offering for working capital and general corporate purposes, including capital
expenditures. We also may use a portion of the net proceeds to selectively pursue acquisitions that complement our strengths and help us execute our strategies or to repay some or all of the
outstanding amounts under our credit facilities. However, we have no understandings or agreements with respect to any such acquisition or investment or debt repayment. See "Use of proceeds." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Proposed
NASDAQ Global Select Market symbol: "CYOP" </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
number of shares of our common stock to be outstanding following this offering is based on 14,359,377 shares of our common stock outstanding as of March&nbsp;31, 2011 on a pro forma basis and
excludes: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>399,570 shares of common stock issuable upon the exercise of options outstanding as of March&nbsp;31, 2011, with a
weighted average exercise price of $8.57 per share;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>26,038 shares of common issuable upon the exercise of outstanding warrants, with a weighted average exercise price of
$10.03 per share; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2> shares of our common stock reserved for future issuance under our stock-based compensation plans,
including&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;sh
ares of common stock reserved for issuance under our 2011 Equity Incentive Plan, which will become effective in connection with this offering, and any future increase in
shares reserved for issuance under such plan. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>Unless
otherwise noted, the information in this prospectus reflects and assumes the following: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the conversion of all outstanding shares of our convertible preferred stock into an aggregate of 13,064,838 shares of
common stock upon the closing of this offering;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the filing of our amended and restated certificate of incorporation immediately prior to the effectiveness of this
offering; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>no exercise by the underwriters of their over-allotment option. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>7</FONT></P>

<HR NOSHADE>
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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="cc76301_summary_consolidated_financial_data"> </A>
<A NAME="toc_cc76301_2"> </A>
<BR></FONT><FONT SIZE=4><B>  Summary consolidated financial data  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The tables below summarize our consolidated financial data. The following summary financial data should be read together with our
consolidated financial statements and related notes and "Management's discussion and analysis of financial condition and results of operations" included elsewhere in this prospectus. The data for each
of the three years ended December&nbsp;31, 2010, 2009 and 2008 have been derived from our audited consolidated financial statements appearing elsewhere in this prospectus. The data for the three
months ended March&nbsp;31, 2011 and 2010 have been derived from our unaudited condensed consolidated financial statements appearing elsewhere in this prospectus. The
historical results presented below are not necessarily indicative of financial results to be achieved in future periods. </FONT></P>
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<TD WIDTH="8pt" style="font-family:arial;"></TD>
<TD WIDTH="8pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="60pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="55pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="55pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="60pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="55pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=20 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=5 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH ROWSPAN=3 style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=5 ROWSPAN=3 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Three months ended March&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=5 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=8 ROWSPAN=2 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Year ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=5 ROWSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>(in thousands, except for share and per share amounts)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2008</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2011</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="BOTTOM">
<TH COLSPAN=20 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TH>
<TH style="font-family:arial;">&nbsp;</TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=5 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>(unaudited)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=5 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Consolidated Statement of Operations Data:</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=4 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Total revenues</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">108,336</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">65,730</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">67,211</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">34,028</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">23,633</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=4 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Cost of revenues</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">79,375</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">57,846</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">63,157</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">24,759</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">17,742</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=5 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=4 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Gross profit</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">28,961</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">7,884</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">4,054</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">9,269</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">5,891</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=4 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Gross margin</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">26.7%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">12.0%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">6.0%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">27.2%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">24.9%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=4 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Operating expenses:</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Research and development</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">12,010</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">19,540</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">19,031</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">3,518</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,860</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Sales and marketing</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,671</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">3,181</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">3,888</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">801</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">629</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">General and administrative</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">3,270</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">7,372</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">5,904</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">863</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">682</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Severance and liquidation expenses</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">6,465</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Asset impairment</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">6,621</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">9,841</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=5 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Total operating expenses</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">17,951</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">43,179</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">38,664</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">5,182</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">4,171</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=5 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=4 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Operating income (loss)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">11,010</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(35,295</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(34,610</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">4,087</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,720</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=4 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Interest expense, net</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(1,328</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(1,617</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(2,148</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(276</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(349</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=4 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Other (expense) income, net</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(292</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,574</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">4,711</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(145</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">52</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=5 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=4 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Income (loss) before income taxes</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">9,390</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(35,338</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(32,047</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">3,666</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,423</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Provision for income taxes</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">501</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">128</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">177</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,384</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">78</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=5 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=4 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Net income (loss)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">8,889</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(35,466</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(32,224</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,282</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,345</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=5 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=5 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Net income (loss) attributable to common stockholders</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,115</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(35,466</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(32,224</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">47,678</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">169</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=4 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Net income (loss) per common share(1):</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Basic</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0.73</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(23.74</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(22.68</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">36.35</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0.11</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Diluted</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0.73</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(23.74</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(22.68</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0.15</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0.11</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=4 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Weighted average number of shares outstanding:</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Basic</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,519,124</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,494,124</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,420,786</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,311,760</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,521,308</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Diluted</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,523,183</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,494,124</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,420,786</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">15,692,812</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,521,308</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=4 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Pro forma net income per common share (unaudited)(2):</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Basic</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Diluted</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=4 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Weighted average number of shares used in pro forma computation (unaudited)(2) :</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Basic</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Diluted</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=4 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Pro forma as adjusted net income per common share (unaudited)(3):</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Basic</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Diluted</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=4 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Weighted average number of shares used in pro forma as adjusted computation (unaudited)(3):</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Basic</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Diluted</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=20 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(1)&nbsp;&nbsp;&nbsp;We
applied the two-class method to compute net income (loss) per common share which requires that earnings for the period be allocated between common and participating
securities based upon their respective contractual rights to receive distributed and undistributed earnings. See Note&nbsp;2 of the notes to each of our consolidated financial statements and our
unaudited condensed consolidated financial statements included elsewhere in this prospectus.
</font></p>
</DIV>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>8</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=2,SEQ=11,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=349899,FOLIO='8',FILE='DISK104:[11ZCB1.11ZCB76301]CC76301A.;49',USER='OALBERT',CD='12-AUG-2011;11:59' -->
<A NAME="page_cc76301_1_9"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(2)&nbsp;&nbsp;&nbsp;The
pro forma basic and diluted net income per share have been calculated assuming (i)&nbsp;the conversion of all outstanding shares of convertible preferred stock into an aggregate
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of our common stock as of the beginning of the applicable period and
(ii)&nbsp;the reclassification of outstanding preferred stock warrants from long term liabilities to
additional paid-in capital as of the beginning of the applicable period. The numerator of the pro forma net income per share calculation is derived by adding $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;for the year
ended December&nbsp;31, 2010 related to the preferred stock warrant liability and by excluding the impact of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;for the three months ended March&nbsp;31, 2011 related to the
redemption of preferred stock below carrying value to arrive at net income attributable to common shares of approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;for the year ended December&nbsp;31,
2010 and the three months ended March&nbsp;31, 2011, respectively. </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(3)&nbsp;&nbsp;&nbsp;The
pro forma as adjusted basic and diluted net income per share have been calculated assuming (i)&nbsp;the conversion of all outstanding shares of convertible preferred stock into
an aggregate of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of our common stock as of the beginning of the applicable period
and (ii)&nbsp;the reclassification of outstanding preferred stock warrants from long term
liabilities to additional paid-in capital as of the beginning of the applicable period, (iii)&nbsp;the sale by us of the&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock in our
initial public
offering as of the beginning of the applicable period, and (iv)&nbsp;the filing of our amended and restated certificate of incorporation which will occur immediately prior to the closing of the
offering. The numerator of the pro forma net income per share calculation is derived by adding&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;for the year ended December&nbsp;31, 2010 related to the preferred stock warrant
liability, and subtracting&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;for the three months ended March&nbsp;31, 2011 related to the redemption of preferred stock below carrying value to net income as reported to arrive at net
income attributable to common shares of approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;for the year ended December&nbsp;31, 2010 and the three months ended March&nbsp;31, 2011, respectively.
 </FONT></P>
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>The following table presents our summary consolidated balance sheet data as of March&nbsp;31, 2011: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>on an actual basis;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>on a pro forma basis to give effect to (i)&nbsp;the conversion of all outstanding shares of preferred stock into shares
of our common stock and all outstanding warrants to purchase preferred stock into warrants to purchase common stock; and (ii)&nbsp;the reclassification of our outstanding preferred stock warrants
from long-term liabilities to additional paid-in capital; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>on a pro forma as adjusted basis to give effect to the conversion and reclassification described in the prior bullet and
(i)&nbsp;the sale by us of the shares of common stock offered by this prospectus at an initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, the midpoint of the price range on the cover of
this prospectus, and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us; and (ii)&nbsp;the filing of our amended and restated certificate of
incorporation, which will occur immediately prior to the closing of this offering. </FONT></DD></DL>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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 </FONT></P>

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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="54pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="59pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="69pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>March&nbsp;31, 2011 </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(in thousands)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Actual</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Pro forma</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Pro forma<BR>
as adjusted</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Consolidated Balance Sheet Data:</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash and cash equivalents</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>31,059</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Working capital(1)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>55,418</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>97,756</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Long-term obligations, including current portion</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>12,551</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Convertible preferred stock</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>95,404</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total stockholders' equity (deficit)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(34,775</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->


<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(1)&nbsp;&nbsp;&nbsp;Working
capital is defined as total current assets less total current liabilities. </FONT></P>
 </DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>9</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=3,SEQ=12,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=892031,FOLIO='9',FILE='DISK104:[11ZCB1.11ZCB76301]CC76301A.;49',USER='OALBERT',CD='12-AUG-2011;11:59' -->
<A NAME="page_cc76301_1_10"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2><B> Key business metrics  </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="54pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="51pt" style="font-family:arial;"></TD>
<TD WIDTH="14pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="51pt" style="font-family:arial;"></TD>
<TD WIDTH="14pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="47pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="47pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=16 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Years ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Three months<BR>
ended March&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(in thousands, except percentages)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2008</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2011</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=16 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>GAAP metrics:</I></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total revenues</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>108,336</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>65,730</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>67,211</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>34,028</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>23,633</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Gross profit</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>28,961</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,884</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,054</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,269</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,891</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Gross margin</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>26.7%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12.0%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6.0%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>27.2%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>24.9%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income (loss) from operations</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>11,010</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(35,295</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(34,610</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,087</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,720</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income (loss) from operations margin</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10.2%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> (53.7)%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> (51.5)%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12.0%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7.3%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net income (loss)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,889</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(35,466</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(32,224</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,282</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,345</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash provided by (used in) operating activities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,233</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(14,766</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(23,176</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,456</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,483</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Non-GAAP metrics:</I></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjusted gross profit*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>30,483</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,198</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,028</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,499</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6,336</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjusted gross margin*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>28.1%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>14.0%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7.5%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>27.9%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>26.8%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjusted income (loss) from operations*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>13,175</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(19,664</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(22,214</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,477</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,326</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjusted income (loss) from operations margin*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12.2%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> (29.9)%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> (33.1)%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>13.2%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9.8%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjusted net income (loss)*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>11,216</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(19,835</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(19,828</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,510</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,932</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>EBITDA*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>15,694</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(25,167</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(22,928</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,957</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,285</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>EBITDA margin*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>14.5%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> (38.3)%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> (34.1)%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>14.6%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>13.9%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjusted EBITDA*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>15,953</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(12,056</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(12,523</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,961</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,290</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjusted EBITDA margin*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>14.7%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> (18.3)%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> (18.6)%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>14.6%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>13.9%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Free cash flow*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,306</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(18,217</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(25,015</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(784</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,226</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=16 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
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<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT  style="font-size:8pt;line-height:9pt;">
*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These performance measures are not calculated in accordance with GAAP. A reconciliation of these non-GAAP measures to the most directly comparable measure calculated and
presented in accordance with GAAP is included in this prospectus in "Management's discussion and analysis of financial condition and results of operations&#151;Key business
metrics&#151;Use of non-GAAP financial measures." These non-GAAP measures should not be considered as an alternative to any measure of financial performance calculated and presented
in accordance with GAAP. In addition, our non-GAAP measures may not be comparable to similarly titled measures of other companies because other companies may not calculate such similarly
titled measures in the same manner as we do. We prepare our non-GAAP measures to eliminate the impact of items that we do not consider indicative of our core operating performance. We
encourage you to evaluate these adjustments, the reasons we consider them appropriate and the material limitations of these non-GAAP measures as described in "Management's discussion and
analysis of financial condition and results of operations&#151;Key business metrics&#151;Use of non-GAAP financial measures." </FONT></P>
 </DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>10</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg76301a_main_toc">Table of Contents</A> </FONT></P>

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<A NAME="toc_da76301_1"> </A>
<BR></FONT><FONT SIZE=4><B>  Risk factors  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I>Investing in our common stock involves a high degree of risk. You should consider carefully the risks and
uncertainties described below, together with all of the other information in this prospectus, including our consolidated financial statements and related notes, before deciding whether to purchase
shares of our common stock. If any of the following risks is realized, our business, financial condition, results of operations and prospects could be materially and adversely affected. In that event,
the price of our common stock could decline and you could lose part or all of your investment.</I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Risks related to our business and industry  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> We are subject to the cyclical nature of the markets in which we compete and any future downturn may reduce demand for our products and revenue.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In the past, the markets in which we compete have experienced significant downturns, often connected with, or in anticipation of, the maturation of
product cycles&#151;for both manufacturers' and their customers' products&#151;and with declining general economic conditions. These downturns have been characterized by diminished
product demand, production overcapacity, high inventory levels and accelerated erosion of average selling prices. These markets are impacted by the aggregate capital expenditures of service providers
and enterprises as they build out and upgrade their network infrastructure. These markets are highly cyclical and characterized by constant and rapid technological change, pricing pressures, evolving
standards and wide fluctuations in product supply and demand. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
may experience substantial period-to-period fluctuations in future results of operations. Any future downturn in the markets in which we compete, or changes in demand for
our products from our customers, could result in a significant reduction in our revenue. It may also increase the volatility of the price of our common stock. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
addition, the communications networks industry from time to time has experienced and may again experience a pronounced downturn. To respond to a downturn, many service providers and enterprises may
slow their capital expenditures, cancel or delay new developments, reduce their workforces and inventories and take a cautious approach to acquiring new equipment and technologies from OEMs, any of
which could cause our results of operations to fluctuate from period to period and harm our business. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> If spending for optical communications networks does not continue to grow as expected, our business may suffer.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our future success depends on continued capital investment in global communications network infrastructure and on continued demand for
high-bandwidth, high-speed communications networks and the ability of OEMs&nbsp;to meet this demand. Spending on communications networks is limited by several factors,
including limited investment resources, uncertainty regarding the long-term evolution and sustainability of service provider business models and a changing regulatory environment. We
cannot be certain that demand for bandwidth-intensive content will continue to grow at the same pace in the future or that communications service providers will continue to increase spending to meet
such demand. If expectations for growth of communications networks and bandwidth consumption are not realized and investment in communications networks does not grow as anticipated, our business,
results of operations and gross margins could be harmed. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>11</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><B><I> Given the high fixed costs associated with our vertically integrated business, a reduction in demand for our products may adversely impact our gross profits and our results
of operations.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We have a high fixed cost base due to our vertically integrated business model, including the fact that 442 of our employees as of March&nbsp;31,
2011 were employed in manufacturing engineering and operations. We may not be able to adjust these fixed costs quickly to adapt to rapidly changing market conditions. Our gross profit and gross margin
is greatly affected by our sales volume and volatility on a quarterly basis and the corresponding absorption of fixed manufacturing overhead expenses. In addition, because we are a vertically
integrated manufacturer, insufficient demand for our products may subject us to the risk of high inventory carrying costs and increased inventory obsolescence. Given our vertical integration, the rate
at which we turn inventory has historically been low when compared to our cost of sales. We do not expect this to change significantly in the future and believe that we will have to maintain a
relatively high level of inventory compared to our cost of sales. As a result, we continue to expect to have a significant amount of working capital invested in inventory. We may be required to write
down inventory costs in the future and our
high inventory costs may have an adverse effect on our gross profits and our results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> We are dependent on our key customers for a significant portion of our revenue and the loss of, or a significant reduction in orders from, any of our key customers may
reduce our revenue and adversely impact our results of operations.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Historically, we have generated most of our revenue from a limited number of customers. In 2010, our top ten customers represented 61.9% of our total
revenue, with only Finisar Corporation (15.3% of revenues) representing more than 10.0% of our revenues. Furthermore, sales of certain of our current products are dependent upon and concentrated among
a limited number of customers and the successful introduction of future component and module products could similarly be dependent upon a limited number of customers. As a result, the loss of, or a
significant reduction in orders from any our key customers would materially and adversely affect our revenue and results of operations. Adverse events affecting our key customers could also negatively
affect our revenue and results of operations. In addition, OEMs may continue to consolidate, and we may not be able to offset any potential decline in revenue arising from the consolidation of our
existing customers with revenue from new customers or additional revenue from the combined company. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> We face intense competition which could negatively impact our results of operations and market share.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The communications networking industry is highly competitive. Our competitors range from large, international companies offering a wide range of
products to smaller companies specializing in niche markets. Some of our competitors have substantially greater technical, financial and marketing resources, name recognition, manufacturing capacity,
and/or better-established relationships with customers than we have. Some of our competitors have more resources to develop or acquire, and more experience in developing or acquiring, new products and
technologies and in creating market awareness for and selling these products and technologies. Some of our competitors may be able to develop new products more quickly than we can and may be able to
develop products that are more reliable or which provide more functionality than our products. All of these advantages may cause us to lose sales or market share or reduce the prices of our products. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>12</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>We
also face competition from some of our customers who evaluate our capabilities against the merits of manufacturing products internally. Such customers may be able to internally manufacture
competitive products at a lower cost than we would charge these customers. As a result, customers may purchase fewer of our products or we may be forced to lower our selling prices, both of which
would negatively impact our financial results. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> We must continually achieve new design wins and enhance existing products or our business may be harmed.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The markets for our products are characterized by frequent new product introductions, changes in customer and market requirements and evolving
industry standards, all with an underlying pressure to reduce cost and meet stringent reliability and qualification requirements. Our future performance will depend on our successful and timely
development, introduction and market acceptance of new and enhanced products that address these challenges. The anticipated or actual introduction of new and enhanced products by us and by our
competitors may lead our customers to defer or cancel orders for our existing products and rapid obsolescence and value diminution of existing inventory. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
development of new, technologically-advanced products is a complex and uncertain process requiring frequent innovation, highly-skilled engineering and development personnel and significant capital
expenditures, as well as the accurate anticipation of technological and market trends. Product development delays may result from numerous factors, including: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>changing product specifications and customer requirements;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>unanticipated engineering and manufacturing complexities and problems discovered during development and manufacturing; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>difficulties in reallocating engineering resources and overcoming resource limitations; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>changing market or competitive product requirements. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>We
have in the past experienced slowdowns in demand for existing products and delays in new product development, and such delays may occur again in the future. We cannot assure you that we will be
able to identify, develop, manufacture, market or support new or enhanced products successfully, if at all, or on a timely basis. To the extent customers defer or cancel orders for our products for
any reason or we fail to achieve new design wins, our competitive and financial position would be adversely affected and our ability to grow our revenue would be impaired. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Further,
we cannot assure you that our new products will gain market acceptance or that we will be able to respond effectively to product introductions by competitors, technological changes or
emerging industry standards. We also may not be able to develop and evolve the underlying core technologies necessary to create new products and enhancements, license these technologies from third
parties, or remain competitive in our markets. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> We are under continuous pressure to reduce the prices of our products.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The communications networking industry has historically been characterized by declining product prices for components over time as a result of new
product and technology introductions, increased competition, aggressive pricing from our competitors and pricing pressure from customers. We have reduced the prices of some of our products in the
past, and </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>13</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>we
expect to continue to experience pricing pressure for our products in the future. When seeking to maintain or increase their market share, our competitors may also reduce the prices of their
products. In addition, our customers may have the ability to internally develop and manufacture competing products at a lower cost than we would otherwise charge, which would add additional downward
pressure on our selling prices. If we are unable to offset future reductions in our average selling prices by increasing our sales volume, by reducing our costs and expenses or by introducing new
products at higher price points, our profitability could suffer. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Our manufacturing processes are extremely complex and specialized and disruptions could have a material adverse effect on our business, financial condition and results of
operations.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The fabrication of our products involves extremely complex and precise processes. We may experience delays, disruptions or quality control problems
in our manufacturing operations. For instance, minor impurities, contamination of the clean room environment, errors in any step of the fabrication process, defects in equipment or materials, human
error, or a number of other factors can cause a substantial percentage of our products to be rejected or malfunction. We could also experience a disruption in our fabrication facility for our products
due to equipment maintenance, repairs and/or upgrades. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Additionally,
manufacturing yields depend on a number of factors, including the stability and manufacturability of the product design, manufacturing improvements gained over cumulative production
volumes, the quality and consistency of component parts and the nature and extent of customization requirements by customers. Capacity constraints, raw materials shortages, logistical issues, labor
shortages, the introduction of new product lines and changes in
customer requirements, manufacturing facilities or processes, or those of some third party contract manufacturers and suppliers of raw materials and components have historically caused, and may in the
future cause, reduced manufacturing yields. Moreover, an increase in the rejection and rework rate of products during the quality control process before, during or after manufacture would result in
our experiencing lower yields. As a result of all of these potential difficulties, we could incur additional costs to fulfill customer orders and/or product shipments to our customers could be
delayed, each of which would negatively affect our revenue, costs, competitive position and reputation. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> We rely on a limited number of suppliers for certain raw materials, and if they stopped, decreased or delayed shipments to us, it could have an adverse effect on our
business.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We depend on a limited number of suppliers for certain raw materials we have qualified to use in the manufacture of certain of our products. Some of
these suppliers could disrupt our business if they stop, decrease or delay shipments or if the materials they ship have quality or consistency issues. Some of these materials are available only from a
sole source or have been qualified only from a single supplier. For example, we currently rely on two suppliers for certain piece parts used in our products that comprised approximately 23% and 21% of
our total revenue for the year ended December&nbsp;31, 2010, respectively, and collectively approximately 23% of our revenue for the year ended December&nbsp;31, 2010. Furthermore, other than our
current suppliers, there are a limited number of entities from whom we could obtain certain of these supplies. We may also face material shortages if we experience increased demand for materials
beyond what our qualified suppliers can deliver on a timely basis or at all. Although we strive to mitigate shortages, any inability on our part to timely obtain sufficient quantities of critical
piece parts at reasonable costs could adversely affect our ability </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>14</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>to
meet demand for our products, which could cause our revenue, results of operations, or both to suffer. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
typically have not entered into long-term agreements with our suppliers and, therefore, our suppliers could stop supplying materials at any time or fail to supply adequate quantities of
piece parts on a timely basis. It is difficult, costly, time consuming and, on short notice, sometimes impossible for us to identify and qualify new suppliers. The reliance on a sole supplier, single
qualified vendor or limited number of suppliers could result in delivery and quality problems and reduced control over product pricing, reliability and performance. We
have in the past had to change suppliers, which has, in some instances, resulted in delays in product development and manufacturing and loss of revenue. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> If we fail to retain our key personnel or if we fail to attract additional qualified personnel, we may not be able to achieve our anticipated level of growth and our
business could suffer.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our future success depends, in part, on our ability to attract and retain key personnel, including our senior management team and others, and on the
continued contributions of members of our senior management team and key technical personnel, each of whom would be difficult to replace. The loss of any of the members of our senior management team
or key personnel or the inability to continue to attract and retain qualified personnel could have a material adverse effect on our business. Competition for highly skilled technical personnel is
extremely intense, and we continue to face challenges identifying, hiring and retaining qualified personnel in certain areas of our business. If we fail to retain our senior management and other key
personnel or if we fail to attract additional qualified personnel, our business could suffer. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Our success will depend on our ability to anticipate and quickly respond to rapidly changing technologies and customer requirements.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The communications networking industry is characterized by substantial investment in new technologies and the development of diverse and changing
technologies. For example, new technologies are required to satisfy the emerging standards for 40Gbps and 100Gbps data transmission in communications networks. Furthermore, fast introduction of new
products can be critical to success. It is difficult to displace an existing supplier for a particular type of product once an OEM has chosen a supplier, even if a
later-to-market product provides superior performance or cost efficiency. If we are unable to make our new or enhanced products commercially available on a timely basis, we may
lose existing and potential customers for extended time periods, which would cause our financial results to suffer. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> The communications networking industry has long product development cycles requiring us to incur product development costs without assurances of an acceptable investment
return.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The communications networking industry is highly capital-intensive. Large volumes of equipment and support structures are installed with considerable
expenditures of funds and other resources, and long investment return period expectations. At the component supplier level, this creates considerable, typically multi-year, gaps between
the commencement of new product development and volume purchases. Accordingly, we often incur significant research and development costs for products that, at the earliest, will be purchased by our
customers long after much of the cost is incurred and, in some cases, may never be purchased due to changes in industry or customer requirements in the interim. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>15</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>Due
to changing industry and customer requirements, we are constantly developing new products and developing and using new technologies in our products. These development activities can and are
expected to necessitate a significant investment of capital. Our new products often require a long time to develop because of their complexity and rigorous testing and qualification requirements.
Additionally, developing a manufacturing approach with an acceptable cost structure and yield for new products can be expensive and time-consuming. Due to the costs and length of research
and development and manufacturing process cycles, we may not recognize revenue from new products until long after such expenditures are incurred, if at all, and our gross margin may decrease if our
costs are higher than expected. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> If our customers do not qualify our products for use, then our results of operations may suffer.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Prior to placing volume purchase orders with us, most of our customers require us to obtain their approval of our new and existing products, and our
customers often audit our manufacturing facilities and perform other vendor evaluations during this process. The approval process, generally known as qualification, involves product sampling and
reliability testing and collaboration with our product management and
engineering teams in the design and manufacturing stages. For example, we have developed new technologies and products that are key components in our customers' systems for 40Gbps and 100Gbps data
transmission. While we are shipping certain products for 40Gbps and 100Gbps system designs today, many of our products for these systems are currently being qualified for use by our customers. If we
are unable to qualify these and other of our products with customers, then our future revenues would be lower than expected, and we may not be able to recover the costs of our investments in new and
existing products, each of which would have an adverse effect on our results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
addition, due to rapid technological changes in our markets, a customer may cancel or modify a design project before we have qualified our product or begun volume manufacturing of a qualified
product. It is unlikely that we would be able to recover the expenses for cancelled or unutilized custom design projects. It is difficult to predict with any certainty whether our customers will delay
or terminate product qualification or the frequency with which customers will cancel or modify their projects, but any such delay, cancellation or modification would have a negative effect on our
results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Rapidly changing standards and regulations could make our products obsolete, which would cause our revenue and results of operations to suffer.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We design our products to conform to regulations established by governments and to standards set by industry standards bodies worldwide, such as the
American National Standards Institute, the European Telecommunications Standards Institute, the International Telecommunications Union and the Institute of Electrical and Electronics
Engineers,&nbsp;Inc. Various industry organizations are currently considering whether and to what extent to create standards for elements used in 100Gbps systems. Because certain of our products are
designed to conform to current specific industry standards, if competing or new standards emerge that are preferred by our customers, we would have to make significant expenditures to develop new
products. If our customers adopt new or competing industry standards with which our products are not compatible, or the industry groups adopt standards or governments issue regulations with which our
products are not compatible, our existing products would become less desirable to our customers and our revenue and results of operations would suffer. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>16</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><B><I> Customer demand is difficult to forecast and, as a result, we may be unable to optimally match production with customer demand.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We make planning and spending decisions, including determining the levels of business that we will seek and accept, production schedules, component
procurement commitments, personnel needs and other resource requirements, based on our estimates of customer demand. The majority of our products are purchased pursuant to individual purchase orders.
While our customers generally provide us with their demand forecasts, they are typically not contractually committed to buy any quantity of products beyond firm purchase orders. The
short-term nature of our customer commitments and the possibility of unexpected changes in demand for their products limit our ability to accurately predict future customer demand. On
occasion, customers have required rapid increases in production, which has strained our resources. We may not have sufficient capacity at any given time to meet the volume demands of our customers, or
one or more of our suppliers may not have sufficient capacity at any given time to meet our volume demands. Conversely, a downturn in the markets in which our customers compete can cause, and in the
past has caused, our customers to significantly reduce the amount of products ordered from us or to cancel existing orders, leading to lower utilization of our facilities. Because many of our costs
and operating expenses are relatively fixed, reduction in customer demand would have an adverse effect on our gross margin, income (loss) from operations and cash flow. During an industry downturn,
there is also a higher risk that our trade receivables would be uncollectible. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> It could be discovered that our products contain defects that may cause us to incur significant costs, divert our management's attention, result in a loss of customers and
result in product liability claims.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our products are complex and undergo quality testing and formal qualification by our customers and us. However, defects may occur from time to time.
Our customers' testing procedures involve evaluating our products under likely and foreseeable failure scenarios and over varying amounts of time. For various reasons, such as the occurrence of
performance problems that are unforeseeable in testing or that are detected only when products age or are operated under peak stress conditions, our products may fail to perform as expected long after
customer acceptance. Failures could result from faulty components or design, problems in manufacturing or other unforeseen reasons. For the majority of our products, we provide a product warranty of
one year or less from date of shipment. For select customers, we provide extended warranties beyond our normal product warranty period for specified failures on a case-by-case basis. As a result, we
could incur significant costs to repair or replace defective products under warranty, particularly when such failures occur in installed systems. We have experienced failures in the past and will
continue to face this risk going forward, as our products are widely deployed throughout the world in multiple demanding
environments and applications. In addition, we may in certain circumstances honor warranty claims after the warranty has expired or for problems not covered by warranty in order to maintain customer
relationships. Any significant product failure could result in lost future sales of the affected product and other products, as well as customer relations problems, litigation and damage to our
reputation. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
addition, our products are typically embedded in, or deployed in conjunction with, our customers' products, which incorporate a variety of components, modules and subsystems and may be expected to
interoperate with modules and subsystems produced by third parties. As a result, not all defects are immediately detectable and when problems occur, it may be difficult </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>17</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>to
identify the source of the problem. These problems may cause us to incur significant damages or warranty and repair costs, divert the attention of our engineering personnel from our product
development efforts and cause significant customer relations problems or loss of customers, all of which would harm our business. The occurrence of any defects in our products could also give rise to
liability for damages caused by such defects. Although we carry product liability insurance to mitigate this risk, insurance may not adequately cover costs that may arise from defects in our products
or otherwise, nor will it protect us from reputational harm that may result from such defects. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> If we fail to adequately manage our long-term growth and expansion requirements, our business will suffer.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In recent years, we have experienced significant growth through, among other things, internal expansion programs, new product developments and
acquisitions of other companies. We expect to continue to grow, which could require us to expand our manufacturing operations, including hiring new personnel, purchasing additional equipment, leasing
or purchasing additional facilities, expanding our management infrastructure and working with our suppliers to manage any such expansion. If we fail to secure these expansion requirements or manage
our future growth effectively, our business could suffer. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Natural disasters, terrorist attacks or other catastrophic events could harm our operations.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our worldwide operations could be subject to natural disasters and other business disruptions, which could harm our future revenue and financial
condition and increase our costs and expenses. Further, a terrorist attack, including one aimed at energy or communications infrastructure suppliers, could hinder or delay the development and sale of
our products. Although we maintain casualty and business interruption insurance, if an earthquake, typhoon, hurricane, terrorist attack or other natural or manmade catastrophe were to destroy any part
of our facilities, destroy or disrupt vital infrastructure systems or interrupt our operations for any extended period of time, our business would be materially adversely affected. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Our manufacturing facilities are leased from third parties.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We conduct all of our manufacturing operations at facilities located in Pennsylvania, New Jersey and Mexico. The leases for our facilities located in
Pennsylvania expire in July 2014 and October 2017, if not renewed at our option; the lease for our facility located in New Jersey expires in July 2014, if not renewed at our option; and the lease for
our facility located in Mexico expires in December 2011, if not renewed at our option. We are substantially dependent on our facilities in Pennsylvania and New Jersey and a loss of use of one or more
of our manufacturing facilities may result in an interruption or delay in our ability to manufacture our products. If we are unable to renew our leases with the owners of the facilities on
commercially reasonable terms, or if we migrate to new facilities, we may experience delays in delivering our products until leases for other facilities can be arranged and the migration to a new
facility is completed. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
operations also rely heavily on the availability of electrical power and cooling capacity, which are also supplied by third-party providers. If our facilities experience a major power outage or if
the cost of electrical power increases significantly, our operations and profitability could be harmed. If our facilities experience a major power outage, we would have to rely on back-up
generators, which may not function properly, and their supply may be inadequate. Such a power outage could result in the disruption of our business. Additionally, if our current </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>18</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>facilities
fail to have sufficient cooling capacity or availability of electrical power, we would need to find alternative facilities. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> If we fail to protect, or incur significant costs in defending, our intellectual property and other proprietary rights, our business and results of operations could be
materially harmed.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our success depends to a significant degree on our ability to protect our intellectual property and other proprietary rights. We rely on a
combination of patent, trademark, trade secret and unfair competition laws, as well as license agreements and other contractual provisions, to establish and protect our intellectual property and other
proprietary rights. We have applied for patent registrations in the United States and selected international jurisdictions, most of which have been issued. In addition, we are applying to register the
trademark "CyOptics" in the United States. We cannot guarantee that our pending applications will be approved by the applicable governmental authorities. Moreover, our existing and future patents and
trademarks may not be sufficiently broad to protect our proprietary rights or may be held invalid or unenforceable in court. Failure to obtain patents or trademark registrations or a successful
challenge to our registrations in the United States or other foreign countries may limit our ability to protect the intellectual property rights that these applications and registrations are intended
to cover. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
also attempt to protect our intellectual property, including our trade secrets and know-how, through the use of trade secret and other intellectual property laws, and contractual
provisions. We enter into confidentiality and invention assignment agreements with our employees and independent consultants. We also use non-disclosure agreements with other third parties
who may have access to our proprietary technologies and information. Such measures, however, provide only limited protection, and there can be no assurance that our confidentiality and
non-disclosure agreements will not be breached, especially after our employees or those of our third-party contract manufacturers end their employment or engagement, and that our trade
secrets will not otherwise become
known by competitors or that we will have adequate remedies in the event of unauthorized use or disclosure of proprietary information. Unauthorized third parties may try to copy or reverse engineer
our products or portions of our products, otherwise obtain and use our intellectual property, or may independently develop similar or equivalent trade secrets or know-how. If we fail to
protect our intellectual property and other proprietary rights, or if such intellectual property and proprietary rights are infringed or misappropriated, our business, results of operations or
financial condition could be materially harmed. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Policing
unauthorized use of our technology is difficult, and we cannot be certain that the steps we have taken will prevent the misappropriation, unauthorized use or other infringement of our
intellectual property rights. Further, we may not be able to effectively protect our intellectual property rights from misappropriation or other infringement in foreign countries where we have not
applied for patent protections, and where effective patent, trademark, trade secret and other intellectual property laws may be unavailable, or may not protect our proprietary rights as fully as U.S.
law. </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>In the future, we may need to take legal actions to prevent third parties from infringing upon or misappropriating our intellectual property or from otherwise gaining access to
our technology. Protecting and enforcing our intellectual property rights and determining their validity and scope could result in significant litigation costs and require significant time and
attention from our technical and management personnel, which could significantly harm our business. In addition, we may not prevail in such proceedings. An adverse outcome of such proceedings may
reduce our competitive advantage or otherwise harm our financial condition and our business. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
have entered into an agreement with one of our customers that requires us to place manufacturing or technical information, including patents, trade secrets, know-how, source code and
other intellectual property, into an escrow. Such agreement provides that the customer will have a right to access the escrowed materials if we experience insolvency, commit a material breach and/or
are unable or unwilling to deliver the ordered products in the allotted timeframe. Depending on the licenses granted upon release of the escrow, we may not be able to control the customer's use of the
released materials and may not be able to receive the same revenue that we would receive when selling the products in the ordinary course of business. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
participation in standards setting organizations or industry initiatives may require us to license our patents to other companies that adopt certain standards or specifications. As a result of
such licensing, our patents may not be enforceable against others who might otherwise be infringing those patents and the value of our intellectual property may be impaired. Likewise, in order to
provide products that are compliant with standards that have been adopted or will be adopted in the future, we may have to license patents owned by others. Such licensing requirements may materially
adversely affect the value of our products, and, consequently, our business, financial condition, liquidity, and operating results. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> We may be involved in intellectual property disputes in the future, which could divert management's attention, cause us to incur significant costs and prevent us from
selling or using the challenged technology.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Participants in the markets in which we sell our products have experienced litigation regarding patent and other intellectual property rights.
Regardless of their merit, responding to claims against us alleging infringement of certain patents or other intellectual property rights of others can be time consuming, divert management's attention
and resources and may cause us to incur significant expenses. While we do not believe that our products infringe upon the intellectual property rights of other parties and meritorious defenses would
exist with respect to any assertions to the contrary, we cannot be certain that our products would not be found infringing the intellectual property rights of others. If certain of our proprietary
rights are found to be invalid, among other potential actions, we may be required to: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>obtain from a third party claiming infringement a license to sell or use the relevant technology, which may not be
available on reasonable terms, or at all;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>stop manufacturing, selling, incorporating or using our products that use the challenged intellectual property; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>pay substantial monetary damages; or </FONT></DD></DL>
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<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>expend significant resources to redesign the products that use the technology and to develop non-infringing
technology. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>Any
of these actions could adversely affect our financial results. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> We may be obligated to indemnify our customers for claims that our intellectual property infringes the rights of others, which may result in substantial expenses to us.  </I></B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>We often indemnify our customers for intellectual property claims made against them for products incorporating our technology. As such, claims
against our customers may require us to incur substantial expenses, such as legal expenses, damages for past infringement or royalties for future use. While we have not incurred any indemnification
expenses to date, any future indemnity claim could adversely affect our relationships with our customers and result in substantial costs to us. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> We face a variety of risks associated with international sales and operations.  </I></B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>We currently derive, and expect to continue to derive, a significant portion of our revenue from international sales in various markets. Our
international revenue and operations are subject to a number of material risks, including, but not limited to: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>difficulties in staffing, managing and supporting operations in more than one country;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>difficulties in enforcing agreements and collecting receivables through foreign legal systems;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>fewer legal protections for intellectual property in foreign jurisdictions;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>foreign and U.S. taxation issues and international trade barriers;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>general economic and political conditions in the markets in which we operate;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>difficulties in obtaining any necessary governmental authorizations for the export of our products to certain foreign
jurisdictions;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>fluctuations in foreign economies;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>fluctuations in the value of foreign currencies and interest rates;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>availability and continuity of labor supply;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>trade and travel restrictions;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>outbreaks of contagious diseases;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>domestic and international economic or political changes, hostilities and other disruptions in regions where we currently
operate or may operate in the future;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>difficulties and increased expenses in complying with a variety of U.S. and foreign laws, regulations and trade standards,
including the Foreign Corrupt Practices Act; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>different and changing legal and regulatory requirements in the jurisdictions in which we currently operate or may operate
in the future. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>Negative
developments in any of these areas could result in a reduction in demand for our products, the cancellation or delay of orders already placed, difficulties in producing and </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>21</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>delivering
our products, threats to our intellectual property, difficulty in collecting receivables, and a higher cost of doing business. In addition, although we intend to implement an
anti-corruption compliance program throughout the company prior to this offering, violations of our compliance program may result in criminal or civil sanctions, including material
monetary fines, penalties and other costs against us or our employees, and may have a material adverse effect on our business. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> We have a limited history of operations, making it difficult to predict our future results of operations.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We have a limited history of operations, which makes it difficult to evaluate our business and financial prospects. While our operations began in
1999, we did not generate revenue from the commercial shipments of our initial products until 2001. Since then, our revenue, gross margin and results of operations have varied significantly and are
likely to continue to vary from quarter to quarter due to a number of factors, many of which are not within our control. For instance, changes in gross margin may result from various factors, such as
changes in pricing, changes in our fixed costs, changes in the mix of our products sold and changes in the amount of product manufactured versus the amount of product sold over time. In making an
investment decision, you should evaluate our business in light of the risks, expenses and difficulties frequently encountered by companies in the rapidly changing communications networking industry.
It is difficult for us to accurately forecast our future revenue and gross margin and plan expenses accordingly and, therefore, it is difficult for us to predict our future results of operations. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> We may not be able to obtain capital when desired on favorable terms, if at all, or without dilution to our stockholders.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>It is possible that we may not generate sufficient cash flow from operations or otherwise have the capital resources to meet our future capital
needs. If this occurs, we may need additional financing to execute on our current or future business strategies, including: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>investment in our research and development efforts by hiring additional technical and other personnel; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>expansion of our operating or manufacturing infrastructure;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>acquisitions of complementary businesses, products or technologies; or  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>pursuit of our strategic plans and response to competitive pressures. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>If
we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders could be significantly diluted, and these newly-issued
securities may have rights, preferences or privileges senior to those of existing stockholders, including those acquiring shares in this offering. We cannot assure you that additional financing will
be available on terms favorable to us, or at all. If adequate funds are not available or are not available on acceptable terms, if and when needed, our ability to fund our operations, take advantage
of unanticipated opportunities, develop or enhance our products, or otherwise respond to competitive pressures could be significantly limited. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>22</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><B><I> Potential future acquisitions could be difficult to integrate, divert the attention of key personnel, disrupt our business, dilute stockholder value and impair our financial
results.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As part of our business strategy, we have pursued and intend to continue to pursue acquisitions of complementary businesses, products or technologies
that we believe could accelerate our ability to compete in our existing markets or allow us to enter new markets. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Acquisitions
involve numerous risks, any of which could harm our business, including: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>difficulties in integrating the operations, technologies, products, existing contracts, accounting and personnel of the
target company and realizing the anticipated synergies of the combined businesses;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>difficulties in supporting and transitioning customers, if any, of the target company;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>diversion of financial and management resources from existing operations;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the price we pay or other resources that we devote may exceed the value we realize, or the value we could have realized if
we had allocated the purchase price or other resources to another opportunity;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>risks of entering new markets in which we have limited or no experience;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>potential loss of key employees, customers and strategic alliances from either our current business or the target
company's business;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>assumption of unanticipated problems or liabilities, such as problems with the quality of the target company's products; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>inability to generate sufficient revenue to offset acquisition costs;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>dilutive effect on our stock as a result of any equity-based acquisitions;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>failure to realize anticipated tax benefits;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>inability to successfully complete transactions with a suitable acquisition candidate; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>in the event of international acquisitions, risks associated with accounting and business practices that are different
from applicable U.S. practices and requirements. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>Acquisitions
also frequently result in the recording of goodwill and other intangible assets which are subject to potential impairments which have occurred in the past and which, were they to occur in
the future, could harm our financial results. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Acquisitions
may also result in the incurrence of liabilities. For example, in July&nbsp;2008, we acquired PGT Photonics, Inc., or PGT, which enabled us to gain access to PGT's unique tunable laser
products and technologies, complementary PIC capabilities and manufacturing infrastructure. In September&nbsp;2009, as a result of the macroeconomic downturn, we commenced dissolution of PGT and
synergized the acquired PGT technologies into our ongoing operations, and a liquidator was assigned to dissolve PGT pursuant to Italian law. Dissolution of entities under Italian law is a lengthy
process and we have not finalized the PGT dissolution. While we believe we have satisfied all outstanding PGT-related liabilities and have no material continuing obligations or commitments related to
PGT, it is possible that we may be subject to liabilities which, if substantial, could harm our operating results. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>23</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>As
a result, if we fail to properly evaluate acquisitions or investments, we may not achieve the anticipated benefits of any such acquisitions, and we may incur costs in excess of what we anticipate.
The failure to successfully evaluate and execute acquisitions or investments or otherwise adequately address these risks could materially harm our business and financial results. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> If we fail to maintain effective internal control over financial reporting in the future, the accuracy and timing of our financial reporting may be adversely affected.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The preparation of our consolidated financial statements involves a number of complex manual and automated processes, which are dependent upon
individual data input or review and require significant management judgment. One or more of these elements may result in errors that may not be detected and could result in a material misstatement of
our consolidated financial statements. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley Act, requires, among other things, that as a publicly traded company we maintain effective internal control over financial reporting and disclosure
controls and procedures. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>If
a material misstatement occurs in the future, we may fail to meet our future reporting obligations, we may need to restate our financial results and the price of our common stock may decline. Any
failure of our internal controls could also adversely affect the results of the periodic management evaluations and annual independent registered public accounting firm attestation reports regarding
the effectiveness of our internal control over financial reporting that will be required when the rules of the Securities and Exchange Commission, or the SEC, under Section&nbsp;404 of the
Sarbanes-Oxley Act, which would most likely become applicable to us beginning with the filing of our Annual Report on Form&nbsp;10-K for the year ending December&nbsp;31, 2012.
Effective internal controls are necessary for us to produce reliable financial reports and are important to helping prevent financial fraud. As a public company, we will need to augment our internal
finance functions and, if we are unable to do so, it may make it more difficult for us to meet our obligations under the Sarbanes-Oxley Act, including the requirement to find that our internal
controls are effective. If we cannot provide reliable financial reports or prevent fraud, our business and results of operations could be harmed, investors could lose confidence in our reported
financial information, and the trading price of our stock could drop significantly. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Potential changes in our effective tax rate could harm our future results.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We are subject to income taxes in the United States and various foreign jurisdictions, and our domestic and international tax liabilities are subject
to the allocation of expenses in differing jurisdictions. Our tax rate is affected by changes in the mix of earnings and losses in countries with differing statutory tax rates, certain
non-deductible expenses arising from the requirement to expense stock options and the valuation of deferred tax assets and liabilities, including our ability to utilize any net operating
losses. Increases in our effective tax rate could harm our results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> We may be unable to utilize our net operating loss carryforwards to reduce our income taxes.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As of December&nbsp;31, 2010, we had net operating loss, or NOL, carryforwards for U.S. federal and state tax purposes of $186.9&nbsp;million and
$64.8&nbsp;million, respectively, with a corresponding valuation allowance. If not utilized, these NOL carryforwards expire, beginning in 2022. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>24</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>Subsequent
to December&nbsp;31, 2010, as a consequence of equity transactions in January 2011, we anticipate further limitation on the use of our NOL carryforwards. The utilization of the NOL
carryforwards are subject to a substantial limitation imposed by Section&nbsp;382 of the Internal Revenue Code of 1986, as amended, and similar state provisions. As of December&nbsp;31, 2010, we
recorded deferred tax assets with a corresponding valuation allowance for the NOL carryforwards currently available after considering the existing Section&nbsp;382 limitation, based on the
preliminary results of a study that we are in the process of completing to assess the ownership changes that have occurred since our formation and their impact on the value of the NOLs. Upon
finalization of the Section&nbsp;382 study, we may adjust the amount of the NOLs that we can utilize. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> We will incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As a public company, we will incur legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley
Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules subsequently implemented by the SEC and the NASDAQ Stock Market, impose additional requirements on
public companies, including specific corporate governance practices. For example, the listing requirements of the NASDAQ Stock Market require that we satisfy certain corporate governance requirements
relating to independent directors, audit and compensation committees, distribution of annual and interim reports, stockholder meetings, stockholder approvals, solicitation of proxies, conflicts of
interest, stockholder voting rights and codes of conduct. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and
regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect these rules and regulations to make
it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantial additional
costs to maintain the same or similar coverage. These rules and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our
board committees or as executive officers. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> We are subject to governmental export and import controls that could subject us to liability or impair our ability to compete in international markets.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We are subject to export control laws, regulations and requirements that limit which products we sell and where and to whom we sell our products. In
some cases, it is possible that export licenses would be required from U.S. government agencies for some of our products in accordance with various laws, including but not limited to the International
Traffic in Arms Regulations, the Export Administration Act of 1979, the International Emergency Economic Powers Act of 1977, the Trading with the Enemy Act of 1917 and the Arms Export Control Act of
1976. In addition, various countries regulate the import of certain technologies and have enacted laws that could limit our ability to distribute our products. We may not be successful in obtaining
the necessary export and import licenses. Failure to comply with these and similar laws on a timely basis, or at all, or any limitation on our ability to export or sell our products would adversely
affect our business, financial condition and results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Changes
in our products or changes in export and import laws and implementing regulations may create delays in the introduction of new products in international markets, prevent our </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>25</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>customers
from deploying our products internationally or, in some cases, prevent the export or import of our products to certain countries altogether. Any change in export or import regulations or
related legislation, shift in approach to the enforcement or scope of existing regulations, or change in the countries, persons or technologies targeted by such regulations, could result in decreased
use of our products by, or in our decreased ability to export or sell our products to, existing or potential customers with international operations. In such event, our business and results of
operations could be adversely affected. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> We are subject to government regulations that could adversely impact our business.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Federal Communications Commission, or FCC, has jurisdiction over the entire U.S. telecommunications industry and, as a result, our products and
our U.S. customers are subject to FCC rules and regulations. Our business is also subject to other U.S. governmental and regulatory authorities, including the Environmental Protection Agency, the Food
and Drug Administration, the Department of Homeland Security, International Trafficking in Arms Regulations and the Department of Defense. Current and future regulations affecting communications
services, our products or our customers' businesses could impose new requirements or result in more stringent enforcement of existing laws, which could result in additional costs and increased
penalties, which could negatively affect our business. In addition, international regulatory standards could impair our ability to develop products for international customers in the future. Delays
caused by our compliance with regulatory requirements could result in postponements or cancellations of product orders. Further, we may not be successful in obtaining or maintaining any regulatory
approvals that may, in the future, be required to operate our business. Any failure to obtain such approvals could harm our business and results of operations. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> We sell our products to federal government entities under prime contracts and subcontracts. A loss or reduction of such contracts, a failure to obtain new contracts or a
modification or termination under such contracts could have an adverse effect on our business.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We derived a portion of our revenues for the fiscal year 2010 from contracts with agencies of the federal government or subcontracts with prime
defense contractors or subcontractors of the federal government. The loss or significant curtailment of any of these government contracts or subcontracts, or failure to exercise renewal options or
enter into new contracts or subcontracts, could have an adverse effect on our business, results of operations and financial condition. Continuation and the exercise of renewal options on existing
government contracts and subcontracts and new government contracts and subcontracts are, among other things, contingent upon the availability of adequate funding for the various federal government
agencies with which we and prime government contractors do business. Changes in federal government spending could directly affect our financial performance. Among the factors that could impact federal
government spending and which would reduce our federal government contracting and subcontracting business are: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>a significant decline in, or reapportioning of, spending by the federal government;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>changes, delays or cancellations of federal government programs or requirements;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the adoption of new laws or regulations that affect companies that provide products or services to the federal government; </FONT></DD></DL>
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<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>federal government shutdowns or other delays in the government appropriations process;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>curtailment of the federal government's use of third-party firms;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>changes in the political climate, including with regard to the funding for the products we provide; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>general economic conditions. </FONT></DD></DL>


<P style="font-family:arial;"><FONT SIZE=2>Furthermore,
if the current presidential administration were to reorder its budgetary priorities resulting in a general decline in U.S. defense spending, it could cause federal government agencies to
reduce their purchases under contracts, exercise their rights to terminate contracts in whole or in part, to issue temporary stop work orders or decline to exercise options to renew contracts, all of
which could harm our operations and significantly reduce our future revenues. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
addition, the federal government can terminate or modify any of its contracts with us or its prime contractors either for its convenience, or if we or its prime contractors default, by failing to
perform under the terms of the applicable contract. A termination arising out of our default could expose us to liability and have a material adverse effect on our ability to compete for future
contracts and subcontracts. If the federal government or its prime contractors terminate and/or materially modify any of our contracts or if any applicable options are not exercised, our failure to
replace sales generated from such contracts would result in lower sales and could adversely affect our earnings, which could have a material adverse effect on our business. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> We are subject to environmental, health and safety laws and regulations, which could subject us to liabilities, increase our costs, or restrict our business or operations in
the future.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our manufacturing operations and our products are subject to a variety of federal, state, local and international environmental, health and safety
laws and regulations. These laws and regulations govern, among other things, air emissions, wastewater discharges, the handling and disposal of hazardous substances and wastes, soil and groundwater
contamination, employee health and safety, and the use of hazardous materials in our products. Liability under environmental, health and safety laws can be joint and several and without regard to
fault or negligence. There can be no assurance that violations of these laws will not occur in the future, as a result of human error, accident, equipment failure or other causes. Our failure to
comply with present and future environmental, health or safety requirements, or the identification of contamination, could cause us to incur substantial costs, including cleanup costs, monetary fines,
and civil or criminal penalties, and subject us to property damage or personal injury claims, suspension of production, alteration of our manufacturing facilities or processes, or curtailment of
operations sales and adverse publicity. In addition, these laws and regulations have increasingly become more stringent over time and we expect that our operations and products will be affected by new
environmental requirements on an ongoing basis, which will likely result in additional costs, which could have a material adverse effect on our business. The identification of presently unidentified
environmental conditions, more vigorous enforcement of current environmental, health and safety requirements by regulatory agencies, or other unanticipated events could restrict our ability to expand
our facilities, require us to install costly pollution control equipment or incur other additional expenses, or require us to modify our manufacturing processes or the contents of our products, which
could have a material adverse effect on our business, financial condition and results of operations. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>27</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>Our
manufacturing facilities use, store and dispose of hazardous substances in connection with their processes. In addition, our operations have grown through acquisitions, and it is possible that
businesses that we have acquired may expose us to environmental liabilities that have not yet been discovered associated with historical site conditions or offsite locations. Some environmental laws
impose liability for contamination on current and former owners and operators of affected sites, or on parties that generated wastes disposed of at off-site locations, regardless of fault.
In the event we are found liable for any such contamination in the future, there can be no assurance that remediation costs, or
potential claims for personal injury or property or natural resource damages resulting from contamination, will not be material. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Some
jurisdictions in which our products are sold have enacted requirements regarding the hazardous material content of certain products. For example, member states of the European Union, are among a
growing number of jurisdictions, which have placed restrictions on the use of lead, among other chemicals, in electronic products, which affects the composition and packaging of our products. The
passage of such requirements in additional jurisdictions, or the tightening of standards or elimination of certain exemptions in jurisdictions where our products are already subject to such
requirements, could cause us to incur significant expenditures to make our products compliant with new requirements, or could limit the markets into which we may sell our products. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Additionally,
increasing efforts to control emissions of greenhouse gases, or GHG, may also impact us. Additional restrictions, limits, taxes, or other controls on GHG emissions could significantly
increase our operating costs and, while it is not possible to estimate the specific impact any final GHG regulations will have on our operations, there can be no assurance that these measures will not
have significant additional impact on us. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Risks related to this offering and our common stock  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> There is no existing market for our common stock and we do not know if one will develop to provide our stockholders adequate liquidity.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>There has not been a public trading market for shares of our common stock prior to this offering. An active trading market may not develop or be
sustained after this offering. The initial public offering price for the shares of common stock sold in this offering will be determined by negotiations between us and representatives of the
underwriters. This price may not be indicative of the price at which our common stock will trade after this offering. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Our financial results may vary significantly from quarter to quarter due to a number of factors, which may lead to volatility in our stock price.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our quarterly revenue and results of operations have varied in the past and may continue to vary significantly from quarter to quarter. This
variability may lead to volatility in our stock price as research analysts and investors respond to these quarterly fluctuations. These fluctuations are due to numerous factors,
including: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>fluctuations in demand for our products;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the timing, size and product mix of sales of our products;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>changes in our pricing and sales policies or the pricing and sales policies of our competitors; </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>28</FONT></P>

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<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>our ability to design, manufacture and deliver products to our customers in a timely and cost-effective manner
and that meet customer requirements;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>quality control or yield problems in our manufacturing operations;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>our ability to timely obtain adequate quantities of the components used in our products;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>length and variability of the sales cycles of our products;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>new product introductions and enhancements by our competitors and ourselves;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>unanticipated increases in costs or expenses; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>fluctuations in foreign currency exchange rates. </FONT></DD></DL>


<P style="font-family:arial;"><FONT SIZE=2>The
foregoing factors are difficult to forecast, and these, as well as other factors, could materially adversely affect our quarterly and annual results of operations. In addition, a significant
amount of our operating expenses is relatively fixed in nature due to our internal manufacturing, research and development, sales and general administrative efforts. Any failure to adjust spending
quickly enough to compensate for a revenue shortfall could magnify the adverse impact of such revenue shortfall on our results of operations. Moreover, our results of operations may not meet our
announced guidance or the expectations of research analysts or investors, in which case the price of our common stock could decrease significantly. There can be no assurance that we will be able to
successfully address these risks. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Our stock price may be volatile and you may be unable to sell your shares at or above the offering price.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The market price of our common stock could be subject to wide fluctuations in response to, among other things, the risk factors described in this
section of this
prospectus, and other factors beyond our control, such as fluctuations in the valuation of companies perceived by investors to be comparable to us. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Furthermore,
the stock markets have experienced price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations
often have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political and market
conditions, such as recessions, interest rate changes or international currency fluctuations, may negatively affect the market price of our common stock. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
the past, many companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may become the target of this type of
litigation in the future. Securities litigation against us could result in substantial costs and divert our management's attention from other business concerns, which could seriously harm our
business. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As
a result of the foregoing, fluctuations in the market price of our common stock could prevent our investors from selling their shares at or above the offering price. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> If research analysts do not publish research about our business or if they issue unfavorable commentary or downgrade our common stock, our stock price and trading volume
could decline.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The trading market for our common stock will depend in part on the research and reports that research analysts publish about us and our business. The
price of our common stock could </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>29</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>decline
if one or more research analysts downgrade our stock or if those analysts issue other unfavorable commentary or cease publishing reports about us or our business. If one or more of the
research analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our common stock could decrease, which could cause our stock price or trading volume to
decline. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Our principal stockholders, executive officers and directors own a significant percentage of our stock and will continue to have significant control of our management and
affairs after the offering, and they can take actions that may be against your best interests.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Following the completion of this offering, our executive officers and directors, and entities that are affiliated with them, will beneficially own an
aggregate of approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of our outstanding common stock. Our largest stockholder, Jerusalem Venture Partners, will beneficially own an aggregate of
approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of
our outstanding common stock following completion of this offering. This significant concentration of share ownership may adversely affect the trading price for our common stock because investors
often perceive disadvantages in owning stock in companies with controlling stockholders. Also, as a result, these stockholders, acting together, may be able to control our management and affairs and
matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, such as mergers, consolidations, the sale of substantially all of our
assets or amendments to our certificate of incorporation or by-laws. Consequently, this concentration of ownership may have the effect of delaying or preventing a change in control, including a
merger, consolidation or other business combination involving us, or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control, even if such a change in
control would benefit our other stockholders. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Our stock price could decline due to the large number of outstanding shares of our common stock eligible for future sale.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Sales of substantial amounts of our common stock in the public market following this offering, or the perception that these sales could occur, could
cause the market price of our common stock to decline. These sales could also make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem
appropriate. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Assuming
completion of this offering as of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2011, we would have had an aggregate of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common
stock outstanding, assuming no exercise of the underwriters'
over-allotment option and no exercise of outstanding options or warrants. The&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares sold pursuant to this offering will be immediately tradable without restriction. Of the
remaining shares: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>no shares will be eligible for sale immediately upon completion of this offering;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2> shares will be eligible for sale upon the expiration of lock-up agreements, subject in some
cases to volume and other restrictions of Rule&nbsp;144 and Rule&nbsp;701 under the Securities Act of 1933, as amended, or the Securities Act; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>The number of shares eligible for sale upon expiration of lock-up agreements assumes the conversion of all
outstanding shares of our Series&nbsp;A Preferred Stock, Series&nbsp;B Preferred Stock, Series&nbsp;B-2 Preferred Stock, Series&nbsp;C Preferred Stock,
Series&nbsp;C-1 Preferred Stock into an aggregate of 12,399,825 shares of common stock on a 1-for-1 basis and the conversion of all outstanding shares of our
Series&nbsp;B-1 Preferred Stock into an aggregate of 665,013 shares of Common Stock on a one for 1.161144499 basis. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>30</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>The
lock-up agreements expire 180&nbsp;days after the date of this prospectus, subject to potential extension in the event we release earning results or material news or a material event
relating to us occurs near the end of the lock-up period. J.P. Morgan Securities&nbsp;LLC and Barclays Capital Inc., as representatives of the underwriters, may, in their discretion and
at any time without notice, release all or any portion of the securities subject to lock-up agreements. After the completion of this offering, we intend to register approximately
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of our common stock that have been issued or reserved for future issuance under our stock incentive plans. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> Because our initial public offering price is substantially higher than the pro forma as adjusted net tangible book value per share of our outstanding common stock, new
investors will incur immediate and substantial dilution.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The initial public offering price is substantially higher than the pro forma as adjusted net tangible book value per share of our common stock based
on the expected total value of our total assets, less our goodwill and other intangible assets, less our total liabilities immediately following this offering. Therefore, if you purchase shares of our
common stock in this offering, you will experience immediate and substantial dilution of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share in the price you pay for our common stock as compared to the pro forma as adjusted net tangible book value as of March&nbsp;31, 2011. To the extent outstanding options or warrants to purchase
common stock are exercised, there will be further dilution. For a further description of the dilution that you will experience immediately after this offering, see "Dilution." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Our management has broad discretion in the use of the net proceeds from this offering and may not use the net proceeds effectively.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our management will have broad discretion in the application of the net proceeds of this offering. We cannot specify with certainty the uses to which
we will apply the net proceeds we will receive from this offering. The failure by our management to apply these funds effectively could adversely affect our ability to continue to maintain and expand
our business. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> We currently do not intend to pay dividends on our common stock and, consequently, your only opportunity to achieve a return on your investment is if the price of our common
stock appreciates.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We currently do not plan to declare dividends on shares of our common stock in the foreseeable future. See "Dividend policy" for more information.
Consequently, your only opportunity to achieve a return on your investment in our company will be if the market price of our common stock appreciates and you sell your shares at a profit. There is no
guarantee that the price of our common stock that will prevail in the market after this offering will ever exceed the price that you pay. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Our charter and organizational documents and Delaware law could prevent a takeover that stockholders consider favorable and could also reduce the market price of our stock.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our amended and restated certificate of incorporation and our amended and restated bylaws, which will be effective upon completion of this offering,
contain provisions that could delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which stockholders might otherwise
receive a premium for their shares. These provisions may also prevent or delay
attempts by stockholders to replace or remove our current management or members of our board of directors. These provisions include: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>providing for a classified board of directors with staggered, three-year terms; </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>31</FONT></P>

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<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>not providing for cumulative voting in the election of directors;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>authorizing our board of directors to issue, without stockholder approval, preferred stock rights senior to those of
common stock;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>prohibiting stockholder action by written consent;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>limiting the persons who may call special meetings of stockholders; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>requiring advance notification of stockholder nominations and proposals. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>The
affirmative vote of the holders of at least 66<SUP>2</SUP>/<SMALL>3</SMALL>% of our shares of capital stock entitled to vote, and not less than 66<SUP>2</SUP>/<SMALL>3</SMALL>% of the outstanding shares of each class
entitled to vote thereon as a class, is generally necessary to amend or repeal the above provisions that are contained in our amended and restated certificate of incorporation. Also, absent approval
of our board of directors, our amended and restated by-laws may only be amended or repealed by the affirmative vote of the holders of at least 66<SUP>2</SUP>/<SMALL>3</SMALL>% of our shares of
capital stock entitled to vote. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
addition, the provisions of Section&nbsp;203 of the Delaware General Corporate Law will govern us upon completion of this offering. These provisions may prohibit large stockholders, in particular
those owning 15% or more of our outstanding common stock, from engaging in certain business combinations without approval of substantially all of our stockholders for a certain period of time. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>These
and other provisions in our amended and restated certificate of incorporation, our amended and restated bylaws, our 2011 amended and restated investor rights agreement and under Delaware law
could discourage potential takeover attempts, reduce the price that investors might be willing to pay for shares of our common stock in the future and result in the market price being lower than it
would be without these provisions. See "Description of capital stock&#151;Preferred stock", "Description of capital stock&#151;Anti-takeover effects of Delaware law and our
certificate of incorporation and bylaws", and "Certain relationships and related party transactions&#151;Private placement financings&#151;Investor rights agreement." </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>32</FONT></P>

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<A HREF="#bg76301a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="de76301_special_note_regarding_forward__spe02700"> </A>
<A NAME="toc_de76301_1"> </A>
<BR></FONT><FONT SIZE=4><B>  Special note regarding forward-looking statements<BR>  and industry data  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>This prospectus contains forward-looking statements that are based on our management's beliefs and assumptions and on information
currently available to our management. The forward-looking statements are contained principally in "Prospectus summary," "Risk factors," "Management's discussion and analysis of financial condition
and results of operations," "Business" and "Compensation discussion and analysis." Forward-looking statements include information concerning our possible or assumed future results of operations,
business strategies, financing plans, competitive position, industry environment, potential growth opportunities and the effects of competition. Forward-looking statements include all statements that
are not historical facts and can be identified by terms such as "anticipates," "believes," "could," "seeks," "estimates," "expects," "intends," "may," "plans," "potential," "predicts," "projects,"
"should," "will," "would" or similar expressions and the negatives of those terms. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Forward-looking
statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future
results, performance or achievements expressed or implied by the forward-looking statements. We discuss these risks in greater detail in "Risk factors" and elsewhere in this prospectus. Given these
uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management's beliefs and assumptions only as of the date of this
prospectus. You should read this prospectus and the documents that we have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding
that our actual future results may be materially different from what we expect. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Except
as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these
forward-looking statements, even if new information becomes available in the future. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>This
prospectus also contains estimates and other information concerning our industry, including market size and growth rates, that are based on industry publications, surveys and forecasts, including
those generated by Cisco Systems, Dell'Oro and Ovum. This information involves a number of assumptions and limitations, and you are cautioned not to give undue weight to these estimates. These
industry publications, surveys and forecasts generally indicate that their information has been obtained from sources believed to be reliable. The industry in which we operate is subject to a high
degree of uncertainty and risk due to variety of factors, including those described in "Risk factors." </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>33</FONT></P>

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<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="de76301_use_of_proceeds"> </A>
<A NAME="toc_de76301_2"> </A>
<BR></FONT><FONT SIZE=4><B>  Use of proceeds  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We estimate that the net proceeds from our sale of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock
in this offering at an assumed initial
public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, the
midpoint of the price range set forth on the front cover of this prospectus after deducting estimated underwriting discounts and commissions and estimated offering expenses, will be approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, assuming no exercise by the underwriters of their over-allotment option, or
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million if the underwriters' option to purchase additional shares
is exercised in full. A $1.00 increase (decrease) in the assumed initial public offering price would increase (decrease) the net proceeds to us from this offering by
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million,
assuming the number of shares offered by us, as set forth on the front cover of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
intend to use the net proceeds of this offering primarily for working capital and general corporate purposes, including capital expenditures. The amount and timing of these expenditures will vary
depending on a number of factors, including competitive and technological developments and the rate of growth, if any, of our business. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
addition, we may use a portion of the net proceeds to selectively pursue acquisitions that complement our strengths and help us execute our strategies or to repay some or all of the outstanding
amounts under our debt facilities. However, we have no understandings or agreements with respect to any such acquisition or investment or debt repayment. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Pending
their use, we plan to invest our net proceeds from this offering in short-term, interest-bearing obligations, investment-grade instruments, certificates of deposit, or direct or
guaranteed obligations of the U.S. government. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="de76301_dividend_policy"> </A>
<A NAME="toc_de76301_3"> </A>
<BR></FONT><FONT SIZE=4><B>  Dividend policy  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We have never declared or paid cash dividends on our common stock. We currently intend to retain all available funds and any future
earnings for use in the operation of our business and do not anticipate paying any dividends on our common stock in the foreseeable future. Any future determination to declare dividends will be made
at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our board of
directors may deem relevant. In addition, our debt facility restricts our ability to declare or pay cash dividends on our capital stock. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>34</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="de76301_capitalization"> </A>
<A NAME="toc_de76301_4"> </A>
<BR></FONT><FONT SIZE=4><B>  Capitalization  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following table sets forth our consolidated cash and cash equivalents and capitalization as of March&nbsp;31, 2011
on: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>an actual basis;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>on a pro forma basis to give effect to (i)&nbsp;the conversion of all outstanding shares of preferred stock into shares
of our common stock and all outstanding warrants to purchase preferred stock into warrants to purchase common stock; and (ii)&nbsp;the reclassification of our outstanding preferred stock warrants
from long-term liabilities to additional paid-in capital; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>on a pro forma as adjusted basis to give effect to the conversion and reclassification described in the prior bullet and
(i)&nbsp;the sale by us of the shares of common stock offered by this prospectus at an initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, the midpoint of the price range on the cover of
this prospectus, and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us; and (ii)&nbsp;the filing of our amended and restated certificate of
incorporation, which will occur immediately prior to the closing of this offering. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>The
following information is illustrative only of our cash and cash equivalents and our capitalization following the completion of this offering and will be adjusted based on the actual initial public
offering price and other terms of this offering determined at pricing. You should read this table together with "Management's discussion and analysis of financial
condition and results of operations" and our financial statements and the related notes appearing elsewhere in this prospectus. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>35</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>As of March&nbsp;31, 2011 (in thousands except share and per share data)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Actual</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Pro-forma</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Pro-forma<BR>
as adjusted(1)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="BOTTOM">
<TH COLSPAN=10 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TH>
<TH style="font-family:arial;">&nbsp;</TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash and cash equivalents</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>31,059</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Long-term obligations, including current portion</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12,551</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Convertible preferred stock, $0.001 par value per share; 18,337,337 shares authorized, 12,972,547 shares issued and outstanding, actual; no shares
authorized, none issued or outstanding, pro forma; no shares authorized, issued or outstanding, pro forma as adjusted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>95,404</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Stockholders' equity (deficit):</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Preferred stock, $0.001 par value per share, no shares authorized or outstanding actual and pro forma; 25,000,000 shares authorized, no shares issued and
outstanding, pro forma as adjusted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Common stock, $0.001 par value per share; 22,084,428 shares authorized, 1,294,539 shares issued and outstanding, actual; 500,000,000 shares authorized,
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares issued and outstanding, pro forma; and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares authorized,
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares issued and outstanding, pro forma as adjusted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Additional paid-in capital(1)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>45,140</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accumulated deficit</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(79,916</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total stockholders' equity (deficit)(1)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(34,775</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total capitalization(1)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>73,180</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
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<DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT  style="font-size:8pt;line-height:9pt;">
(1)&nbsp;&nbsp;&nbsp;A $1.00 increase (decrease) in the assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, the midpoint of the range set forth on the cover page of this
prospectus, would
increase (decrease) each of additional paid-in capital, total stockholders' equity and total capitalization by $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, assuming that the number of shares offered
by us, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Each
increase of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million shares in the number of shares offered by us, together with a
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;increase in the assumed offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, would
increase additional paid-in capital, total stockholders' equity and total capitalization by approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million. </FONT></P>
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>The number of shares of our common stock to be outstanding following this offering as of March&nbsp;31, 2011 excludes: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>399,570&nbsp;shares of common stock issuable upon the exercise of options outstanding as of March&nbsp;31, 2011, with
a weighted average exercise price of $8.57&nbsp;per share;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>26,038&nbsp;shares of common issuable upon the exercise of outstanding warrants, with a weighted average exercise price
of $10.03 per share; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2> shares of our common stock reserved for future issuance under our stock-based compensation plans,
including&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;sh
ares of common stock reserved for issuance under our 2011 Equity Incentive Plan, which will become effective in connection with this offering, and any future increase in
shares reserved for issuance under such plan. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>36</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg76301a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="dg76301_dilution"> </A>
<A NAME="toc_dg76301_1"> </A>
<BR></FONT><FONT SIZE=4><B>  Dilution  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>If you invest in our common stock, your interest will be diluted to the extent of the difference between the amount per share paid by
purchasers of shares of common stock in this initial public offering and the pro forma as adjusted net tangible book value per share of common stock immediately after completion of this offering. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>At
March&nbsp;31, 2011, our pro forma net tangible book value was approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, or $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share of common stock. Pro forma net tangible book
value per
share represents total tangible assets less total liabilities, divided by the number of shares of common stock outstanding after giving effect to (i)&nbsp;the conversion of all outstanding shares of
our convertible preferred stock into an aggregate of 13,064,838 shares of our common stock effective immediately prior to the completion of this offering, for a total of 14,359,377 shares of common
stock outstanding on March&nbsp;31, 2011 and (ii)&nbsp;the reclassification of our preferred stock warrant liabilities from long-term liabilities to additional paid-in
capital. After giving effect
to our sale of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock in this offering at an assumed initial public offering price of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, the midpoint of the price range set forth on the front cover of
this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses, our pro forma as adjusted net tangible book value at March&nbsp;31, 2011 would
have been $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, or $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share of common stock. This represents an immediate increase in pro forma
net tangible book value of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share to existing
stockholders and an immediate dilution of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share to new investors. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
following table illustrates this dilution: </FONT></P>
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<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="56pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="56pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Assumed initial public offering price per share</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Pro forma net tangible book value per share as of March&nbsp;31, 2011</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Increase per share attributable to this offering</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Pro forma as adjusted net tangible book value per share after this offering</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Dilution per share to new investors in this offering</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>If all our outstanding options had been exercised, the pro forma net tangible book value as of March&nbsp;31, 2011 would have been
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, or $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, and the pro forma as adjusted net tangible book value after
this offering would have been $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, or
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, causing dilution to new investors of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
following table summarizes, on a pro forma as adjusted basis as of March&nbsp;31, 2011, the total number of shares of common stock purchased from us, the total consideration paid to us, and the
average price per share paid to us by existing stockholders and by new investors purchasing shares in this offering at the initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, the midpoint
</FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>37</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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<A NAME="page_dg76301_1_38"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:arial;"><FONT SIZE=2>of
the price range set forth on the front cover of this prospectus, before deducting estimated underwriting discounts and commissions and estimated offering expenses: </FONT></P>
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<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="47pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="44pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="47pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="44pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="54pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=17 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Shares purchased </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Total consideration </B></FONT></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Average<BR>
price<BR>
per share</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Number</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Percent</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Amount</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Percent</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=17 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Existing stockholders</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>New investors</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=11 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=17 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>The foregoing calculations exclude as of March&nbsp;31, 2011: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>399,570 shares of common stock issuable upon the exercise of options outstanding as of March&nbsp;31, 2011, with a
weighted average exercise price of $8.57 per share;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>26,038&nbsp;shares of common issuable upon the exercise of outstanding warrants, with a weighted average exercise price
of $10.03 per share; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2> shares of our common stock reserved for future issuance under our stock-based compensation plans,
including&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;sh
ares of common stock reserved for issuance under our 2011 Equity Incentive Plan, which will become effective in connection with this offering, and any future increase in
shares reserved for issuance under such plan. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>38</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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<A NAME="page_dg76301_1_39"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="dg76301_selected_consolidated_financial_data"> </A>
<A NAME="toc_dg76301_2"> </A>
<BR></FONT><FONT SIZE=4><B>  Selected consolidated financial data  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following selected consolidated financial data should be read together with our financial statements and accompanying notes and
"Management's discussion and analysis of financial condition and results of operations" appearing elsewhere in this prospectus. The selected financial data in this section is not intended to replace
our financial statements and the related notes. Our historical results are not necessarily indicative of our future results. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
derived the consolidated statements of operations data for each of the three years ended December&nbsp;31, 2010, 2009 and 2008 and the consolidated balance sheet data as of December&nbsp;31,
2010 and 2009 from our audited consolidated financial statements appearing elsewhere in this
prospectus. The consolidated statements of operations data for the years ended December&nbsp;31, 2007 and 2006, and the consolidated balance sheet data as of December&nbsp;31, 2008, 2007 and 2006
are derived from our audited consolidated financial statements that are not included in this prospectus. The consolidated statements of operations data for the three months ended March&nbsp;31, 2011
and 2010 and the consolidated balance sheet data as of March&nbsp;31, 2011 are derived from our unaudited condensed consolidated financial statements appearing elsewhere in this prospectus. </FONT></P>
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<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=3 style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ROWSPAN=3 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Three months ended March&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
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<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=14 ROWSPAN=2 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Year ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
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<TH COLSPAN=3 ROWSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(in thousands, except share and per share data)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
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<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2008</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2007</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2006</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2011</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
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<TH COLSPAN=24 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TH>
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<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>(unaudited)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
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<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Consolidated Statement of Operations Data:</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total revenues</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>108,336</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>65,730</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>67,211</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>52,029</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>46,719</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>34,028</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>23,633</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cost of revenues</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>79,375</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>57,846</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>63,157</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>47,673</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>38,583</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>24,759</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>17,742</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=20 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Gross profit</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>28,961</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,884</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,054</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,356</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,136</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,269</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,891</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating expenses:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Research and development</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12,010</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>19,540</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>19,031</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10,569</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,876</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,518</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,860</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sales and marketing</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,671</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,181</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,888</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,459</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,115</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>801</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>629</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>General and administrative</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,270</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,372</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,904</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,136</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,332</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>863</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>682</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Severance and liquidation expenses</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6,465</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Asset impairment</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6,621</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,841</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Restructuring charge</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,502</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=20 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total operating expenses</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>17,951</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>43,179</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>38,664</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>16,164</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>14,825</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,182</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,171</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=20 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income (loss) from operations</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>11,010</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(35,295</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(34,610</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(11,808</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(6,689</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,087</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,720</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other (expense) income:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest expense, net</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(1,328</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(1,617</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(2,148</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(1,088</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(972</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(276</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(349</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other (expense) income, net</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(292</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,574</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,711</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(387</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>433</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(145</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>52</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=20 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total other income (expense)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(1,620</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(43</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,563</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(1,475</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(539</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(421</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(297</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income (loss) before provision for income taxes</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,390</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(35,338</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(32,047</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(13,283</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(7,228</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,666</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,423</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Provision for income taxes</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>501</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>128</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>177</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,384</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>78</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=20 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net income (loss)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,889</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(35,466</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(32,224</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(13,283</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(7,228</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,282</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,345</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=20 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net income (loss) attributable to common shareholders</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,115</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(35,466</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(32,224</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(13,283</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(7,228</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>47,678</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>169</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=20 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net income (loss) per common share(1):</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Basic</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>0.73</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(23.74</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(22.68</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(15.22</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(8.62</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>36.35</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>0.11</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Diluted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>0.73</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(23.74</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(22.68</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(15.22</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(8.62</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>0.15</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>0.11</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=24 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>
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<TD WIDTH="9pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="58pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="58pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="58pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="49pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="49pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="64pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="58pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=23 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=3 style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ROWSPAN=3 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Three months ended March&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=14 ROWSPAN=2 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Year ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ROWSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(in thousands, except share and per share data)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2008</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2007</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2006</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2011</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="BOTTOM">
<TH COLSPAN=23 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TH>
<TH style="font-family:arial;">&nbsp;</TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>(unaudited)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Weighted average number of common shares outstanding</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Basic</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,519,124</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,494,124</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,420,786</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>872,714</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>838,059</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,311,760</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,521,308</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Diluted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,523,183</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,494,124</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,420,786</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>872,714</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>838,059</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>15,692,812</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,521,308</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Pro forma net income per common share (unaudited)(2):</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Basic</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Diluted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Weighted average number of shares used in pro forma computation (unaudited)(2):</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Basic</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Diluted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Pro forma as adjusted net income per common share (unaudited)(3):</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Basic</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Diluted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Weighted average number of shares used in pro forma as adjusted computation (unaudited)(3):</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Basic</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Diluted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=23 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->


<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(1)&nbsp;&nbsp;&nbsp;We
applied the two-class method to compute net income (loss) per common share which requires that earnings for the period be allocated between common and participating
securities based upon their respective contractual rights to receive distributed and undistributed earnings. See Note&nbsp;2 of the notes to each of our consolidated financial statements included
elsewhere in this prospectus. </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(2)&nbsp;&nbsp;&nbsp;The
pro forma basic and diluted net income per share have been calculated assuming (i)&nbsp;the conversion of all outstanding shares of convertible preferred stock into an aggregate
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of our common stock as of the beginning of the applicable period and (ii)&nbsp;the reclassification of
outstanding preferred stock warrants from long term liabilities to
additional paid-in capital as of the beginning of the applicable period. The numerator of the pro forma net income per share calculation is derived by adding
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;for the year
ended December&nbsp;31, 2010 related to the preferred stock warrant liability and by excluding the impact of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;for the
three months ended March&nbsp;31, 2011 related to the
redemption of preferred stock below carrying value to net income as reported to arrive at net income attributable to common shares of approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;for the year
ended December&nbsp;31, 2010 and the three months ended March&nbsp;31, 2011, respectively. </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(3)&nbsp;&nbsp;&nbsp;The
pro forma as adjusted basic and diluted net income per share have been calculated assuming (i)&nbsp;the conversion of all outstanding shares of convertible preferred stock into
an aggregate of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of our common stock as of the beginning of the applicable period and (ii)&nbsp;the
reclassification of outstanding preferred stock warrants from long term
liabilities to additional paid-in capital as of the beginning of the applicable period, (iii)&nbsp;the sale by us of the&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock in our initial public
offering as of the beginning of the applicable period, and (iv)&nbsp;the filing of our amended and restated certificate of incorporation immediately prior to the closing of this offering. The
numerator of the pro forma net income per share calculation is derived by adding $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;for the year ended December&nbsp;31, 2010 related to the preferred stock warrant liability
and
subtracting $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;for the three months ended March&nbsp;31, 2011 related to the redemption of preferred stock below carrying value to net income as reported to arrive at net
income
attributable to common shares of
</font></p>
</DIV>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>40</FONT></P>

<HR NOSHADE>
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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;for the year ended December&nbsp;31, 2010 and the three months ended March&nbsp;31, 2011,
 respectively. </FONT></P>
 </DIV>
<DIV style="padding:0pt;position:relative;width:57%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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</FONT></P>

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<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="49pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="49pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="49pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="46pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="46pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="89pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=19 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>As of December&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>As of March&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(in thousands)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2008</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2007</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2006</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2011</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="BOTTOM">
<TH COLSPAN=19 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TH>
<TH style="font-family:arial;">&nbsp;</TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>(unaudited)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Consolidated balance sheet data:</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash and cash equivalents</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12,397</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,122</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>35,929</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6,033</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,323</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>31,059</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Working capital</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>34,978</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>25,632</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>44,561</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,992</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>15,261</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>55,418</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total assets</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>74,311</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>55,433</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>107,331</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>48,295</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>38,908</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>97,756</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Long-term obligations, including current portion</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>13,033</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>14,750</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>16,287</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>19,102</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>14,930</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12,551</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Convertible preferred stock</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>122,958</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>122,958</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>122,958</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>49,582</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>34,037</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>95,404</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total stockholders' equity (deficit)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(84,561</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(93,471</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(61,039</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(30,100</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(18,024</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(34,775</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=19 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
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 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>41</FONT></P>

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</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg76301a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="di76301_management_s_discussion_and_an__man03466"> </A>
<A NAME="toc_di76301_1"> </A>
<BR></FONT><FONT SIZE=4><B>  Management's discussion and analysis of financial condition and results of operations  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I>The following discussion and analysis of our financial condition and results of operations should be read in
conjunction with "Selected consolidated financial data" and our consolidated financial statements and related notes appearing elsewhere in this prospectus. In addition to historical information, this
discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking
statements as a result of certain factors. Factors that we believe could cause or contribute to these differences include, but are not limited to, those identified below and elsewhere in this
prospectus, including those set forth under "Risk factors" and "Special note regarding forward-looking statements and industry data."</I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Overview  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We are a leading platform-based provider of core optical technologies enabling bandwidth for high-speed networks. Our
solutions provide the fundamental building blocks&#151;the creation, modulation, routing and detection of light&#151;that enable high-performance and
cost-effective optical networking. We produce active components that create and detect light, passive components that guide and combine light, and packaging solutions that integrate active
and passive components into high-performance, power-efficient, cost-effective, compact products. Through our vertically integrated technology and manufacturing platforms, we
design, fabricate and package a broad portfolio of optical components&#151;lasers, detectors, transmitters, receivers and modulators&#151;for module manufacturers and OEMs, who sell to
communication service providers and enterprises in the Access, Enterprise/Data Center and Long Haul/Metro segments of the communications network, and for other emerging end market applications, such
as defense and avionics, high performance computing, medical and security. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
are one of the few companies in our industry with vertically integrated technology and manufacturing platforms that span from Indium Phosphide and Silica-on-Silicon
fabrication to proprietary, highly automated assembly and test facilities. Our in-house capabilities allow us to offer a dependable supply of quality optical components and modules. Our
PIC and COB solutions incorporate greater functionality and intelligence at the component level, which enables us to serve next-generation, higher speed networks. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
sell our products to a global, diversified customer base that includes module manufacturers and OEMs, who in turn sell to communication service providers and enterprises, and to defense and
avionics contractors. Our customers include Cambridge Industries Group&nbsp;Ltd., Ciena Corporation, Finisar Corporation, Huawei Technologies&nbsp;Co.,&nbsp;Ltd., Lockheed Martin Corporation,
Source Photonics,&nbsp;Inc. and Superxon Technology,&nbsp;Ltd. We believe that greater than 70% of our revenue was sole-sourced in 2010, which we believe demonstrates the
differentiation of our products and gives us significant insight into our customers' product and technology roadmaps. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>We
believe we have an attractive financial profile, with superior top-line performance and strong quarter over quarter revenue visibility. We have grown our revenue at a 31.3% CAGR between
2005 and 2010 and 44.0% quarter over quarter from March&nbsp;31, 2010 to March&nbsp;31, 2011. We have also experienced significant margin expansion, as our income (loss) from operations margin
increased from 7.3% in the three months ended March&nbsp;31, 2010 to 12.0% in </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>42</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:arial;"><FONT SIZE=2>the
three months ended March&nbsp;31, 2011, and our adjusted income (loss) from operations margin increased from 9.8% in the three months ended March&nbsp;31, 2010 to 13.2% in the three months
ended March&nbsp;31, 2011. Adjusted income (loss) from operations margin is not calculated in accordance with GAAP. A reconciliation of this non-GAAP measure to income (loss) from
operations margin calculated and presented in accordance with GAAP is included below in "&#151;Key business metrics." Adjusted income (loss) from operations margin should not be considered as
an alternative to income (loss) from operations margin calculated and presented in accordance with GAAP. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Our history and key milestones  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In 1999, the company was founded with a vision of providing core optical technologies to enable bandwidth for high-speed
networks. Key milestones in our development include: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>In February 2003, we acquired the optical component packaging capabilities of CENIX,&nbsp;Inc., an optical start-up that
developed high-speed optical modules using an automated manufacturing platform;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>In April 2003, we introduced what we believe to be one of the first commercially available 10Gbps TOSAs to enable
pluggable transceivers;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>In April 2005, we acquired the optoelectronics division of TriQuint Semiconductor,&nbsp;Inc., formerly the
optoelectronics divisions of Lucent Technologies and Bell Labs;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>In September 2005, we introduced what we believe to be one of the lowest power consumption cooled 2.5Gbps small form
factor laser transmitters for integration into pluggable transceivers;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>In April 2007, we acquired Apogee Photonics,&nbsp;Inc., a supplier of laser sources for 10Gbps and 40Gbps markets; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>In November 2007, we acquired Inplane Photonics,&nbsp;Inc., a manufacturer of planar lightguide circuits,
or&nbsp;PLCs, for optical networks in defense and telecommunications applications using Silica-on-Silicon&nbsp;PLC technology;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>In July 2008, we acquired PGT Photonics&nbsp;S.p.A., or PGT, a silicon-based photonics business with tunable laser
technology, photonic integrated circuit, or PIC, capabilities and manufacturing infrastructure;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>In March 2011, we introduced what we believe to be one of the first 40Gbps/100Gbps coherent receivers with full
integration of 90&nbsp;degree hybrids, detectors, Trans-Impedance Amplifiers, or TIAs, and polarization splitters; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>In May 2011, we introduced what we believe to be one of the first commercially available 10Gbps TOSAs for DWDM in small
form-factor pluggable plus (SFP+) transceivers. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=3><B> Key business metrics  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Presented in the following table is a number of key metrics that we believe are helpful to evaluate our business. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>43</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=2,SEQ=46,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=33044,FOLIO='43',FILE='DISK104:[11ZCB1.11ZCB76301]DI76301A.;57',USER='NLUCCA',CD='12-AUG-2011;12:10' -->
<A NAME="page_di76301_1_44"> </A>


<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
management monitors a number of the key financial metrics shown below to help us evaluate trends, measure the effectiveness and efficiency of our operations and gauge our cash generation. These
include revenue, gross profit and gross margin, income (loss) from operations, income (loss) from operations margin, net income (loss) and net cash provided by (used in) operating activities. We
discuss a number of the elements of these metrics in "&#151;Financial operations overview" and "&#151;Critical accounting policies and estimates." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
addition, we present a number of key non-GAAP financial metrics in the table below that we believe are useful for investors and that we expect our management to use to evaluate our
business in future periods. These include adjusted gross profit, adjusted gross margin, earnings before interest, taxes, depreciation and amortization or EBITDA, EBITDA margin, adjusted EBITDA,
adjusted EBITDA margin, adjusted income (loss) from operations, adjusted income (loss) from operations margin, adjusted net income (loss) and free cash flow. These measures are not a recognized
presentation under GAAP. An explanation of the elements of each non-GAAP measure and a full reconciliation of each non-GAAP measure to the most directly comparable GAAP
measure, as well as a discussion of the material limitations of adjusted EBITDA, is presented in "&#151;Use of non-GAAP financial measures&#151;Reconciliation of
non-GAAP measures to most comparable GAAP measure." </FONT></P>
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<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="54pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="51pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="51pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="47pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="47pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=16 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Years ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Three months<BR>
ended March&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(in thousands, except percentages)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2008</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2011</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=16 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>GAAP metrics:</I></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total revenues</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>108,336</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>65,730</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>67,211</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>34,028</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>23,633</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Gross profit</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>28,961</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,884</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,054</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,269</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,891</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Gross margin</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>26.7%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12.0%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6.0%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>27.2%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>24.9%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income (loss) from operations</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>11,010</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(35,295</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(34,610</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,087</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,720</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income (loss) from operations margin</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10.2%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> (53.7)%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> (51.5)%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12.0%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7.3%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net income (loss)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,889</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(35,466</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(32,224</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,282</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,345</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash provided by (used in) operating activities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,233</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(14,766</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(23,176</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,456</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,483</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Non-GAAP metrics:</I></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjusted gross profit</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>30,483</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,198</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,028</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,499</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6,336</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjusted gross margin</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>28.1%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>14.0%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7.5%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>27.9%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>26.8%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjusted income (loss) from operations</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>13,175</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(19,664</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(22,214</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,477</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,326</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjusted income (loss) from operations margin</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12.2%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> (29.9)%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> (33.1)%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>13.2%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9.8%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjusted net income (loss)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>11,216</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(19,835</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(19,828</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,510</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,932</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>EBITDA</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>15,694</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(25,167</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(22,928</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,957</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,285</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>EBITDA margin</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>14.5%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> (38.3)%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> (34.1)%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>14.6%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>13.9%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjusted EBITDA</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>15,953</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(12,056</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(12,523</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,961</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,290</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjusted EBITDA margin</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>14.7%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> (18.3)%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> (18.6)%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>14.6%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>13.9%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Free cash flow</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,306</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(18,217</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(25,015</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(784</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,226</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=16 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2><B><I> Use of non-GAAP financial measures  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Adjusted gross profit, adjusted gross margin, adjusted income (loss) from operations, adjusted income (loss) from operations margin, adjusted net
income (loss), EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin and free cash flow are performance measures that are not calculated in accordance with GAAP. The foregoing
non-GAAP measures should not be </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>44</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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<P style="font-family:arial;"><FONT SIZE=2><A
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<BR>

<P style="font-family:arial;"><FONT SIZE=2>considered
as a substitute for, or superior to, the information provided to measures of financial performance calculated and presented in accordance with GAAP. The table at the end of this section in
"&#151;Reconciliation of non-GAAP measures to most comparable GAAP measure" provides a reconciliation of these non-GAAP measures to the most directly comparable measures
calculated and presented in accordance with GAAP. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
non-GAAP measures may not be comparable to similarly titled measures of other companies because other companies may not calculate such similarly titled measures in the same manner as
we do. We prepare our non-GAAP measures in each case to eliminate the impact of items that we do not consider indicative of our core operating performance. We encourage you to evaluate
these adjustments and the reasons we consider them appropriate. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> <U>Definitions of Non-GAAP Financial Measures</U>  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our non-GAAP financial measures are calculated as follows: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Adjusted gross profit</I></FONT><FONT SIZE=2> is based on gross profit and excludes the
amortization of certain purchased intangible assets and stock-based compensation expense.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Adjusted gross margin</I></FONT><FONT SIZE=2> is equal to adjusted gross profit divided by total
revenues.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Adjusted income (loss) from operations</I></FONT><FONT SIZE=2> is based on our income (loss) from
operations and excludes the amortization of purchased intangible assets, acquired in-process research and development costs, stock-based compensation expense, severance and liquidation
expenses related to PGT and asset impairment charges.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Adjusted income (loss) from operations margin</I></FONT><FONT SIZE=2> is equal to adjusted income
(loss) from operations divided by total revenues.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Adjusted net income (loss)</I></FONT><FONT SIZE=2> is based on our net income (loss) and excludes
the amortization of purchased intangible assets, acquired in-process research and development costs, preferred stock warrant charges, stock-based compensation expense, severance and
liquidation expenses related to PGT, asset impairment charges and the related tax effects of such non-GAAP adjustments.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>EBITDA</I></FONT><FONT SIZE=2> is based on our net income (loss) and excludes amortization of
purchased intangible assets, depreciation expense, net interest expense and provision for income taxes.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>EBITDA margin</I></FONT><FONT SIZE=2> is equal to EBITDA divided by total revenues. </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Adjusted EBITDA</I></FONT><FONT SIZE=2> is based on our net income (loss) and excludes the
amortization of purchased intangible assets, depreciation expense, acquired in-process research and development costs, preferred stock warrant charges, stock-based compensation expense,
severance and liquidation expenses related to PGT, asset impairment charges, net interest expense and provision for income taxes.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Adjusted EBITDA margin</I></FONT><FONT SIZE=2> is equal to adjusted EBITDA divided by total
revenues.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Free cash flow</I></FONT><FONT SIZE=2> is based on our cash provided by (used in) operating
activities and includes our purchases of property and equipment. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>45</FONT></P>

<HR NOSHADE>
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<P style="font-family:arial;"><FONT SIZE=2><A
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<P style="font-family:arial;"><FONT SIZE=2><I> <U>Use of Non-GAAP Financial Measures by Investors</U>  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We believe that the use of the foregoing non-GAAP measures is helpful for an investor in determining whether to invest in our common
stock. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
believe these non-GAAP measures are useful to investors because they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in
our industry. In addition, we believe that these measures are useful in evaluating our operating performance compared to that of other companies in our industry because the calculation of these
measures generally eliminates the effects of certain items that items may vary for different companies for reasons unrelated to overall operating performance. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> <U>Exclusions of GAAP-Measures from Non-GAAP Measures</U>  </I></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>We believe that it is appropriate to exclude items from certain of our non-GAAP measues that are not necessarily indicative of ongoing
operating performance and, therefore, limit comparability between periods and between us and similar companies. Further explanation of the excluded items is provided below: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Amortization of purchased intangible assets.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Included in
our GAAP financial results is the amortization of purchased intangible assets associated with prior acquisitions and which is non-cash in nature. We exclude these expenses from our
adjusted gross profit, adjusted gross margin, adjusted EBITDA, adjusted EBITDA margin, adjusted income (loss) from operations, adjusted income (loss) from operations margin and adjusted net income
(loss) because we believe they are not indicative of our core operating performance.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Stock-based compensation expense.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Included in our GAAP
financial results are non-cash charges for the fair value of stock options granted to employees. While this is a recurring item, we believe that excluding these charges from our adjusted
gross profit, adjusted gross margin, adjusted EBITDA, adjusted EBITDA margin, adjusted income (loss) from operations, adjusted income (loss) from operations margin and adjusted net income (loss)
provides for more accurate comparisons of our historical and current results of operations to those of similar companies because various valuation methodologies with subjective assumptions may be used
to calculate stock-based compensation expense.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Acquired in-process research and development
expenses.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Included in our GAAP financial results is an acquired in-process research and development charge in 2008. We
exclude acquired in-process research and development expenses from our adjusted EBITDA, adjusted EBITDA margin, adjusted income (loss) from operations, adjusted income (loss) from
operations margin and adjusted net income (loss) because we believe they are not indicative of our core operating performance.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Severance and liquidation expenses.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Included in our GAAP
financial results in 2009 are severance and liquidation expenses related to the down-sizing and dissolution of PGT in late 2009. We exclude severance and liquidation expenses from our adjusted EBITDA,
adjusted EBITDA margin, adjusted income (loss) from operations, adjusted income (loss) from operations margin and adjusted net income (loss) because we believe they are not indicative of our core
operating performance.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Asset impairment charges.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Included in our GAAP financial
results in 2009 and 2008 are non-cash asset impairment charges related primarily to the dissolution of our Italian </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>46</FONT></P>

<HR NOSHADE>
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<P style="font-family:arial;"><FONT SIZE=2><A
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<UL>

<P style="font-family:arial;"><FONT SIZE=2>subsidiary,
PGT, in late 2009. We exclude asset impairment charges from adjusted EBITDA, adjusted EBITDA margin, adjusted income (loss) from operations, adjusted income (loss) from operations margin
and adjusted net income (loss) because they are unique to the specific events and circumstances and we do not believe they are indicative of our core operating performance.  </FONT></P>

</UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Preferred stock warrant charge.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Included in our GAAP
financial results is a preferred stock warrant charge in 2010. We exclude preferred stock warrant charges from our adjusted EBITDA, adjusted EBITDA margin and adjusted net income (loss) because we
believe they are not indicative of our core operating performance. Additionally, this charge will no longer be applicable subsequent to this initial public offering.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Depreciation expense.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Included in our GAAP financial
results is depreciation expense associated with our capital expenditures. While the use of the capital equipment enables us to generate revenue for our business, we exclude depreciation expenses from
our EBITDA, EBITDA margin, adjusted EBITDA and adjusted EBITDA margin as the exclusion of depreciation expense enable us to compare our financial results with other companies in our industry. </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Interest expense, net.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Included in our GAAP financial
results is interest income and interest expense. Although our investing and borrowing activities are elements of our cost structure and provide us the ability to generate revenue and returns for our
owners, we exclude interest income and interest expense from our adjusted EBITDA and adjusted EBITDA margin to provide period-to-period comparability of our core results of
operations unassociated with our investing and borrowing activities.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Income tax effect of non-GAAP
adjustments.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;This amount adjusts the provision for income taxes to reflect the effect of the non-GAAP adjustments on
non-GAAP net income. The adjustments were calculated by applying the effective tax rate of the entity where each non-GAAP adjustment was recorded.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Provision for income taxes.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Included in our GAAP
financial results is provision for income taxes. While we are subject to various state and foreign taxes and the payment of such taxes is a necessary element of our operations, we exclude provision
for income taxes from our adjusted EBITDA and adjusted EBITDA margin to provide period-to-period comparability of our core results of operations unassociated with the varying
effective tax rates to which we are subject. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2><I> <U>Material Limitations of Non-GAAP Measures</U>  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Although non-GAAP measures are frequently used by investors and securities analysts in their evaluations of companies,
non-GAAP measures each have limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our results of operations as reported under
GAAP. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>47</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>A
number of the material limitations of our use and presentation of non-GAAP measures include: </FONT></P>
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<TD WIDTH="" style="font-family:arial;"></TD>
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<TD COLSPAN=3 style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Non-GAAP Measure</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Limitations</B></FONT><BR></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjusted gross profit and adjusted gross margin</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p align=left style="font-family:arial;margin-top:0pt;margin-left:20pt;text-indent:-20pt;"><FONT SIZE=2>  </FONT><FONT SIZE=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2>Exclusion of amortization of purchased
intangibles does not reflect the costs of acquiring or replacing intangible assets, which may be significant.  </FONT><FONT SIZE=2> <p align=left style="font-family:arial;margin-top:0pt;margin-left:20pt;text-indent:-20pt;"> </FONT><FONT
SIZE=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2>Exclusion of stock-based compensation expense does not necessarily reflect the full economic costs incurred by us for compensating our employees and service providers, which
may be significant.</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:10pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjusted net income (loss) from operations and adjusted net income (loss) from operations margin</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p align=left style="font-family:arial;margin-top:10pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>In addition to the limitations on adjusted gross profit and adjusted gross margin:</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:10pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p align=left style="font-family:arial;margin-top:10pt;margin-left:20pt;text-indent:-20pt;"><FONT SIZE=2>  </FONT><FONT SIZE=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2>Exclusion of acquired in-process research
and development expenses does not necessarily reflect the full economic costs incurred by us in acquiring certain research and development activities, which may be significant.  </FONT><FONT SIZE=2> <p align=left
style="font-family:arial;margin-top:0pt;margin-left:20pt;text-indent:-20pt;"> </FONT><FONT SIZE=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2>Exclusion of severance and liquidation expenses does not reflect the actual cost, which includes
severance and other costs, that were incurred in connection with the down-sizing and dissolution of PGT.</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:10pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjusted net income (loss)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p align=left style="font-family:arial;margin-top:10pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>In addition to the limitations on adjusted net income (loss) from operations and adjusted net income (loss) from
operations margin:</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:10pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p align=left style="font-family:arial;margin-top:10pt;margin-left:20pt;text-indent:-20pt;"><FONT SIZE=2>  </FONT><FONT SIZE=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2>Exclusion of preferred stock warrant
charge does not reflect the full economic cost of financing our business.</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:10pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p align=left style="font-family:arial;margin-top:10pt;margin-left:20pt;text-indent:-20pt;"><FONT SIZE=2>  </FONT><FONT SIZE=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2>Exclusion of asset impairment charges
does not reflect the cost of acquiring or replacing tangible and intangible assets, which may be significant.</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><p style="font-family:arial;margin-top:10pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjusted EBITDA and adjusted EBITDA margin</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:10pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>In addition to the limitations on adjusted net income (loss):</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:10pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p align=left style="font-family:arial;margin-top:10pt;margin-left:20pt;text-indent:-20pt;"><FONT SIZE=2>  </FONT><FONT SIZE=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2>Exclusion of depreciation expense does
not reflect the full economic costs of acquiring or replacing our long-term assets, which may be significant.  </FONT><FONT SIZE=2> <p align=left style="font-family:arial;margin-top:0pt;margin-left:20pt;text-indent:-20pt;"> </FONT><FONT
SIZE=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2>Exclusion of interest expense, net does not reflect the full economic cost of financing our business, including cash paid for interest.  </FONT><FONT SIZE=2> <p align=left
style="font-family:arial;margin-top:0pt;margin-left:20pt;text-indent:-20pt;"> </FONT><FONT SIZE=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2>Exclusion of provision for taxes does not reflect the full economic cost of conducting our business,
including cash paid for taxes, which may be significant.</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:10pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>EBITDA and EBITDA margin</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p align=left style="font-family:arial;margin-top:10pt;margin-left:20pt;text-indent:-20pt;"><FONT SIZE=2>  </FONT><FONT SIZE=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2>Exclusion of amortization of purchased
intangibles does not reflect the costs of acquiring or replacing intangible assets, which may be significant.  </FONT><FONT SIZE=2> <p align=left style="font-family:arial;margin-top:0pt;margin-left:20pt;text-indent:-20pt;"> </FONT><FONT
SIZE=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2>Exclusion of depreciation expense does not reflect the full economic costs of acquiring or replacing our long-term assets, which may be significant.  </FONT><FONT SIZE=2> <p
align=left style="font-family:arial;margin-top:0pt;margin-left:20pt;text-indent:-20pt;"> </FONT><FONT SIZE=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2>Exclusion of interest expense, net does not reflect the full economic cost of financing our
business, including cash paid for interest.  </FONT><FONT SIZE=2> <p align=left style="font-family:arial;margin-top:0pt;margin-left:20pt;text-indent:-20pt;"> </FONT><FONT SIZE=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2>Exclusion of provision
for taxes does not reflect the full economic cost of conducting our business, including cash paid for taxes, which may be significant.</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:10pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Free cash flow</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p align=left style="font-family:arial;margin-top:10pt;margin-left:20pt;text-indent:-20pt;"><FONT SIZE=2>  </FONT><FONT SIZE=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2>Exclusion of purchases of property and
equipment does not reflect the full cash cost of conducting our business, which may be significant.</FONT></TD>
</TR>
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<A NAME="page_di76301_1_49"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>
 </DIV>

<P style="font-family:arial;"><FONT SIZE=2><I> <U>Reconciliation of Non-GAAP Measures to Most Comparable GAAP Measure</U>  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following table reflects the reconciliation of our non-GAAP financial measures to the most comparable GAAP measure, for each of the
periods identified. </FONT></P>
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<TD WIDTH="8pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="46pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="44pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="44pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="40pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=17 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH ROWSPAN=3 style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=5 ROWSPAN=3 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Three months ended March&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=8 ROWSPAN=2 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Years ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ROWSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Unaudited<BR>
(in thousands, except percentages)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2008</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2011</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=17 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Total revenues</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">108,336</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">65,730</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">67,211</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">34,028</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">23,633</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=17 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Gross profit</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">28,961</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">7,884</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">4,054</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">9,269</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">5,891</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Non-GAAP adjustments:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Amortization of purchased intangibles</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,522</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,314</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">958</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">230</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">445</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Stock-based compensation expense</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">16</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Adjusted gross profit</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B> $</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>30,483</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>$</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>9,198</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>$</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>5,028</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>$</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>9,499</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>$</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>6,336</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Adjusted gross margin</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B> 28.1%</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>14.0%</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>7.5%</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>27.9%</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>26.8%</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=17 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Income (loss) from operations</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">11,010</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(35,295</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(34,610</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">4,087</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,720</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Non-GAAP adjustments:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Amortization of purchased intangible assets(1)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,145</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,520</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,991</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">386</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">601</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Acquired in-research and development</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">510</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Stock-based compensation expense</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">20</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">25</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">54</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">4</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">5</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Severance and liquidation expenses</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">6,465</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Asset impairment charges</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">6,621</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">9,841</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Adjusted income (loss) from operations</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B> $</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>13,175</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>$</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>(19,664</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>)</B></FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>$</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>(22,214</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>)</B></FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>$</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>4,477</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>$</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2,326</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Adjusted income (loss) from operations margin</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B> 12.2%</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>(29.9</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>)%</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>(33.1</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>)%</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>13.2%</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>9.8%</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=17 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Net income (loss)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">8,889</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(35,466</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(32,224</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,282</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,345</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Non-GAAP adjustments:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Amortization of purchased intangible assets(1)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,145</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,520</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,991</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">386</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">601</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Acquired in-research and development</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">510</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Stock-based compensation expense</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">20</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">25</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">54</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">4</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">5</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Severance and liquidation expenses</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">6,465</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Asset impairment charges</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">6,621</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">9,841</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Preferred stock warrant charge</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">239</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Tax effect of non-GAAP adjustments</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(77</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(162</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(19</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Adjusted net income (loss)</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B> $</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>11,216</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>$</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>(19,835</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>)</B></FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>$</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>(19,828</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>)</B></FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>$</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2,510</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>$</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>1,932</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=17 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Net income (loss)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">8,889</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(35,466</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(32,224</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,282</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,345</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Non-GAAP adjustments:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Amortization of purchased intangible assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,145</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,520</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,991</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">386</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">601</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Depreciation expense</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,831</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">6,034</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">4,980</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">629</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">912</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Interest expense, net</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,328</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,617</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,148</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">276</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">349</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Provision for income taxes</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">501</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">128</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">177</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,384</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">78</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>EBITDA</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B> $</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>15,694</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>$</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>(25,167</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>)</B></FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>$</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>(22,928</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>)</B></FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>$</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>4,957</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>$</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>3,285</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>EBITDA margin</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B> 14.5%</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>(38.3</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>)%</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>(34.1</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>)%</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>14.6%</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>13.9%</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=17 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Net income (loss)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">8,889</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(35,466</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(32,224</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,282</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,345</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Non-GAAP adjustments:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Amortization of purchased intangible assets(1)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,145</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,520</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,991</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">386</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">601</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Acquired in-process research and development</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">510</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Stock-based compensation expense</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">20</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">25</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">54</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">4</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">5</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Depreciation expense</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,831</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">6,034</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">4,980</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">629</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">912</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Severance and liquidation expenses</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">6,465</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Asset impairment charges</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">6,621</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">9,841</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Interest expense, net</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,328</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,617</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,148</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">276</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">349</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Preferred stock warrant charge</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">239</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Provision for income taxes</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">501</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">128</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">177</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,384</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">78</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Adjusted EBITDA</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B> $</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>15,953</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>$</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>(12,056</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>)</B></FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>$</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>(12,523</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>)</B></FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>$</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>4,961</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>$</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>3,290</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Adjusted EBITDA margin</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B> 14.7%</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>(18.3</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>)%</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>(18.6</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>)%</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>14.6%</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>13.9%</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=17 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Net cash provided by (used in) operating activities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">8,233</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(14,766</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(23,176</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,456</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,483</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Non-GAAP adjustments:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Purchase of property and equipment</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(2,927</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(3,451</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(1,839</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(2,240</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(257</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Free cash flow</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B> $</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>5,306</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>$</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>(18,217</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>)</B></FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>$</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>(25,015</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>)</B></FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>$</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>(784</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>)</B></FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>$</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2,226</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=17 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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<DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT  style="font-size:8pt;line-height:9pt;">
(1)&nbsp;&nbsp;&nbsp;Reflects amortization of purchased intangible assets included in cost of revenues and operating expenses. </FONT></P>
 </DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>49</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
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<P style="font-family:arial;"><FONT SIZE=3><B> Financial operations overview  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Total revenues  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We derive our revenues from sales of hardware products to module manufacturers and OEMs&nbsp;with end market applications in communications and
enterprise networks and other emerging end market applications. Geographically, while many design wins are obtained outside of Asia, given the predominance of Asia-based manufacturing, in
2010, 76.3% of our products were shipped to the Asia Pacific region, 16.7% to North America and 7.0% to Europe and the Middle East. We sell our products primarily through our direct sales force and in
certain cases in conjunction with manufacturer representatives and distributors. In 2010, we sold our products to more than 180 customers with only one of our customers, Finisar Corporation (15.3% of
revenues), representing more than 10.0% of our revenues. We expect that a substantial portion of our revenues will continue to come from a limited number of customers. We closely monitor customer
orders and work directly with many of our customers to understand their forward-looking demand profiles, which we use to build our rolling forecast models. Several of our larger customers grant annual
or semi-annual percent share awards based on a competitive bidding process, the results of which are incorporated into our forecasts and provide us with increased visibility into our
revenues. We anticipate that our revenues will increase as a result of increased demand for our products. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Cost of revenues and gross profit  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our cost of revenues consists primarily of the cost to manufacture and test our products, which are assembled at one of our internal manufacturing
facilities or our contract manufacturing partners' facilities. We have a diverse set of suppliers to help balance considerations related to product availability, quality and cost. Our cost of revenues
also includes labor costs for our employees and contract laborers engaged in the production of our products. Our cost of revenues is impacted by manufacturing variances such as assembly and test
yields and production volumes. For new product introductions, our manufacturing yields typically increase over time as we gain manufacturing experience with the product, and increased production
volumes provide economies of scale in material procurement unit costs and manufacturing fixed cost distribution. Additionally, our cost of revenues includes reserves for excess and obsolete inventory,
amortization of certain purchased intangible assets, warranty, shipping and allocated facilities costs. We anticipate our gross margins will improve over time due to increased scale, manufacturing
efficiencies and continued introduction of higher performance products with greater component-level intelligence and integrated functionality. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> Operating expenses  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our operating expenses have traditionally consisted of research and development, sales and marketing and general and administrative expenses. In
addition, in certain periods our operating expenses have also included severance and liquidation expenses and asset impairment charges. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Research and development.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Research and development expenses consist primarily of salaries, bonuses and benefits for research and development personnel involved in
the design, development and quality testing of new products or enhancements of existing products including engineering services, development software and hardware tools, depreciation of </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>50</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
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<BR>

<P style="font-family:arial;"><FONT SIZE=2>capital
equipment and the cost of facilities attributable to research and development. We generally expense research and development as incurred. Property and equipment that are acquired or
constructed for research and development activities and that have alternate future
uses are capitalized and depreciated over their estimated useful lives on a straight-line basis. We have invested and expect to continue to invest significant time and capital into our
research and development operations. Consistent with our strategy, we expect research and development expenses to increase in absolute dollars as we enhance and expand our products in the future. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Sales and marketing.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Sales and marketing expenses consist primarily of salaries, bonuses and benefits for our sales and marketing personnel, sales commissions paid
to manufacturer representatives, distributors and others, costs related to sales and marketing programs and services and the cost of facilities attributable to sales and marketing operations. We
expect sales and marketing expenses to increase in absolute dollars as we increase the number of sales and marketing professionals and sales commissions paid to manufacturer representatives,
distributors and others. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> General and administrative.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;General and administrative expenses consist primarily of salaries, bonuses and benefits for our executive, finance, human resources and
administrative personnel, as well as the cost of facilities attributable to general and administrative operations, depreciation, legal, accounting and professional service fees and other corporate
expenses. We expect general and administrative expenses to increase in the short term, as we develop the infrastructure necessary to operate as a public company, including but not limited to costs and
expenses for directors fees, increased personnel costs, increased directors and officers insurance premiums, audit and legal fees, investor relations fees, expenses for compliance with the
Sarbanes-Oxley Act of 2002 and rules implemented by the SEC and The NASDAQ Stock Market,&nbsp;LLC. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Severance and liquidation expenses.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Severance and liquidation expenses related to costs incurred in connection with the down-sizing and dissolution of PGT in late
2009. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Asset impairment.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We record asset impairment charges when it is determined that the carrying value of our assets is not recoverable. In 2009, we recorded an asset
impairment charge of $6.6&nbsp;million related to PGT. In 2008, we recorded asset impairment charges of $9.8&nbsp;million, primarily related to the goodwill and intangible assets acquired in the
acquisition of PGT. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Interest expense, net  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Interest expense, net consists of amounts incurred with respect to our short-term and long-term borrowings offset by interest
income received on our cash and cash equivalents. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Other (expense) income, net  </I></B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Other (expense) income, net primarily consists of change in the fair value of preferred stock warrants, foreign exchange gains (losses), gain (loss)
on disposal of property and equipment and other income or expense. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>51</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
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<P style="font-family:arial;"><FONT SIZE=2>Change
in the fair value of preferred stock warrants consists of charges recorded to mark our company's outstanding preferred stock warrants to fair value at each reporting date. In connection with
this initial public offering, our preferred stock warrants will be reclassified to additional paid-in capital, and they will no longer be required to be classified as a liability and
adjusted to their fair market value through earnings each period. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>For
operations in Mexico, the functional currency is the U.S. Dollar. Assets and liabilities of those operations are translated into U.S. dollars using period-end exchange rates; income
and expenses are translated using the average exchange rates for the reporting period. Translation adjustments for the operations in Mexico are included in other (expense) income, net. Realized
foreign currency transaction gains and losses are included in other (expense) income, net. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Provision for income taxes  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our income (loss) from operations is subject to varying rates of tax in the United States, Mexico and other jurisdictions. Consequently, our
effective tax rate is dependent upon the geographic distribution of our earnings or losses and the tax laws and regulations in each geographical region. We expect that our income taxes will vary in
relation to our profitability and the geographic distribution of our profits. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Critical accounting policies and estimates  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>To understand our financial statements, it is important to understand our critical accounting policies and estimates. We prepare our
consolidated financial statements in accordance with GAAP. The preparation of consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts of
assets, liabilities, revenue, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the
circumstances. Actual results could differ significantly from the estimates made by our management. To the extent that there are differences between our estimates and actual results, our future
financial statement presentation, financial condition, results of operations and cash flows will be affected. We believe that the accounting policies discussed below are critical to understanding our
historical and future performance, as these policies relate to the more significant areas involving management's judgments and estimates. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Revenue recognition  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We generate revenues principally from the sale of hardware products to our customers. Revenues from product sales are recognized when delivery has
occurred, persuasive evidence of an agreement exists, the price is fixed or determinable, no further obligation exists and collectability is reasonably assured. Delivery is generally considered to
have occurred upon shipment of products. Contracts and/or customer purchase orders are used to determine the existence of an arrangement. We assess whether the price is fixed or determinable based on
the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. We generally do not grant a right of return to our customers. In transactions where a
customer's contractual terms include a provision for customer acceptance, revenues are recognized either when such acceptance has been obtained or the acceptance </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>52</FONT></P>

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<BR>

<P style="font-family:arial;"><FONT SIZE=2>provision
has lapsed. We assess collectability based primarily on the creditworthiness of the customer as determined by credit checks and the customer's payment history. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Our
terms of sale generally provide that title passes to the buyer upon shipment by us. Amounts billed to clients for shipping and handling of products are classified as total revenues in the
consolidated statements of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Valuation of long-lived assets  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Long-lived assets, including property and equipment and intangible assets, such as technology and customer relationships, are reviewed
for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. An impairment loss would be recognized in the consolidated statement of operations
in the period that the impairment occurs. As a result of the significance of our long-lived assets, any recognized impairment loss could have a material adverse impact on our financial
position and/or results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>No
asset impairment charges were recognized during the year ended December&nbsp;31, 2010. During the year ended December&nbsp;31, 2009, an asset impairment charge of $6.6&nbsp;million was
recognized for the impairment of property and equipment, inventory, and receivables at PGT. During the year ended December&nbsp;31, 2008, we recorded asset impairment charges of $9.8&nbsp;million,
primarily related to the goodwill and intangible assets acquired in the acquisition of PGT. As a result, we had no goodwill balances remaining as of December&nbsp;31, 2010, 2009 or 2008. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Events
giving rise to impairment are an inherent risk in the industry and cannot be predicted. Factors that we consider in deciding when to perform an impairment review include significant
under-performance of a product line in relation to expectations, significant negative industry or economic trends, and significant changes or planned changes in our use of the assets. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Valuation of inventories  </I></B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Inventories are recorded at the lower of cost (using the first-in, first-out method) or market, after we give appropriate
consideration to obsolescence and inventories in excess of anticipated future demand. In assessing the ultimate recoverability of inventories, we are required to make estimates regarding future
customer demand, the timing of new product introductions, economic trends and market conditions. If the actual product demand is significantly lower than forecasted, we could be required to record
additional inventory write-downs that would be charged to cost of revenues. Any write-downs would have an adverse impact on our gross profit. During the years ended December&nbsp;31, 2010, 2009 and
2008, we recorded (recovery) provision for excess and obsolete inventory of $(0.2&nbsp;million), $0.9&nbsp;million and $2.0&nbsp;million, respectively. During the three months ended
March&nbsp;31, 2011 and 2010, we did not record any provision for excess and obsolete inventory. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>53</FONT></P>

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<A HREF="#bg76301a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Product warranties  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>For the majority of our products, we provide a product warranty of one year or less from the date of shipment. We estimate the costs of our warranty
obligations based on our historical experience, expectations and future conditions. To the extent we experience increased warranty claim activity or increased costs associated with servicing those
claims, our warranty costs will increase resulting in decreases to gross margin. We periodically assess the adequacy of our recorded warranty liabilities and adjust the amounts as necessary. Products
are tested against specified functionality requirements prior to delivery, but we nevertheless from time to time experience claims under our warranty guarantees. A provision for estimated future costs
related to warranty activities is charged to cost of revenues based upon historical product failure rates and historical costs incurred in correcting product failures. If we experience an increase in
warranty claims compared with our historical experience, or if the cost of servicing warranty claims is greater than expected, our gross margin would be adversely affected. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Stock-based compensation  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We account for stock options issued to employees using a fair-value-based method, under which we measure the cost of employee services
received in exchange for an award of equity instruments, including stock options, based on the grant-date fair value of the award. The resulting cost is recognized for the awards expected
to vest over the period during which an employee is required to provide service in exchange for the award, usually the vesting period. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
fair value of the stock options issued to employees was estimated at each grant date using the Black-Scholes option-pricing model. One of the inputs to this model is the estimate of the fair value
of the underlying common stock on the date of grant. The other inputs include an estimate of the expected volatility of the stock price, an option's expected term, the risk-free interest
rate over the option's expected term, the option's exercise price and our expectations regarding dividends. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
do not have a history of market prices for our common stock because our stock has not been publicly traded. We utilized the observable data for a group of peer companies that grant options with
substantially similar terms to assist in developing our volatility assumption. We have derived our expected term assumption based on the simplified method, which results in an expected term based on
the midpoint between the vesting date and the contractual term of an option. The simplified method was chosen because we have limited historical option exercise experience due to our company being
privately held. The weighted-average risk-free interest rate was based on a zero coupon U.S. Treasury instrument whose term was consistent with the expected life of the stock options. We
have not paid and do not anticipate paying cash dividends on our shares of common stock; therefore, the expected dividend yield was assumed to be zero. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
value of options issued to nonemployees was insignificant. No employee equity awards were issued during the three months ended March&nbsp;31, 2011. A summary of the significant </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>54</FONT></P>

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<BR>

<P style="font-family:arial;"><FONT SIZE=2>assumptions
used to estimate the fair value of employee equity awards during the years ended December&nbsp;31, 2010 and 2009 were as follows: </FONT></P>
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<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="107pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="107pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Year ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Expected life (in years)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>7.00</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>7.00</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Risk-free interest rate</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1.14%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1.52%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Expected volatility</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>75%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>75%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
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<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Dividend yield</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
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 <P style="font-family:arial;"><FONT SIZE=2>If factors change and we employ different assumptions, stock-based compensation expense on future awards may differ significantly from what we have recorded in
the past. Higher volatility and longer expected terms result in an increase to stock-based compensation determined at the date of grant. Future stock-based compensation expense and unrecognized
stock-based compensation will increase to the extent that we grant additional equity awards to employees or we assume unvested equity awards in connection with acquisitions. If there are any
modifications or cancellations of the underlying unvested securities, we may be required to accelerate any remaining unearned stock-based compensation expense or incur incremental cost. Stock-based
compensation expense affect our cost of revenue; research and development expenses; sales and marketing expenses; and general and administrative expenses. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Assuming
a fair value of our common stock of $2.37 at December&nbsp;31, 2010 and March&nbsp;31, 2011, respectively, the aggregate intrinsic value of the vested and unvested options to purchase
shares of our common stock outstanding as of December&nbsp;31, 2010 and March&nbsp;31, 2011, was $0.3&nbsp;million. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
estimate our forfeiture rate based on an analysis of our actual forfeitures and will continue to evaluate the appropriateness of the forfeiture rate based on actual forfeiture experience, analysis
of employee turnover behavior, and other factors. Changes in the estimated forfeiture rate can have a significant effect on reported stock-based compensation expense, because the cumulative effect of
adjusting the rate for all expense amortization is recognized in the period the forfeiture estimate is changed. The effect of forfeiture adjustments during 2010 and 2009 and the three months ended
March&nbsp;31, 2011 was insignificant. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Significant factors, assumptions, and methodologies used in estimating fair value of common stock  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We performed valuations to estimate the fair value of our common stock for option grants from January&nbsp;1, 2010 to March&nbsp;31, 2011. The
fair value of our common stock was $0.12 for the </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>55</FONT></P>

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<BR>

<P style="font-family:arial;"><FONT SIZE=2>2010
grants. The per share exercise prices and Black-Scholes fair values of the option awards as of the respective dates of valuation are as follows: </FONT></P>
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<TD WIDTH="91pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="82pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="78pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Date of grant</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Number of<BR>
options granted</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Exercise price<BR>
per share of<BR>
common stock</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Black-Scholes<BR>
fair value per<BR>
option award</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>April&nbsp;22, 2010</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,767</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0.52</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0.05</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>May&nbsp;24, 2010</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>20,672</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0.52</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0.05</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>July&nbsp;12, 2010</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4,326</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0.52</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0.05</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>November&nbsp;9, 2010</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3,652</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0.52</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0.05</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>The fair value of our common stock for the 2010 grants was based on a valuation that was completed as of December&nbsp;31, 2009, and took into consideration a
number of objective and subjective factors that we believe market participants would consider, including (a)&nbsp;our business, financial condition and results of operations, including related
industry trends affecting our operations; (b)&nbsp;our forecasted operating performance and projected future cash flows; (c)&nbsp;the liquid or illiquid nature of our common stock;
(d)&nbsp;liquidation preferences, redemption rights and other rights and privileges of our preferred stock; (e)&nbsp;market multiples of our most comparable public peers; (f)&nbsp;recent sales
of our securities; and (g)&nbsp;market conditions affecting our industry.
We did not update the valuation during 2010 due to the fact that 2010 option grants were not significant as noted in the table above. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
used the market-comparable approach and the income approach to estimate our enterprise value. The market-comparable approach estimates the value of a company by applying market multiples of
publicly-traded companies in the same or similar lines of business to the results and projected results of the company being valued. The income approach involves applying an appropriate
risk-adjusted discount rate to projected cash flows based on forecasted revenue and costs. We then used an option pricing model to allocate the calculated enterprise value between the
preferred and common shares outstanding. In applying the market comparable and income approaches to determine a value of the common stock, a discount was applied to reach the final valuation of the
common stock based on the fact that, inasmuch as we are a private company, there are impediments to liquidity, including lack of publicly available information and the lack of a trading market. The
size of the discount was determined using quantitative analysis and was in part&nbsp;a function of market participant assumptions as to the estimated time for us to reach a liquidity event. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>When
estimating the enterprise value at each valuation date and the corresponding value of the common stock, we determined an appropriate weighting between the valuations derived from the
market-comparable and the income approaches, based on the quality and reliability of the data underlying each indication of value. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>For
our determination of an appropriate discount for lack of marketability, we used a protective put option model that considered such variables as time to liquidity, the volatility and yield of the
underlying stock and the risk-free rate. We utilized a 25% discount for lack of marketability for awards issued in 2010. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>There
is inherent uncertainty in our forecasts and projections and, if we had made different assumptions and estimates than those described previously, the amount of our stock-based </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>56</FONT></P>

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<BR>

<P style="font-family:arial;"><FONT SIZE=2>compensation
expense, net loss, and net loss per share amounts could have been materially different. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
recorded stock-based compensation of $20,000, $25,000, $54,000 and $4,000 during 2010, 2009 and 2008, and the three months ended March&nbsp;31, 2011, respectively. In future periods, we expect
stock-based compensation to increase as we issue additional stock-based awards to continue to attract and retain employees. As of March&nbsp;31, 2011, we had $14,000 of
unrecognized stock-based compensation expense related to equity instruments previously granted, which is expected to be recognized over a weighted average period of 0.7&nbsp;years. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> Income taxes  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We use the liability method of accounting for income taxes as set forth in the authoritative guidance for income taxes. Under this method, we
recognize deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the respective carrying amounts and tax bases of our assets and liabilities. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
continue to assess the realizability of our deferred tax assets, which primarily consist of net operating loss, or NOL, carry-forwards. In assessing the realizability of these deferred tax assets,
management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. We establish valuation allowances when necessary to reduce deferred tax
assets to the amounts expected to be realized. The factors used to assess the likelihood of realization include our latest forecast of future taxable income and available tax planning strategies that
could be implemented to realize the net deferred tax assets. As of March&nbsp;31, 2011 and December&nbsp;31, 2010 and 2009, our deferred tax assets had full valuation allowances on them as we do
not currently have sufficient positive evidence to recognize such deferred tax assets at this time. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>If
our recent trend of profitability continues, we may determine that there is sufficient positive evidence to support a reversal of, or decrease in, the valuation allowance. If we were to reverse all
or some part of our valuation allowance our financial statements in the period of reversal would likely reflect an increase in assets on our balance sheet and a corresponding tax benefit to our
statement of operations in the amount of the reversal. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As
of December&nbsp;31, 2010, we had U.S. federal net operating loss carryforwards of $186.9&nbsp;million and state net operating loss carryforwards of $64.8&nbsp;million which expire in 2022
through 2029. The Tax Reform Act of 1986, or the Act, provides for a limitation of the annual use of net operating loss and research and development tax credit carryforwards following certain
ownership changes (as defined by the Act) that limit our ability to utilize carryforwards. As such, we are in the process of completing a study to assess ownership changes that have occurred since our
formation and their impact on the value of the NOLs. As a result, we expect that the federal and state net operating loss carryforwards mentioned above will be limited, and we have disclosed our
deferred tax asset related to net operating losses based on our best estimate of useable net operating losses. As a consequence of equity transactions consummated in January 2011, we anticipate
further limitations on the use of our net operating losses. Our current estimate is that the total available net operating loss carryforwards are approximately
$19&nbsp;million for federal purposes and approximately $18&nbsp;million for state purposes. This limit could change upon completion of the study. In addition, we have concluded that there are
sufficient net operating loss carryforwards from a federal tax perspective to offset the 2010 federal tax liability. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>57</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>We
adopted Accounting Standards Codification (ASC) 740-10, </FONT><FONT SIZE=2><I>Accounting for Uncertainty in Income Taxes&#151;an Interpretation of FASB Statement
No.&nbsp;109</I></FONT><FONT SIZE=2>, on January&nbsp;1, 2007. We have analyzed our tax position in all jurisdictions where we are required to file an income tax return and have concluded that we
do not have any material unrecognized tax benefits. We have filed a U.S. income tax return as well as returns for various state jurisdictions. Our policy is to recognize interest and penalties accrued
on any unrecognized tax benefit within the provision for income taxes on the consolidated statement of operations. We have no interest or penalties accrued for any unrecognized tax benefits for any
periods presented. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
annual provision for income taxes and the determination of the resulting deferred tax assets and liabilities involve a significant amount of management judgment. Management's judgments,
assumptions and estimates relative to the current provision for income taxes take into account current tax laws, our interpretation of current tax laws and possible outcomes of current and future
audits conducted by foreign and domestic tax authorities. We operate within federal, state and international taxing jurisdictions and are subject to audit in these jurisdictions. These audits can
involve complex issues that may require an extended period of time to resolve. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
intend either to invest our non-United States earnings permanently in foreign operations or to remit these earnings to our United States entities in a tax-free manner. For
this reason, we have not recorded federal income taxes on the $1.8&nbsp;million of undistributed earnings of our foreign subsidiaries. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>58</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
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<P style="font-family:arial;"><FONT SIZE=3><B> Results of operations  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following tables set forth a summary of our consolidated statement of operations and the related changes for the periods
indicated: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:73%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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<!-- User-specified TAGGED TABLE -->
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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="56pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="54pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="54pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=18 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=3 style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ROWSPAN=3 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Three months<BR>
ended March&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=8 ROWSPAN=2 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Year ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ROWSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(in thousands, except for percentages, share and per share amounts)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2008</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2011</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="BOTTOM">
<TH COLSPAN=18 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TH>
<TH style="font-family:arial;">&nbsp;</TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>(unaudited)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Consolidated statement of operations data:</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total revenues</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>108,336</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>65,730</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>67,211</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>34,028</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>23,633</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cost of revenues</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>79,375</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>57,846</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>63,157</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>24,759</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>17,742</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Gross profit</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>28,961</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,884</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,054</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,269</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,891</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Gross margin</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>26.7%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12.0%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6.0%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>27.2%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>24.9%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating expenses:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Research and development</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12,010</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>19,540</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>19,031</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,518</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,860</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sales and marketing</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,671</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,181</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,888</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>801</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>629</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>General and administrative</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,270</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,372</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,904</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>863</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>682</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Severance and liquidation expenses</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6,465</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Asset impairment</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6,621</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,841</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total operating expenses</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>17,951</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>43,179</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>38,664</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,182</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,171</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating income (loss)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>11,010</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(35,295</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(34,610</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,087</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,720</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest expense, net</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(1,328</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(1,617</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(2,148</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(276</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(349</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other (expense) income, net</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(292</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,574</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,711</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(145</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>52</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income (loss) before income taxes</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,390</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(35,338</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(32,047</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,666</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,423</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Provision for income taxes</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>501</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>128</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>177</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,384</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>78</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net income (loss)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,889</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(35,466</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(32,224</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,282</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,345</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=18 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=3><B> Comparison of three months ended March&nbsp;31, 2011 and 2010  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Total revenues  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Total revenues were $34.0&nbsp;million for the three months ended March&nbsp;31, 2011 compared to $23.6&nbsp;million for the three months ended
March&nbsp;31, 2010, an increase of $10.4&nbsp;million, or 44.1%. This increase in total revenues was primarily attributable to growth in sales of our products in support of the Access and Long
Haul/Metro network segments. Sales to customers located in the Asia-Pacific region, primarily due to China's aggressive FTTH rollout, grew by $8.8&nbsp;million in the three months ended
March&nbsp;31, 2011 compared to March&nbsp;31, 2010. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Cost of revenues and gross margin  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Cost of revenue was $24.8&nbsp;million for the three months ended March&nbsp;31, 2011 compared to $17.7&nbsp;million for the three months ended
March&nbsp;31, 2010, an increase of $7.1&nbsp;million, or 40.1%. Cost of revenues increased primarily due to higher sales volumes that drove higher material and labor costs. Gross margin was 27.2%
for the three months ended March&nbsp;31, 2011 compared to 24.9% for the three months ended March&nbsp;31, 2010. Gross margin increased as a </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>59</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=6,SEQ=62,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=611306,FOLIO='59',FILE='DISK104:[11ZCB1.11ZCB76301]DK76301A.;46',USER='AGUERRE',CD='12-AUG-2011;10:14' -->
<A NAME="page_dk76301_1_60"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:arial;"><FONT SIZE=2>result
of economies of scale realized as a result of higher levels of manufacturing equipment utilization and improvements in manufacturing yields and cycle times. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> Operating expenses  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following table sets forth operating expenses in absolute dollars and as a percentage of revenue: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:54%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"150%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="150%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="78pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="78pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="42pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="41pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=21 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Three months ended March&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>2011 </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>2010 </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Change </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Amount</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Percentage of<BR>
revenue</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Amount</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Percentage of<BR>
revenue</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>$</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>%</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="BOTTOM">
<TH COLSPAN=21 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TH>
<TH style="font-family:arial;">&nbsp;</TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>(unaudited)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating expenses:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Research and development</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3,518</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>10.3%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,860</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>12.1%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>658</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>23.0%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sales and marketing</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>801</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2.4%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>629</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2.7%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>172</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>27.3%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>General and administrative</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>863</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2.5%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>682</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2.9%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>181</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>26.5%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=17 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total operating expenses</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>5,182</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>15.2%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4,171</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>17.7%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,011</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>24.2%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=21 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2><I> Research and development.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The increase in research and development expenses was primarily due to higher research and development personnel costs resulting from
increases in salary, bonuses and benefits, and the increased utilization of development materials during the three months ended March&nbsp;31, 2011 as we continued to invest in research and
development activities to support our current and future technology and product roadmaps. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Sales and marketing.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The increase in sales and marketing expenses was primarily attributable to an increase in sales commissions resulting from higher sales
volumes. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> General and administrative.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The increase in general and administrative expenses was primarily due to an increase in general and administrative personnel costs
resulting from increases in salary, bonuses and benefits and outside professional services in support of continued business expansion. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> Other expense (income), net  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Other expense was $0.1&nbsp;million for the three months ended March&nbsp;31, 2011 compared to other income of $0.1&nbsp;million for the three
months ended March&nbsp;31, 2010. The increase of $0.2&nbsp;million in other expense was primarily a result of gains on the sale of assets and grant income received in 2010 that did not occur in
2011. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Interest expense, net  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Interest expense, net was $0.3&nbsp;million for the three months ended March&nbsp;31, 2011 compared to $0.3&nbsp;million for the three months
ended March&nbsp;31, 2010. The decrease of $73,000 was primarily a result of declining principal balances on our outstanding debt. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Provision for income taxes  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our effective tax rate for the three months ended March&nbsp;31, 2011 was expense of 37.6% compared to an expense of 5.8% in the
prior-year period. Our expense from income taxes is based on an estimated annual effective tax rate for 2011 of 37.6%. Our estimated annual </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>60</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=7,SEQ=63,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=633347,FOLIO='60',FILE='DISK104:[11ZCB1.11ZCB76301]DK76301A.;46',USER='AGUERRE',CD='12-AUG-2011;10:14' -->
<A NAME="page_dk76301_1_61"> </A>


<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:arial;"><FONT SIZE=2>effective
tax rate includes the U.S. federal statutory rate of 35.0%, state income taxes and foreign income taxed at different rates, partially offset by the impact of the expected usage of NOLs that
are not currently estimated to be limited. Our effective tax rate for the three months ended March&nbsp;31, 2010 principally reflected state and foreign taxes, and was lower than the same period in
2011, due to our ability to utilize NOLs without limitation in 2010. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=3><B> Comparison of the years ended December&nbsp;31, 2010 and 2009  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Total revenues  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Total revenues were $108.3&nbsp;million in 2010 compared to $65.7&nbsp;million in 2009, an increase of $42.6&nbsp;million, or 64.8%. This
increase in total revenues was attributable to overall market improvement together with increased market share and new product introductions in the Access network segment, driven by the aggressive
FTTH build out in the Asia-Pacific region, and Long Haul/Metro network segments. Sales to customers located in the Asia-Pacific region grew by $36.2&nbsp;million in 2010 compared to 2009. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Cost of revenues and gross margin  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Cost of revenues was $79.4&nbsp;million for the year ended December&nbsp;31, 2010 compared to $57.8&nbsp;million for the year ended
December&nbsp;31, 2009, an increase of $21.6&nbsp;million, or 37.4%. Cost of revenues increased due to higher sales volumes that drove higher material and labor costs primarily for the Access and
Long Haul/Metro products. Gross margin was 26.7% for the year ended December&nbsp;31, 2010 compared to 12.0% for the year ended December&nbsp;31, 2009. This significant improvement in gross margin
was due to improved economies of scale realized as a result of higher levels of manufacturing utilization, improved manufacturing yields and cycle times, improved efficiencies from the dissolution and
integration of PGT and lower charges for excess and obsolete inventory in 2010 compared to 2009. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Operating expenses  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following table sets forth operating expenses in absolute dollars and as a percentage of revenue: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:54%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="150%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="78pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="78pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="54pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="56pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=21 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Years ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ROWSPAN=2 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>2010 </B></FONT></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ROWSPAN=2 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>2009 </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ROWSPAN=2 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Change </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Percentage of<BR>
revenue</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Percentage of<BR>
revenue</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Amount</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Amount</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>$</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>%</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="BOTTOM">
<TH COLSPAN=21 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TH>
<TH style="font-family:arial;">&nbsp;</TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>(unaudited)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating expenses:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Research and development</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12,010</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>11.1%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>19,540</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>29.7%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(7,530</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(38.5)%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sales and marketing</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,671</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2.5%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,181</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4.8%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(510</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(16.0)%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>General and administrative</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,270</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3.0%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,372</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>11.2%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(4,102</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(55.6)%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Severance and liquidation expenses</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6,465</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9.8%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(6,465</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(100.0)%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Asset impairment</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6,621</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10.1%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(6,621</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(100.0)%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=17 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total operating expenses</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>17,951</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>16.6%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>43,179</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>65.7%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(25,228</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(58.4)%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=21 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2><I> Research and development.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The decrease in research and development expenses was primarily related to the absence of $7.7&nbsp;million of PGT research and
development expenses incurred in </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>61</FONT></P>

<HR NOSHADE>
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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:arial;"><FONT SIZE=2>2009
that did not recur in 2010 due to the dissolution of PGT in late 2009, partially offset by increased research and development personnel costs, resulting from increases in salary, bonuses and
benefits. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Sales and marketing.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The decrease in sales and marketing expenses was primarily related to the absence in 2010 of $0.5&nbsp;million of PGT-related sales and
marketing expenses due to the down-sizing and dissolution of PGT in late 2009. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> General and administrative.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The decrease in general and administrative expenses was primarily related to the absence in 2010 of $4.6&nbsp;million of PGT-related
general and administrative expenses due to the down-sizing and dissolution of PGT in late 2009. This was partially offset by increases in personnel costs, resulting from increases in salary, bonuses
and benefits and information system costs to help support our continued business expansion. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Severance and liquidation expenses.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Severance and liquidation expenses were related to expenses incurred pursuant to the down-sizing and dissolution of PGT in late
2009. No such expenses were incurred in 2010. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Asset impairment.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We record asset impairment charges when it is determined that the carrying value of our assets is not recoverable. In September&nbsp;2009, in
conjunction with our dissolution of PGT, we recorded an asset impairment charge of $6.6&nbsp;million related to the write down of property and equipment, inventory and receivables to their net
realizable value. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Interest expense, net  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Interest expense, net was $1.3&nbsp;million for the year ended December&nbsp;31, 2010 compared with $1.6&nbsp;million for the year ended
December&nbsp;31, 2009. The decrease was primarily a result of a reduction in the interest rate on our revolving credit facility for 2010 compared to 2009. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Other (expense) income, net  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Other expense, net was $0.3&nbsp;million for the year ended December&nbsp;31, 2010 compared to other income, net of $1.6&nbsp;million for the
year ended December&nbsp;31, 2009. This decrease in other income, net was primarily related to certain income earned by PGT in 2009, which was not part of the ongoing operations of the business and
was therefore classified as other income. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Provision for income taxes  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our effective tax rate for the year ended December&nbsp;31, 2010 was 5.3% compared to 0.4% in the prior year period. Our tax expense for the year
ended December&nbsp;31, 2010 consisted of state and foreign income taxes. The tax expense for the year ended December&nbsp;31, 2009 consisted solely of foreign income tax expense. The increase
from 2009 to 2010 is due to the generation of U.S. taxable income in 2010. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>62</FONT></P>

<HR NOSHADE>
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<P style="font-family:arial;"><FONT SIZE=2><A
NAME="page_dm76301_1_63"> </A>


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</FONT> <FONT SIZE=2>
<A HREF="#bg76301a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Comparison of the years ended December&nbsp;31, 2009 and 2008  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Total revenues  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Total revenues declined to $65.7&nbsp;million in 2009 from $67.2&nbsp;million in 2008, a decrease of $1.5&nbsp;million, or 2.2%. The decline
was due to a decrease in sales in the Long Haul/Metro network segments partially offset by an increase in sales in the Access network segment. This decrease was primarily related to the macroeconomic
downturn that began in late 2008 and continued into the first half of 2009. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Cost of revenues and gross margin  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Cost of revenues was $57.8&nbsp;million for the year ended December&nbsp;31, 2009 compared to $63.2&nbsp;million for the year ended
December&nbsp;31, 2008, a decrease of $5.4&nbsp;million, or 8.5%. Cost of revenues decreased primarily as a result of lower sales volumes and increased manufacturing efficiencies that resulted in
material, labor and overhead cost reductions of $2.2&nbsp;million in our U.S. and Mexican operations, a reduction of $2.0&nbsp;million in PGT-related costs of revenues as a result of
cost reduction measures taken in late 2008 and 2009 and a reduction in charges recorded for excess and obsolete inventory in our U.S. and Mexican operations. Gross margin was 12.0% for the year ended
December&nbsp;31, 2009 compared to 6.0% for the year ended December&nbsp;31, 2008. The improvement in gross margin was due to lower charges for excess and obsolete inventory in 2009 compared to
2008 and general cost reduction initiatives initiated in late 2008 and 2009 that had a greater impact in 2009. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Operating expenses  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following table sets forth operating expenses in absolute dollars and as a percentage of revenue: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:57%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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<DIV ALIGN="CENTER"><TABLE width="140%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="47pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="78pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="47pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="78pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="45pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="47pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=20 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Years ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>2009 </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>2008 </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=4 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Change </B></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Amount</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Percentage of<BR>
revenue</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Amount</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Percentage of<BR>
revenue</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>$</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>%</B></FONT><BR></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="BOTTOM">
<TH COLSPAN=20 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>(unaudited)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating expenses:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Research and development</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>19,540</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>29.7%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>19,031</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>28.3%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>509</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2.7%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sales and marketing</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,181</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4.8%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,888</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5.8%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(707</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> (18.2)%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>General and administrative</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,372</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>11.2%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,904</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8.8%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,468</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>24.9%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Severance and liquidation expenses</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6,465</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9.8%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6,465</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>N/A</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Asset impairment</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6,621</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10.1%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,841</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>14.6%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(3,220</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> (32.7)%</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=16 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total operating expenses*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>43,179</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>65.7%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>38,664</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>57.5%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,515</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>11.7%</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=20 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
<DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT  style="font-size:8pt;line-height:9pt;">
*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Percentages may not add due to rounding. </FONT></P>
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2><I> Research and development.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The increase in research and development expenses was primarily related to the acquisition of PGT in mid-2008, as PGT-related
research and development expenses increased by $1.1&nbsp;million in 2009 compared to 2008. There were five months of operations for PGT in 2008 versus nine months in 2009. This was partially offset
by the one-time, in-process $0.5&nbsp;million research and development charge incurred in 2008. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>63</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
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<P style="font-family:arial;"><FONT SIZE=2><I> Sales and marketing.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The decrease in sales and marketing expenses was primarily related to the rationalization of PGT sales and marketing expenses in late 2008,
which resulted in a $0.7&nbsp;million reduction in sales and marketing expenses in 2009 compared to 2008. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> General and administrative.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;This increase in general and administrative expenses was primarily related to the acquisition of PGT in mid-2008, as
PGT-related general and administrative expenses increased by $1.5&nbsp;million in 2009 compared to 2008. There were five months of expenses for PGT in 2008 compared to nine months in 2009. These
expenses were primarily related to the transitional service agreement billings associated with PGT. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><I> Severance and liquidation expenses.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Severance and liquidation expenses of $6.5&nbsp;million in 2009 were related to expenses incurred pursuant to the down-sizing
and dissolution of PGT in late 2009. No such expenses were incurred in 2008. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Asset impairment.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We record asset impairment charges when it is determined that the carrying value of our assets is not recoverable. In 2009, in conjunction with
our dissolution of PGT, we recorded an asset impairment charge of $6.6&nbsp;million related to the writedown of property and equipment, inventory and receivables to their net realizable value. In
2008, we recorded asset impairment charges of $9.8&nbsp;million, primarily related to the goodwill and intangible assets acquired in the acquisition of PGT. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Interest expense, net  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Interest expense, net was $1.6&nbsp;million for the year ended December&nbsp;31, 2009 compared with $2.1&nbsp;million for the year ended
December&nbsp;31, 2008. The decrease was primarily a result of lower interest rates on our borrowings in 2009 as compared to 2008. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Other (expense) income, net  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Other income, net was $1.6&nbsp;million for the year ended December&nbsp;31, 2009 compared with other income, net of $4.7&nbsp;million for the
year ended December&nbsp;31, 2008. This decrease was primarily related to a reduction in certain PGT-related income earned in 2009 as compared to 2008, which was not part of the ongoing operations
of the business and therefore classified as other income. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Provision for income taxes  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our provision for income taxes decreased to $0.1&nbsp;million for the year ended December&nbsp;31, 2009 from $0.2&nbsp;million for the year
ended December&nbsp;31, 2008. Our provision consisted of foreign income taxes for both periods. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Acquisition/dissolution  </I></B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>On July&nbsp;24, 2008, we purchased PGT for an aggregate purchase price of $47.7&nbsp;million. The acquisition of PGT enabled us to gain access
to PGT's unique tunable laser products and technologies, complementary PIC capabilities and manufacturing infrastructure. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
purchase price was allocated to the assets acquired and the liabilities assumed, based on their estimated fair values at the date of acquisition. In September 2009, as a result of the
macroeconomic downturn, we commenced dissolution of PGT and a liquidator was assigned to dissolve the company. We synergized certain PGT products, technology and manufacturing infrastructure into our
ongoing operations. The assignment of the liquidator effectively marked </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>64</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
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<BR>

<P style="font-family:arial;"><FONT SIZE=2>our
loss of control of PGT. As a result of this loss of control, we were required to deconsolidate the subsidiary. Due to the Italian liquidation of PGT, we retained no interest with value in PGT. We
believe we have no material continuing obligations or commitments related to PGT. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>During
the third quarter of 2009, an asset impairment charge of $6.6&nbsp;million was recorded. Also in 2009, prior to deconsolidation, PGT incurred expenses related to the down-sizing and
dissolution of PGT amounting to $6.5&nbsp;million. There were no assets and liabilities of PGT presented in our consolidated balance sheet as of December&nbsp;31, 2010 or 2009. Included in our
consolidated statements of operations for 2009 and 2008 were revenues of $3.4&nbsp;million and $3.5&nbsp;million and a net loss of $(24.7&nbsp;million) and $(17.4&nbsp;million), respectively,
for PGT, including impairment charges. Our consolidated statement of cash flows for 2009 reflects the use of cash in the amount of $14.9&nbsp;million related to PGT, including $6.9&nbsp;million in
support of severance and liquidation activities. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Liquidity and capital resources  </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Since our inception, we have financed our operations primarily through the sale of preferred stock, cash flows generated by
operations and borrowings under debt instruments. As of March&nbsp;31, 2011, we had cash and cash equivalents totaling $31.1&nbsp;million and $55.4&nbsp;million of working capital. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
believe that our existing cash and cash equivalents and our cash flow from operations will be sufficient to fund our operations and our capital expenditures for at least the next 12&nbsp;months.
Our future capital requirements will depend on many factors, including our rate of revenue growth, the expansion of our sales and marketing activities, the timing and extent of spending to support
product development efforts and expansion into new markets and geographies, the timing of introductions of new products and enhancements to existing products and the continuing market acceptance of
our products. Although we are not currently a party to any agreement or letter of intent regarding potential investments in, or acquisitions
of, complementary businesses, applications or technologies, we may enter into these types of arrangements, which could require us to seek additional equity or debt financing. Additional funds may not
be available on terms favorable to us or at all. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
will also incur costs as a public company that we have not previously incurred, including, but not limited to, costs and expenses for directors fees, increased personnel costs, increased directors
and officers insurance premiums, audit and legal fees, investor relations fees, expenses for compliance with the Sarbanes-Oxley Act of 2002 and rules implemented by the SEC and The NASDAQ Stock
Market,&nbsp;LLC and various other costs. We cannot currently estimate how much these costs will be. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As
of March&nbsp;31, 2011, we have the following indebtedness: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>In May 2008, we entered into a loan and security agreement with Silicon Valley Bank that includes a revolving credit
facility in the aggregate amount of up to $14.0&nbsp;million and a term loan commitment of up to $2.0&nbsp;million. All of our property, including all cash accounts, outstanding trade receivables,
inventory, fixed assets and any intellectual property serve as collateral. The term loan shall be repaid by monthly installment payments of interest only in the first year, and thereafter by monthly
installments of principal and interest payments for a period of 36&nbsp;months. Interest is payable monthly during the term. In December 2009, we </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>65</FONT></P>

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<UL>

<P style="font-family:arial;"><FONT SIZE=2>amended
our existing loan and security agreement with the bank. The amendment extended the maturity date on the revolving credit facility to December&nbsp;29, 2011, and reduced the interest rate on
this facility by 1% to 6.5% per year. The amendment did not change the existing terms or rate of interest and expiration date on the term loan. On June&nbsp;20, 2011, we further amended our existing
loan and security agreement with Silicon Valley Bank. The amendment increased the amount of the credit facility to an aggregate amount of up to $20.0&nbsp;million. The amendment extended the
maturity date on the revolving credit facility to December&nbsp;26, 2013, and reduced the interest rate on this facility to Prime Rate plus three-quarters of one percent (4.0% currently). The
amended loan and security agreement does not contain any financial covenants. The outstanding amounts at December&nbsp;31, 2010 and March&nbsp;31, 2011 have been classified as
long-term due to our intent and ability to refinance those amounts on a long term basis as occurred in June 2011. $10.2&nbsp;million is outstanding under the credit line and
$0.8&nbsp;million is outstanding under the term loan at March&nbsp;31, 2011.  </FONT></P>

</UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>As part of a previous acquisition in 2005, we received a loan from a related party in the amount of $5.6&nbsp;million.
Interest accrued for the initial 23-month period, with total accrued interest as of April&nbsp;1, 2006 and 2007 added to the principal balance of the loan. Principal and interest
payments commenced on April&nbsp;1, 2007, and are payable over 60 equal monthly installments, through March&nbsp;1, 2012. $1.4&nbsp;million is outstanding under this loan at March&nbsp;31,
2011. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>The
following table shows selected balance sheet data as well as our cash flows from operating activities, investing activities and financing activities for the stated periods: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="47pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="51pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="51pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="47pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="47pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=16 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>As of and for the year ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>As of and for the three months ended March&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(in thousands)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2008</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2011</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="BOTTOM">
<TH COLSPAN=16 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TH>
<TH style="font-family:arial;">&nbsp;</TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>(unaudited)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash and cash equivalents</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12,397</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,122</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>35,929</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>31,059</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10,854</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash provided by (used in) operating activities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,233</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(14,766</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(23,176</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,456</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,483</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash (used in) provided by investing activities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(2,854</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(10,338</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>27,888</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(2,221</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(249</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash (used in) provided by financing activities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(2,104</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(1,664</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>28,374</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>19,427</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(502</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=16 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2><B><I> Cash and cash equivalents  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our cash and cash equivalents at March&nbsp;31, 2011 were held for working capital purposes and were invested primarily in cash and money market
accounts. We do not enter into investments for trading or speculative purposes. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Cash flows  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Cash provided by (used in) operating activities  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Net cash provided by operating activities was $1.5&nbsp;million and $2.5&nbsp;million, which included net income of $2.3&nbsp;million and
$1.3&nbsp;million for the three months ended March&nbsp;31, 2011 and 2010, respectively. The primary reasons for the decrease in net cash provided by operating activities for the three months
ended March&nbsp;31, 2011 was an increase in our inventory balance, as a result of increased manufacturing activity, offset by an increase in net income. The change in operating assets and
liabilities resulted in a net use of cash of $1.9&nbsp;million and $0.4&nbsp;million for the three months ended March&nbsp;31, 2011 and 2010, respectively. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>66</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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<A NAME="page_dm76301_1_67"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Net
cash provided by (used in) operating activities was $8.2&nbsp;million, $(14.8&nbsp;million) and $(23.2&nbsp;million) and net income (loss) was $8.9&nbsp;million, $(35.5&nbsp;million) and
$(32.2&nbsp;million) for the years ended December&nbsp;31, 2010, 2009 and 2008, respectively. The primary reason for the increase in net cash provided by operating activities in 2010 was the
increase in net income during 2010 offset by increases in inventories and accounts receivable. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
also incurred net non-cash expenses totaling $5.2&nbsp;million, $16.3&nbsp;million and $19.6&nbsp;million for the years ended December&nbsp;31, 2010, 2009 and 2008,
respectively. Non-cash expenses primarily consisted of depreciation and amortization in 2010, and depreciation and amortization asset impairment charges and provisions for excess and
obsolete inventory in 2009 and 2008. The change in operating assets and liabilities resulted in a net use of cash of $(5.8&nbsp;million), $4.4&nbsp;million and $(10.6&nbsp;million) for the years
ended December&nbsp;31, 2010, 2009 and 2008, respectively. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Cash provided by (used in) investing activities  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Net cash used in investing activities was $(2.2&nbsp;million) and $(0.2&nbsp;million) for the three months ended March&nbsp;31, 2011 and 2010,
respectively. Cash used in investing activities for the three months ended March&nbsp;31, 2011 and 2010 was primarily for capital expenditures related to property and equipment as we continued to
expand our manufacturing capacity. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Net
cash used in investing activities was $(2.9&nbsp;million) and $(10.3&nbsp;million) for the years ended December&nbsp;31, 2010 and 2009, respectively, and net cash provided by investing
activities was $27.9&nbsp;million for the year ended December&nbsp;31, 2008. Cash used in investing activities for the year ended December&nbsp;31, 2010 was primarily for the purchase of
property and equipment. Cash used in investing activities for the year ended December&nbsp;31, 2009 was primarily for capital expenditures of $3.5&nbsp;million related to property and equipment
and $6.9&nbsp;million of cash used in the dissolution of the PGT business. Cash provided by investing activities for the year ended December&nbsp;31, 2008 was primarily related to
$28.1&nbsp;million in net cash acquired as a result of the acquisition of the PGT business partially offset by purchase of property and equipment. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Cash provided by (used in) financing activities  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Net cash provided by financing activities was $19.4&nbsp;million for the three months ended March&nbsp;31, 2011. Net cash used in financing
activities was $(0.5&nbsp;million) for the three months ended March&nbsp;31, 2010. Net cash provided by financing activities for the three months ended March&nbsp;31, 2011 primarily resulted
from the net proceeds of a round of financing (Series&nbsp;C-1 preferred stock) of $49.6&nbsp;million. These proceeds were offset by the repurchase of Common and Preferred stock from
investors of $(29.6&nbsp;million). Net cash used in financing activities for the three months ended March&nbsp;31, 2010 was related to payments on revolving credit facility and terms loans. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Net
cash used in financing activities was $(2.1&nbsp;million) and $(1.7&nbsp;million) for the years ended December&nbsp;31, 2010 and 2009, respectively. Net cash provided by financing activities
was $28.4&nbsp;million for the year ended December&nbsp;31, 2008. Net cash used in financing activities for the years ended December&nbsp;31, 2010 and 2009 was primarily related to payments on
our revolving credit facility and terms loans. Net cash provided by financing activities for the year ended December&nbsp;31, 2008 resulted from proceeds from long-term loans and credit
line of $16.7&nbsp;million and proceeds from the issuance of preferred stock of $20.0&nbsp;million partially offset by payments on revolving credit facility and term loans of $8.3&nbsp;million. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>67</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=5,SEQ=70,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=50256,FOLIO='67',FILE='DISK104:[11ZCB1.11ZCB76301]DM76301A.;43',USER='AGUERRE',CD='12-AUG-2011;10:12' -->
<A NAME="page_dm76301_1_68"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Contractual obligations and commitments  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We generally do not enter into long-term minimum purchase commitments. Our principal commitments, in addition to those
related to our long-term debt discussed above, consist of obligations under facility leases for office space. The following table summarizes our outstanding contractual obligations as of
December&nbsp;31, 2010: </FONT></P>
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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="47pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="56pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="69pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="69pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="63pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=16 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Payments due by period </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(in thousands)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Total</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Less than<BR>
1 year</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>1 to 3 years</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>3 to 5 years</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>More than<BR>
5 years</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=16 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating lease obligations</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>11,238</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,330</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3,685</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>5,223</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Debt related payments(1)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>11,145</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>667</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>10,478</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Related party loans(2)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,798</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,432</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>366</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>24,181</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4,429</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>14,529</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>5,223</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=16 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 </DIV>
<DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT  style="font-size:8pt;line-height:9pt;">
(1)&nbsp;&nbsp;&nbsp;We have a credit line $10,200 and a term loan $945. The amount presented in the table represents the principal portion of the obligations. The debt obligations outstanding as of
December&nbsp;31, 2010 bear interest at rates ranging from the greater of Bank Prime&nbsp;+&nbsp;1.5% or 6.5% on the credit line and the greater of Bank Prime&nbsp;+&nbsp;1.5% or 7.5% on the
term loan, all of which was subject to fluctuations in interest rates. Interest is paid monthly over the term of the debt arrangements. </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(2)&nbsp;&nbsp;&nbsp;The
related party loan bears interest at the lesser of 1-year LIBOR&nbsp;+&nbsp;3%, or 8.5%. </FONT></P>
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>On June&nbsp;20, 2011, we amended our existing loan and security agreement with Silicon Valley Bank. The amendment increased the amount of the credit facility
to the aggregate amount of up to $20.0&nbsp;million. The amendment extended the maturity date on the revolving credit facility to December&nbsp;26, 2013, and reduced the interest rate on this
facility to Prime Rate plus three-quarters of one percent (4.0% currently). As a result, the outstanding balance of $10.2&nbsp;million has been classified in the 1 to 3&nbsp;years period in the
table above. There has been no material change in the obligations since December&nbsp;31, 2010 other than scheduled payments through March&nbsp;31, 2011. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Off-balance sheet arrangements  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>During the years ended December&nbsp;31, 2010, 2009 and 2008, and the three months ended March&nbsp;31, 2011, we did not have any
relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities, that would have been established for the purpose of facilitating
off-balance sheet arrangements or other contractually narrow or limited purposes. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Recently adopted accounting principles  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Recent accounting pronouncements  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In January 2010, the Financial Accounting Standards Board, or FASB, issued updated guidance related to fair value measurements and disclosures, which
requires a reporting entity to disclose separately the amounts of significant transfers in and out of Level&nbsp;1 and Level&nbsp;2 fair value measurements and to describe the reasons for the
transfers. In addition, in the reconciliation for fair value measurements using significant unobservable inputs, or Level&nbsp;3, a reporting entity should disclose separately information about
purchases, sales, issuances, and settlements (that is, on a gross basis rather than on a net basis). The updated guidance also requires that an entity should provide fair value measurement disclosures
for each class of assets and liabilities and disclosures about the valuation techniques and inputs used to measure </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>68</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>fair
value for both recurring and non-recurring fair value measurements for Level&nbsp;2 and Level&nbsp;3 fair value measurements. The updated guidance is effective for interim or
annual financial reporting periods beginning after December&nbsp;15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the rollforward activity in Level&nbsp;3
fair value measurements, which are effective for fiscal years beginning after December&nbsp;15, 2010 and for interim periods within those fiscal years. We adopted the updated guidance in the first
quarter of 2010, and the impact on our consolidated financial statements was not material. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Quantitative and qualitative disclosures about market risk  </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and
rates. Our market risk exposure is primarily a result of fluctuations in interest rates. We do not hold financial instruments for trading purposes. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Interest rate sensitivity  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We had cash and cash equivalents of $31.1&nbsp;million at March&nbsp;31, 2011, $12.4&nbsp;million at December&nbsp;31, 2010,
$9.1&nbsp;million at December&nbsp;31, 2009 and $35.9&nbsp;million at December&nbsp;31, 2008. We held these amounts primarily in cash or money market funds. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
hold cash and cash equivalents for working capital purposes. We do not have material exposure to market risk with respect to investments, as our investments consist primarily of highly liquid
investments purchased with original maturities of three months or less. We do not use derivative financial instruments for speculative or trading purposes; however, we may adopt specific hedging
strategies in the future. Any declines in interest rates, however, will reduce future interest income. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
had total outstanding debt of $12.3&nbsp;million at March&nbsp;31, 2011, $12.8&nbsp;million at December&nbsp;31, 2010, $14.8&nbsp;million at December&nbsp;31, 2009 and
$16.3&nbsp;million at December&nbsp;31, 2008, primarily all of which was subject to fluctuations in interest rates. As of December&nbsp;31, 2010, the weighted average interest rate on the
$12.8&nbsp;million of outstanding principal subject to interest rate fluctuations was 6.24%. A hypothetical 10% increase in the interest rate could result in approximately $80 of additional annual
interest expense. As of March&nbsp;31, 2011, the weighted average interest rate on the $12.3&nbsp;million of outstanding principal subject to interest rate fluctuations was 6.28%. A hypothetical
10% increase in the interest rate could result in approximately $77,000 of additional annual interest expense. The hypothetical changes and assumptions made above will be different from what actually
occurs in the future. Furthermore, the computations do not anticipate actions that may be taken by our management should the hypothetical market changes actually occur over time. As a result, actual
impacts on our results of operations in the future will differ from those quantified above. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Foreign currency risk  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Foreign currency exchange rates are subject to fluctuation and may cause us to recognize transaction gains and losses in our statement of operations.
However, to date the vast majority of our purchased materials and services have been procured in U.S. dollars and we have experienced minimal currency fluctuations. A portion of our business is
conducted through our subsidiary in Mexico whose functional currency is the U.S. Dollar. To the extent that transactions by our subsidiary in Mexico are denominated in currencies other than U.S.
Dollar, </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>69</FONT></P>

<HR NOSHADE>
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<BR>

<P style="font-family:arial;"><FONT SIZE=2>we
bear the risk that fluctuations in the exchange rates of the U.S. Dollar in relation to other currencies could increase our costs and expenses. Translation adjustments are included in other income
(expense) and were immaterial for all periods presented herein. Realized foreign currency transaction gains and losses are also included in other income (expense) and were immaterial for all periods
presented herein. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>To
date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future,
the availability and effectiveness of these hedging transactions may be limited and we may not be able to successfully hedge our exposure. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Inflation risk  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Inflationary factors, such as increases in our cost of revenues and operating expenses, may adversely affect our results of operations. Although we
do not believe that inflation has had a material impact on our financial position or results of operations to date, an increase in the rate of inflation in the future, particularly in Mexico, may have
an adverse affect on our levels of gross profit and operating expenses as a percentage of revenue if the sales prices for our products do not proportionately increase with these increased expenses. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>70</FONT></P>

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</FONT></P>

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<A HREF="#bg76301a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="do76301_business"> </A>
<A NAME="toc_do76301_1"> </A>
<BR></FONT><FONT SIZE=4><B>  Business  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Company overview  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We are a leading platform-based provider of core optical technologies enabling bandwidth for high-speed networks. Our
solutions provide the fundamental building blocks&#151;the creation, modulation, routing and detection of light&#151;that enable high-performance and
cost-effective optical networking. We produce active components that create and detect light, passive components that guide and combine light, and packaging solutions that
integrate active and passive components into high-performance, power-efficient, cost-effective, compact products. Through our vertically integrated technology and manufacturing
platforms, we design, fabricate and package a broad portfolio of optical components&#151;lasers, detectors, transmitters, receivers and modulators&#151;for module manufacturers and
systems providers, including original equipment manufacturers, or OEMs, who sell to communication service providers and enterprises in the Access, Enterprise/Data Center and Long Haul/Metro segments
of the communications network, and for other emerging end market applications, such as defense and avionics, high performance computing, medical and security. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Network
traffic continues to increase rapidly in volume, volatility and complexity, driven by unprecedented demand for bandwidth-intensive, rich content such as streaming and real-time
video, the growth of online social networking and cloud-based computing services, and the proliferation of mobile devices. Optical networking is becoming the de facto transport technology due to its
attractive bandwidth capacity, reach, reliability, low power consumption and network intelligence capabilities. Within optical networking, innovation at the optical component level is driving
increased functionality, higher performance and cost savings. According to Cisco Systems, while optical components represent approximately 19% of the capital expenditures for 10 gigabits per second,
or Gbps, systems, they represent approximately 68% of the capital expenditures for 100Gbps systems. While Ovum estimates the overall market for optical components will grow at a 13.4% compound annual
growth rate, or CAGR, from $5.6&nbsp;billion in 2010 to $10.5&nbsp;billion by 2015, we believe there are specific market segments and geographies which are expected to meaningfully exceed that
growth rate, such as the gigabit passive optical network, or&nbsp;GPON, system deployment in the Access segment supporting China's aggressive fiber-to-the-home,
or FTTH, rollout, and next-generation high speed 40Gbps and 100Gbps deployment in the Enterprise/Data Center and Long Haul/Metro segments. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
are one of the few companies in our industry with vertically integrated technology and manufacturing platforms that span from Indium Phosphide and Silica-on-Silicon
fabrication to proprietary, highly automated assembly and test facilities. Our in-house capabilities allow us to offer a dependable supply of quality optical components and modules. Our
PICs and components on board, or COB, solutions incorporate greater functionality and intelligence at the component level, which enables us to serve next-generation, higher speed networks.
We continue to leverage and expand upon more than 25&nbsp;years of research, development and investments, including by the former optoelectronics divisions of Lucent Technologies and Bell Labs,
which we obtained through our acquisition of a division of TriQuint Semiconductor,&nbsp;Inc. in 2005, and our broad portfolio of proprietary technologies, which form the foundation of our technical
expertise and extensive know-how. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>71</FONT></P>

<HR NOSHADE>
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<P style="font-family:arial;"><FONT SIZE=2>We
sell our products to a global, diversified customer base that includes module manufacturers and OEMs, who in turn sell to communication service providers and enterprises, and to defense and
avionics contractors. Our customers include Cambridge Industries Group, Ciena Corporation, Finisar Corporation, Huawei Technologies&nbsp;Co.,&nbsp;Ltd., Lockheed Martin Corporation, Source
Photonics,&nbsp;Inc. and Superxon Technology,&nbsp;Ltd. We believe that greater than 70% of our revenue was sole-sourced in 2010, which we believe demonstrates the differentiation of
our products, and gives us significant insight into our customers' product and technology roadmaps. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
believe we have an attractive financial profile, with superior top-line performance and strong quarter over quarter revenue visibility. We have grown our revenue at a 31.3% CAGR from
2005 to 2010 and 44.0% quarter over quarter from March&nbsp;31, 2010 to March&nbsp;31, 2011. We have also experienced significant margin expansion, as our income (loss) from operations margin
increased from 7.3% in the three months ended March&nbsp;31, 2010 to 12.0% in the three months ended March&nbsp;31, 2011. In addition, our non-GAAP adjusted income (loss) from operations margin
increased from 9.8% in the three months ended March&nbsp;31, 2010 to 13.2% in the three months ended March&nbsp;31, 2011. Adjusted income (loss) from operations margin is not calculated in
accordance with GAAP. A reconciliation of this non-GAAP measure to income (loss) from operations margin calculated and presented in accordance with GAAP is included in this prospectus in
the "Management's discussion and analysis of financial condition and results of operations&#151;Key business metrics&#151;Use of non-GAAP financial measures." Adjusted income (loss) from
operations margin should not be considered as an alternative to income (loss) from operations margin calculated and presented in accordance with GAAP. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Industry  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Network traffic continues to increase rapidly in volume, volatility and complexity, driven by unprecedented demand for
bandwidth-intensive, rich content such as streaming and real-time video, the growth of online social networking, cloud-based computing services and the proliferation of mobile devices.
According to Cisco System's Visual Networking Index, global Internet Protocol, or IP, traffic is expected to grow from 20 exabytes (1 exabyte&nbsp;= 10<SUP>9</SUP> gigabytes) per month in 2010 to
80 exabytes per month in 2015, representing a 31.9% CAGR. To address this trend, communication service providers and
enterprises are expanding and upgrading their existing network infrastructures. Notwithstanding their investments, network traffic growth is outpacing service provider revenue growth. As a result,
communication service providers and enterprises are investing in higher-data rate, scalable and cost-effective network architectures to increase bandwidth capacity and improve
profitability. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Optical
networking is becoming the de facto transport technology due to its attractive bandwidth capacity, reach, reliability, low power consumption and network intelligence capabilities. Optical
components and modules provide the fundamental building blocks&#151;the creation, modulation, routing and detection of light&#151;of the optical ecosystem, from Long Haul/Metro, Access
to the Digital Home, through FTTH, to Enterprise/Data Center. Ovum estimates the market for optical components and modules was $5.6&nbsp;billion in 2010 and is forecasted to grow to
$10.5&nbsp;billion in 2015, representing a 13.4% CAGR. Consumer and enterprise demand for bandwidth-intensive, rich content and services is driving network build outs across the ecosystem. These
build outs are in turn requiring capital investment to alleviate bottlenecks across the network, which we believe is resulting in a persistent growth </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>72</FONT></P>

<HR NOSHADE>
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<P style="font-family:arial;"><FONT SIZE=2>phenomenon
across network segments and geographies and, in many cases, outpacing the growth of the overall optical networking market. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>
<IMG SRC="g155031.jpg" ALT="GRAPHIC" WIDTH="619" HEIGHT="340">
  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
optical component and module market consists of traditional network segments&#151;Access, Enterprise/Data Center and Long Haul/Metro which are differentiated primarily based on transmission
distance&#151;and emerging applications in other end markets: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Access network segment.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Access segment comprises network
areas with transmission distances of less than 20 kilometers typically used to connect individual enterprise and residential customers to the network. Due to attractive bandwidth, reliability and cost
advantages, Access networks increasingly use high-speed optical fiber as a replacement for copper lines in legacy networks and as a favorable alternative to wireless access technologies in
new deployments. High-speed Access networks can support high-bandwidth content and enable bundled services, such as "quadruple play", that can include voice, video
on-demand, high-speed data and wireless offerings.
<BR></FONT>
<BR>

<P style="font-family:arial;"><FONT SIZE=2>In
Access networks, we believe communication service providers and enterprises are under considerable pressure to deliver emerging, next-generation applications and services at low costs
as traditional voice revenues decline and subscribers of data and video services become increasingly price sensitive and less loyal. We believe OEMs increasingly prefer to procure directly from
optical component vendors to remove module intermediaries. By doing so, OEMs&nbsp;are able to reduce their direct costs and potentially deliver infrastructure solutions to Access communication
service providers and enterprises at lower prices.
<BR></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Passive
optical networks, or PONs, are currently the fastest-growing broadband Access technology, enabling 1Gbps and higher transmission speeds to the home, a 100-fold increase over legacy
copper networks. Dell'Oro forecasts PON subscribers as a percentage of worldwide broadband subscribers to increase from 10.8% in 2010 to 25.5% in 2015. Communication service providers in the Asia
Pacific region have been early adopters of PON technology, demonstrated by large-scale deployments in Japan and, more recently, by China's aggressive FTTH rollout, including China Telecom's
announcement of their target to connect </FONT></P>

</DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>73</FONT></P>

<HR NOSHADE>
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<UL>

<P style="font-family:arial;"><FONT SIZE=2>100&nbsp;million
subscribers by 2015. Gigabit PON, or&nbsp;GPON, has higher data rates, enhanced security and broader multi-protocol support compared to PON. Consequently, it is expected that GPON
will continue to gain market share over previous PON technologies. According to Ovum,&nbsp;GPON transceiver sales are projected to grow from $288.5&nbsp;million in 2010 to $576.7&nbsp;million in
2015, representing a 14.9% CAGR. Specifically within China, Dell'Oro estimates that&nbsp;GPON revenue to grow by as much as 40% year-over-year in 2011. </FONT></P>

</UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Enterprise/Data Center network segments.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Enterprise/Data
Center Network segments provide networking capabilities to clusters of computers and servers in close proximity to each other, such as on a campus, or in an office building or data center. Fueled
primarily by server virtualization and cloud computing, server data transfer rates are doubling every 24&nbsp;months with the server-to-switch connection rate moving rapidly
from 1 gigabit Ethernet, or GbE, to 10GbE. The adoption of 10GbE on server infrastructure is accelerating the migration of copper to optical fiber and the need for 40GbE and 100GbE on uplinks to the
core of the data centers. Traditionally, links of 10GbE and below relied on only one laser and one receiver per transceiver. These traditional architectures are no longer adequate for 40GbE and
100GbE, which require multi-channel (4x10GbE, 10x10GbE or 4x25GbE) architectures, comprised of multiple lasers and receivers per transceiver, to meet the faceplate density, cost and power consumption
requirements of next-generation switches. According to Ovum, 100GbE transceiver sales will increase from $51.6&nbsp;million in 2010 to $712.6&nbsp;million in 2015, representing a 69.1%
CAGR.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Long Haul/Metro network segments.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Long Haul/Metro segments
include networks with longer distance transmission for intra-city, city-to-city and country-to-country transport. Communication service
providers have upgraded many legacy 2.5Gbps networks to 10Gbps and are accelerating deployments of next-generation networks capable of transmission at 40Gbps and 100Gbps. According to
Ovum, revenue from 40Gbps and 100Gbps Long Haul/Metro receivers is forecasted to grow from $66.0&nbsp;million in 2010 to $494.8&nbsp;million in 2015, representing a 49.6% CAGR. As these networks
need to handle an increasing amount of IP or packet based traffic network operators need to find efficient and scalable ways to upgrade their installed base of disparate synchronous optical networking
and synchronous digital hierarchy (SONET/SDH), Ethernet and Dense Wavelength Division Multiplexing (DWDM) infrastructure. Next generation "packet optical" networks on the basis of 40Gbps and 100Gbps
transport produce the needed capital and operational efficiencies by converging formerly disparate network architectural layers and including integrated routing, switching, reconfigurable optical
add-drop multiplexers (ROADMs), DWDM transport and other optical networking functionality. At next-generation higher 40Gbps and 100Gbps network speeds, we believe there will be
considerable technical challenges resulting in market and supply chain disruption. We believe OEMs&nbsp;will look to procure optical components directly from vendors in order to build their own
solutions in order to successfully overcome these challenges.
<BR></FONT>
<BR>

<P style="font-family:arial;"><FONT SIZE=2>A
key emerging technology for next-generation networks is coherent detection, which enables ultra-long reach and efficient spectral bandwidth usage in 40Gbps and 100Gbps
transmission. Coherent detection allows for improved receiver sensitivity and superior data integrity by electronically recovering signal information that is normally lost or distorted, while
leveraging existing infrastructure such as fiber plants and optical amplifiers. According </FONT></P>

</DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>74</FONT></P>

<HR NOSHADE>
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<P style="font-family:arial;"><FONT SIZE=2>to
Ovum, revenue from 100Gbps coherent modules will increase from $35.3&nbsp;million in 2010 to $786.5&nbsp;million in 2015, representing an 86.0% CAGR.  </FONT></P>

</UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Other emerging end market applications.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In addition to
traditional telecommunications and networking markets, optical components and modules are increasingly being used in other emerging end market applications, such as defense and avionics, high
performance computing, medical and security markets, all of which require high-speed, high-bandwidth data transmission, higher levels of integration and/or high performance
laser/receiver solutions. For example, the defense and avionics industry is increasingly using optical solutions to reduce size, weight and power in applications such as next-generation
munitions or fiber-based local area networks, or LANs, on aircraft. Other emerging end market applications include: highly reliable, high-power optical lasers in Fiber Optic Gyroscopes on
satellites; highly reliable and efficient lasers for integration onto Silicon Photonics chips to enable exascale computing; and lasers with high power and high spectral purity characteristics for
gas-sensing in security systems. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Optical network market value chain  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The optical network market value chain can be broken down into four segments&#151;components, modules, systems and
carriers/providers&#151;that provide the following types of products and services and include the following selected key players: </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>
<IMG SRC="g158500.jpg" ALT="GRAPHIC" WIDTH="628" HEIGHT="400">
  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Optical
components are typically incorporated into optical modules, which are assembled into systems that are purchased and installed into service provider networks. Demand for increased bandwidth
capacity and pressure to control costs is driving higher levels of integration at the product level, delivering increased faceplate density, lower power dissipation and greater </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>75</FONT></P>

<HR NOSHADE>
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<P style="font-family:arial;"><FONT SIZE=2>system
functionality. This trend creates an opportunity for optical component manufacturers to deliver next-generation optical modules and optical COB solutions directly to OEMs. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
believe that innovation at the optical component level is driving increased functionality, higher performance and cost savings in optical networking solutions. High-speed Long
Haul/Metro network segments, in particular at 40Gbps and 100Gbps transmission speeds, are forecast to be key areas of service provider investment in PICs, tunable lasers and coherent detectors, which
are key enablers of these high-speed, long-distance networks. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Innovative
optical component solutions, many of which are based on PICs, such as multi-channel 10x10Gbps, 4x25Gbps, 40Gbps/100Gbps coherent transmitters, receivers and transceivers, and tunable lasers
are expected to comprise an increasing percentage of total optical system capital expenditures. For example, according to Cisco Systems, while optical components represent approximately 19% of the
capital expenditures for 10Gbps systems, they represent approximately 68% of the capital expenditures for 100Gbps systems. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
believe optical module manufacturers and OEMs&nbsp;face many challenges, including: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Demand for high-performance, high-speed optical
solutions.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;To address increasing network traffic demands, optical module manufacturers and OEMs&nbsp;must offer solutions that deliver high data transmission
speed and bandwidth capacity to end customers at a cost competitive to conventional technologies. These solutions must also be interoperable with existing infrastructure, without requiring costly
wholesale infrastructure replacement.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Increasing system complexity and decreasing time to
market.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;OEMs&nbsp;are beginning to incorporate optical components, rather than modules, directly into their system architectures to reduce their time to market
if advanced module level technology is not available, to reduce their system cost by eliminating the module manufacturer or to enhance their products' technical performance. The ability for
OEMs&nbsp;to be designed into new network architectures is critical, as early design wins and implementations provide a competitive advantage given the prohibitive cost of redesign for communication
service providers and enterprises.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Demand for reduced service provider capital investment
requirements.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Communication service providers and enterprises continue to search for more economical ways to increase network capacity to accommodate the continued
growth in IP traffic. For example, by integrating DWDM optics as interfaces within routers, communication service providers and enterprises reduce the need for external optical-electrical-optical, or
OEO, transponder racks, cross connects and SONET/SDH switching layers, resulting in lower up front capital expenditures due to the need for fewer devices in the network. Furthermore, the move to a
DWDM-based optical transport network, or OTN, provides a cost-effective, scalable, high capacity and flexible network platform by further reducing the number and types of
required network element boxes, enabling low cost deployment of 40Gbps and 100Gbps networks.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Demand for reduced service provider operating expense
requirements.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Communication service providers target improved operational efficiencies by converging formerly disparate network architectural layers through the
migration to "packet optical" networks on the basis of 40Gbps and 100Gbps. Optical module manufacturers and OEMs&nbsp;seek to reduce the power required to operate optical systems. Heat from
neighboring components or high ambient temperatures degrade the functionality of laser diodes or even require the use of costly thermoelectric coolers, which limit the ability to miniaturize the
optical module. The higher levels of integration, lower power requirements and lower heat dissipation of optical components enable greater faceplate density and result in ongoing operating cost
savings. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>76</FONT></P>

<HR NOSHADE>
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<P style="font-family:arial;"><FONT SIZE=3><B> Our solutions  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We are a leading platform-based provider of core optical technologies enabling bandwidth for high-speed networks. Our
solutions provide the fundamental building blocks&#151;the creation, modulation, routing and detection of light&#151;that enable high-performance and
cost-effective optical networking. Facilitated by our differentiated technologies and in-house proprietary design, manufacturing, packaging and technology capabilities, we
produce: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>active components that create, modulate and detect light;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>passive components that guide and combine light; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>packaging solutions that integrate active and passive components into high-performance, compact products. </FONT></DD></DL>


<P style="font-family:arial;"><FONT SIZE=2>We
design, fabricate and package a broad portfolio of optical components, including lasers, detectors, transmitters, receivers, and modulators: </FONT></P>
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</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Product family</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Components</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Markets</B></FONT><BR></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=5 style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Devices</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:0pt;margin-left:20pt;text-indent:-20pt;"><FONT  style="font-size:8pt;line-height:9pt;">  </FONT><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT  style="font-size:8pt;line-height:9pt;">Die-level lasers and detectors  </FONT><FONT  style="font-size:8pt;line-height:9pt;"> <p
align=left style="font-family:arial;margin-top:0pt;margin-left:20pt;text-indent:-20pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT  style="font-size:8pt;line-height:9pt;">TO-can packaged lasers and receivers</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Access, Enterprise/Data Center, Long-Haul/Metro</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=5 style="font-family:arial;border-bottom:solid #000000 1.0pt;"><BR>&nbsp;</TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:10pt;margin-left:0pt;text-indent:-0pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Large Form Factor Components</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:10pt;margin-left:20pt;text-indent:-20pt;"><FONT  style="font-size:8pt;line-height:9pt;">  </FONT><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT  style="font-size:8pt;line-height:9pt;">For integration into Transponders or onto linecards for
transmission speeds up to 10Gbps  </FONT><FONT  style="font-size:8pt;line-height:9pt;"> <p align=left style="font-family:arial;margin-top:0pt;margin-left:20pt;text-indent:-20pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT  style="font-size:8pt;line-height:9pt;">Planar packaged lasers and
detectors  </FONT><FONT  style="font-size:8pt;line-height:9pt;"> <p align=left style="font-family:arial;margin-top:0pt;margin-left:20pt;text-indent:-20pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT  style="font-size:8pt;line-height:9pt;">Tunable lasers</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:10pt;margin-left:0pt;text-indent:0pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Access, Long-Haul/Metro</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=5 style="font-family:arial;border-bottom:solid #000000 1.0pt;"><BR>&nbsp;</TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:10pt;margin-left:0pt;text-indent:-0pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Small Form Factor Components</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:10pt;margin-left:20pt;text-indent:-20pt;"><FONT  style="font-size:8pt;line-height:9pt;">  </FONT><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT  style="font-size:8pt;line-height:9pt;">For integration into pluggable Transceivers for
transmission speeds up to 10Gbps  </FONT><FONT  style="font-size:8pt;line-height:9pt;"> <p align=left style="font-family:arial;margin-top:0pt;margin-left:20pt;text-indent:-20pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT  style="font-size:8pt;line-height:9pt;">Planar or TO-can style packaged
Transmit/Receive Optical Sub-Assemblies (TOSA/ROSA)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:10pt;margin-left:0pt;text-indent:0pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Enterprise/Data Center, Long-Haul/Metro</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=5 style="font-family:arial;border-bottom:solid #000000 1.0pt;"><BR>&nbsp;</TD>
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<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:10pt;margin-left:0pt;text-indent:-0pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Components on Board (COB)</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:10pt;margin-left:20pt;text-indent:-20pt;"><FONT  style="font-size:8pt;line-height:9pt;">  </FONT><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT  style="font-size:8pt;line-height:9pt;">For integration into Customer Premise or Central Office
Equipment for FTTH and custom designs  </FONT><FONT  style="font-size:8pt;line-height:9pt;"> <p align=left style="font-family:arial;margin-top:0pt;margin-left:20pt;text-indent:-20pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT  style="font-size:8pt;line-height:9pt;">Bidirectional Optical
Sub-Assemblies (BOSA)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:10pt;margin-left:0pt;text-indent:0pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Access, Emerging end market applications</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=5 style="font-family:arial;border-bottom:solid #000000 1.0pt;"><BR>&nbsp;</TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:10pt;margin-left:0pt;text-indent:-0pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>PIC-Based Components and Next-generation Modules (Transceivers)</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:10pt;margin-left:20pt;text-indent:-20pt;"><FONT  style="font-size:8pt;line-height:9pt;">  </FONT><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT  style="font-size:8pt;line-height:9pt;">Integrated coherent receivers for 40Gbps and 100Gbps
</FONT><FONT  style="font-size:8pt;line-height:9pt;"> <p align=left style="font-family:arial;margin-top:0pt;margin-left:20pt;text-indent:-20pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT  style="font-size:8pt;line-height:9pt;">Multi-channel TOSA/ROSA and transceivers for transmission speeds of
40Gbps and beyond</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:10pt;margin-left:0pt;text-indent:0pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Enterprise/Data Center, Long-Haul/Metro</FONT></TD>
</TR>
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<TD COLSPAN=5 style="font-family:arial;border-bottom:solid #000000 1.0pt;"><BR>&nbsp;</TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:10pt;margin-left:0pt;text-indent:-0pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Specialty Components</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:10pt;margin-left:20pt;text-indent:-20pt;"><FONT  style="font-size:8pt;line-height:9pt;">  </FONT><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT  style="font-size:8pt;line-height:9pt;">Custom packaged lasers and detectors  </FONT><FONT
 style="font-size:8pt;line-height:9pt;"> <p align=left style="font-family:arial;margin-top:0pt;margin-left:20pt;text-indent:-20pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT  style="font-size:8pt;line-height:9pt;">Devices and components for emerging end market applications, such as defense and
avionics, high performance computing, medical and security</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:10pt;margin-left:0pt;text-indent:0pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Emerging end market applications</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=5 style="font-family:arial;border-bottom:solid #000000 1.0pt;"><BR>&nbsp;</TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
&nbsp;</FONT></TD>
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 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>Key benefits of our solutions include: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>High levels of photonic integration.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our in-house
Indium Phosphide and Silica-on-Silicon technology platforms and diverse toolbox of device elements enable the efficient design and the scalable, high volume fabrication of a
broad variety of PICs. As a result, we are able to achieve high levels of integration either by single chip, or "monolithic," integration in a single Indium Phosphide chip, or by
multi-chip, or "hybrid," assemblies using both Indium Phosphide and Silica-on-Silicon, for which we leverage our proprietary, highly automated,
sub-micron precision assembly platform. This high level of integration enables us to provide </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>77</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>solutions
that have significantly smaller size, higher reliability and lower power consumption as compared to traditional discrete components.  </FONT></P>

</UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>High bit rate products.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our high bit rate BOSA components are
used in next-generation Access networks (10Gbps or higher). Our PIC-based components and next-generation modules are used for communication switches in high
capacity Enterprise/Data Center networks (40Gbps or higher) and for coherent Long Haul/Metro networks (40Gbps or higher). These products enable communication service providers and enterprises to
deliver bandwidth-intensive rich content and services over significantly longer distances than existing solutions.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Cost-effective solutions.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our industry-leading
levels of automation in chip fabrication and packaging operations enable us to manufacture our products at high yields and low labor cost, while the re-usability,
re-configurability and scalability of our assembly and test equipment reduces our on-going capital needs. Our high levels of automation also enable significant consistency and
repeatability throughout the entire manufacturing process, resulting in high performance and highly reliable products. Our flexible and versatile combination of monolithic and hybrid integration
technologies, together with our sub-micron precision alignment capability, enables us to create highly integrated, application-optimized and miniaturized solutions, which reduces the total
cost of ownership for our customers.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Tailored solutions.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We leverage our technology platforms and
array of device and packaging technologies across all market segments to customize a broad range of products. Our in-house hybrid and monolithic photonic integration techniques, together
with our highly-automated assembly and test manufacturing capabilities, and cooled and uncooled Indium Phosphide laser fabrication capabilities, allows us to tailor these products to each segment of
the communications network. By reusing proprietary technologies, we can often design new devices more rapidly and at lower cost.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Superior quality.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our automated manufacturing and control
systems that we have built into our device fabrication, packaging and testing processes enable us to deliver products with stable performance, high quality and a high level of reliability. To date, we
have had less than 1 reported laser or detector chip failure in time (FIT), a measure of failure rate in 10<SUP>9</SUP> service hours (e.g. 1 FIT&nbsp;= 1 failure in 10<SUP>9</SUP> service
hours), over an estimated 350&nbsp;billion service hours in the field since our inception. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=3><B> Competitive strengths  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We believe our key competitive strengths include the following: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Strong institutional knowledge base and track record of technology
innovation.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We develop industry-leading optical components, including PIC-based components, such as multi-channel TOSA/ROSA and coherent receivers, as
well as next-generation modules by leveraging and expanding upon more than 25&nbsp;years of investments, including those made by the former optoelectronics divisions of Lucent
Technologies and Bell Labs, which we obtained through our acquisition of a division of TriQuint Semiconductor,&nbsp;Inc. in 2005, and our broad portfolio of proprietary technologies, which form the
foundation of our technical expertise </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>78</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>and
extensive industry know-how. We believe some of our innovations were among the first commercially available in the industry, including: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>10Gbps TOSA to enable pluggable transceivers (2003);  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the lowest power consumption cooled 2.5Gbps small form factor laser transmitter for integration into pluggable
transceivers (2005);  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>40Gbps/100Gbps coherent receiver with full integration of 90 degree hybrids, detectors, Trans-Impedance Amplifiers, or
TIAs, and polarization splitters (2011); and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>10Gbps TOSA for DWDM in small form factor pluggable plus (SFP+) transceivers (2011).  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD></DL>
</UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Greater intelligence at the component level.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We are well
positioned to capture a higher proportion of the bill of materials of the optical value chain as the industry migrates to higher speed networks. According to Cisco Systems, optical components
represent approximately 19% of the capital expenditures in 10Gbps optical systems, but approximately 68% of the capital expenditures in 100Gbps optical systems, which we believe is a result of
increased system-level consolidation and integration and hence a greater opportunity for differentiation. We are well positioned to capitalize on this industry trend with our PICs and COB solutions,
which provide our customers with significant performance and cost advantages due to the need for fewer components.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Vertical integration.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We are one of the few companies in our
industry with vertically integrated technology and manufacturing platforms that span from Indium Phosphide and Silica-on-Silicon fabrication to proprietary, highly automated
assembly and test facilities. Our comprehensive in-house capabilities allow us to offer our customers a dependable supply of quality optical components and modules, giving us significant
time-to-market, time-to-volume and cost advantages as well as the ability to respond more quickly to changing market and customer requirements. As a
result of the complexity of the design and manufacturing disciplines involved in the creation of our products, we believe it would be difficult for others to replicate the platforms we have developed. </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Industry-leading market position.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We are a leader in several
of the market segments that we serve. For example, we believe that based on Ovum's 2010 market data and our shipment history, our FTTH BOSA, TO-cans and devices were deployed in 49.5% of
all&nbsp;GPON and Ethernet Passive Optical Network, or EPON, Optical Line Terminals, or OLTs, and 47.3% of all&nbsp;GPON Optical Network Units, or ONUs, sold worldwide in 2010. Furthermore, we
believe that based on Ovum's 2010 market data and our shipment history, our 2.5Gbps to 10Gbps TOSAs and devices for high-performance, long-reach and temperature controlled
applications using a thermo-electric cooler, or TEC, were deployed in approximately 35.8% of all Standard Form Factor Pluggable (SFP), 10G Form Factor Pluggable (XFP) and SFP+ pluggable optical
transceivers worldwide. In addition to our strong presence across network segments, we also believe that we have an entrenched position within our existing customer base. For example, we believe that
greater than 70% of our revenue was sole-sourced in 2010, which we believe demonstrates the differentiation of our products and gives us significant insight into our customers' product and
technology roadmaps.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Diversity across network segments, products and
customers.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our revenues are diversified across network segments, with approximately 51.8% of our 2010 revenue from Long Haul/ </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>79</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>Metro,
37.4% from Access and 8.8% from Enterprise/Data Center, allowing us to capitalize on growth in capital investment cycles across the communications network. Our global, diversified customer base
includes module manufacturers and OEMs&nbsp;who sell to telecom carriers, bandwidth providers and defense and avionics contractors, such as Cambridge Industries Group, Ciena Corporation, Finisar
Corporation, Huawei Technologies&nbsp;Co.,&nbsp;Ltd., Lockheed Martin Corporation, Source Photonics,&nbsp;Inc. and Superxon Technology,&nbsp;Ltd. Furthermore, our products are deployed in a
number of major communication service provider networks. Our revenue is also well diversified by product, with more than 2,500 products across six product families.  </FONT></P>

</UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Experienced management team with strong execution
track-record.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Each of our executive officers has more than 15&nbsp;years of relevant industry experience, with the substantial majority having more than 25 years
of relevant experience. Members of our management team and board of directors also played integral roles in leading Lucent Technologies' optoelectronic components business in 2000, when the division's
revenues exceeded $1&nbsp;billion. Our key managers have worked side by side in large and small companies and have a proven track record of strong top-line revenue performance throughout
varied market cycles. We grew our revenues from $27.8&nbsp;million in 2005 to $108.3&nbsp;million in 2010, representing a 31.3% CAGR. We have acquired and successfully integrated five businesses
since 2003. Our management is consistently recognized for its visionary leadership and often called upon to present at industry conferences and serve on technical committees that establish industry
standards. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=3><B> Our strategy  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our goal is to become the leading provider of high-performance optical technologies that enable the rapid growth in
high-speed optical networking communications. Key elements of our strategy are as follows: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Extend leadership in FTTH.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We intend to maintain our strong
position in our core&nbsp;GPON FTTH markets and extend&nbsp;GPON market share by winning new customers and introducing next generation products. In addition, we plan to take advantage of market
disruption and product cycle transitions by providing an alternative to traditional transceiver vendors through our BOSA offerings and by addressing emerging FTTH applications (WDM PON and 10 gigabit
Ethernet PON, or GEPON).  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Capture an increasing share of the Enterprise/Data Center and Long-Haul/Metro market
segments.</I></B></FONT><FONT SIZE=2> We intend to leverage our technology leadership, Indium Phosphide and Silica-on-Silicon integration and high-performance packaging
to develop multi-channel PICs in support of 40Gbps and 100Gbps Ethernet TOSA and ROSA, receivers and miniaturized tunable laser for coherent applications and tunable 10Gbps TOSA for both module
manufacturers and OEM customers. Our goal is to become a leader in these market segments through a combination of high performance, on-time delivery and low manufacturing cost. </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Continue to grow our defense and avionics business and other emerging end market
applications.</I></B></FONT><FONT SIZE=2> We intend to continue to leverage our differentiated technologies and U.S.-based design and manufacturing operations to address the growing demand for
optical components and modules in the Intelligence, Surveillance and Reconnaissance, or ISR, and munitions industries. We will continue to work with the major US-based defense prime
contractors and look to secure agency development contracts. We also intend to grow our presence in other emerging end market applications such as high-performance computing, medical and
security. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>80</FONT></P>

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<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Continue gross margin expansion.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We intend to continue our
gross margin improvement through increased scale across our manufacturing infrastructure and continued introduction of higher performance products with greater component-level intelligence and
integrated functionality to module manufacturers and OEMs.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Selectively pursue complementary acquisitions.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We intend to
continue to selectively pursue acquisitions that complement our strengths and help us execute our strategies. Our acquisition strategy is designed to accelerate our revenue growth, increase our
customer penetration, expand our technology and manufacturing platforms and grow our addressable market. We believe our demonstrated experience with successful integration of past acquisitions
provides us an advantage in assessing and integrating companies we may pursue in the future. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=3><B> Technology  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We design and manufacture optical components and modules on the basis of Indium Phosphide and Silica-on-Silicon
technologies. Our design and fabrication expertise is based on more than 25&nbsp;years of investments, including those made by the former optoelectronics divisions of Lucent Technologies and Bell
Labs, which we obtained through our acquisition of a division of TriQuint Semiconductor,&nbsp;Inc. in 2005, and our broad portfolio of proprietary technologies, which form the foundation of our
technical expertise and extensive industry know-how. Many members of our team are considered innovators in the Indium Phosphide semiconductor photonics market. While most of our
competitors in recent years have outsourced their manufacturing, in whole or in part, we are one of the few companies in our industry with vertically integrated technology and manufacturing platforms
that span from Indium Phosphide and Silica-on-Silicon Planar Lightguide Circuit, or&nbsp;PLC, chip fabrication to proprietary, highly automated assembly and test facilities.
Our in-house capabilities allow us to offer a dependable supply of quality optical components and modules. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
control of all phases of the development and manufacturing process in-house and leverage a comprehensive library of proprietary and commercially available design tools to accurately
model and optimize the optical, electrical, thermal and mechanical properties prior to fabricating our devices and packages. The increasing complexity of optical devices makes accurate performance
modeling necessary to reduce the number of design iterations thereby reducing our customers' time to market and enabling them to make more efficient engineering investments. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
also have developed extensive expertise in the design and large scale fabrication of PICs, and are one of the few companies with all the key technologies in-house that enable the
efficient design and the scalable, reliable, high volume fabrication of monolithic and hybrid PICs. In monolithic or single chip PICs, we leverage our advanced design, process know-how and
epitaxial growth techniques to integrate multiple devices and/or functions into a single Indium Phosphide chip. In hybrid PICs, we utilize our highly automated sub-micron precision
assembly platform to integrate multi-chip optical devices that are coupled using optical interconnects into a single package. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>81</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>The
following technologies and capabilities are key to our business: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Indium Phosphide fabrication.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We have one of the leading
Indium Phosphide fabrication facilities, or Indium Phosphide fabs, in the world with comprehensive, in-house manufacturing from epitaxial growth to wafer and chip fabrication. Optoelectronic design
and manufacturing requires a deep understanding of complex material and their interactions, device structures and the operation of associated complex manufacturing processes and equipment to build the
needed layer structure with atomic-level precision. At the core of our business lies our laser and photo-detector technology, which allows us to efficiently design products that meet or exceed the
power, size, temperature performance and reliability requirements of our customers. In the development and manufacturing of Indium Phosphide based lasers and photo-detectors, we utilize accumulated
knowledge in areas such as semiconductor epitaxial growth, semiconductor material systems, quantum well design and band gap engineering, to achieve high speed performance, wide operating temperature
ranges and precise wavelength control for Dense Wavelength Division Multiplexing, or DWDM, resulting in high manufacturing yield and throughput, and reduced cycle time. In our monolithic PICs, we use
a combination of highly flexible, multi-stage epitaxial growth via metal-organic chemical vapor deposition, or MOCVD, integration technologies such as Selective Area Growth, or SAG, and low loss
coupling waveguide interconnects between active and passive sections, which are the key building blocks enabling the large scale integration of multiple active and passive features in Indium Phosphide
on the same chip.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Silica-on-Silicon PLC
fabrication.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Many of our PIC products rely on our Silica-on-Silicon&nbsp;PLC technology. We have developed a broad toolbox of device
elements that provide a variety of optical functions on a single silicon chip. The planar processing enables scalable, high volume production along with high performance and reliability. We use bulk
and thin film capabilities to manufacture our own glass materials on the silicon wafer substrate. By intentionally incorporating impurities, such as Germanium, Boron or Phosphorus, into the Silica
waveguides for the purpose of modifying its optical properties in a controlled manner, a process known as "doping", we can create material structures for lowest optical power loss, highest levels of
integration as well as material that provides optical gain or amplification. In order to achieve a specific functionality, we can vary these doping levels precisely across the wafer and are able to
integrate different elements into optical circuits on a single chip. We routinely utilize micron and submicron scale structures of multiple precision-doped
Silica-on-Silicon&nbsp;PLCs to manufacture and integrate into optical circuits design elements and building blocks for low loss coupling between different waveguides,
Wavelength Division Multiplexer, or WDM, couplers, splitters, turning mirrors to couple light out of the&nbsp;PLC chip into a photo-detector, DWDM and course wavelength division multiplexing, or
CWDM, arrayed waveguide gratings, or AWG, multiplexer and de-multiplexer.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Assembly and test.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We have accumulated a significant
knowledge base in laser packaging, and in mechanical, optical, thermal and high frequency design. Laser diodes and photo-detectors are particularly sensitive to external forces, electrostatic fields
and chemical environments, so they are typically housed in hermetically sealed packages. The laser diodes and photo-detectors are typically placed on special silicon or ceramic submounts before being
packaged into the mechanical housing together with certain electronics and other optical and mechanical elements. Substantial investments have been made since 1995 in our in-house </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>82</FONT></P>

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<UL>

<P style="font-family:arial;"><FONT SIZE=2>designed
and built packaging equipment platforms and we believe that our assembly and test operations have the highest level of versatility and automation in our industry. We use
pick-and-place robotics to mount the various optical, electrical and thermal elements in packages that support applications from low cost to high reliability and power, housing
micro-optics, hybrid and monolithically integrated devices. The key differentiation of our automation equipment is the capability to achieve sub-micron alignment precision between optical
elements within the mechanical housing guaranteeing low optical power loss for hybrid or multi-chip integration. We supplement our internal assembly and test capabilities for higher end,
temperature controlled planar packages with the use of contract manufacturers for assembling components in the cylindrical style, or TO-can packages. </FONT></P>

</UL>

<P style="font-family:arial;"><FONT SIZE=3><B> Products  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We are a leading platform-based provider of core optical technologies enabling bandwidth for high-speed networks. We have
one of the most comprehensive optical component portfolios with more than 195 active datasheets, which we sell to most of the leading transceiver vendors and OEMs&nbsp;addressing the needs of
Access, Enterprise/Data Center, and Long Haul/Metro networks and other emerging end market applications. Our product portfolio primarily consists of chips, subcomponents and components for integration
into optical transceivers or transponders or onto linecards. Our product portfolio includes a broad range of optical components&#151;lasers, detectors, transmitters, receivers and
modulators&#151;that vary by data rate, level of integration and form factor and are distinguishable by their superior performance across several technical parameters, such as reliability,
temperature range, power consumption, wavelength stability or receiver sensitivity. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
laser diode and transmit optical subassembly, or TOSA, products include tunable lasers, Fabry Perot lasers, directly modulated lasers, or DMLs, at data rates of up to 25Gbps and electro-absorptive
modulated, or EAM, lasers at data rates of up to 40Gbps with signal wavelengths between 1270nm and 1600nm. We offer high performance avalanche photo-detectors, or APDs, and receivers for data rates of
up to 10Gbps and PIN photo-detector and receivers for data rates of up to 25Gbps. Our 40Gbps and 100Gbps coherent receivers address the emerging end market for the coherent polarization multiplexed
quadrature phase shift keying, or PM-QPSK, transmission standard. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
some of our newer products we leverage our proprietary Terabit PICs, or TERAPICS<SUP>TM</SUP>, platform. In TERAPICS<SUP>TM</SUP> we combine monolithic and hybrid integration to create
optical networking solutions for 40Gbps/100Gbps and beyond. Our active laser or detector arrays are monolithically integrated into Indium Phosphide and are mounted on or interconnected to
Silica-on-Silicon based&nbsp;PLCs, which encompass passive optical features and functions such as an optical multiplexer or demultiplexer. In addition to our Indium Phosphide
and Silica-on-Silicon device technology we leverage our highly automated assembly equipment enabling the very precise and accurate sub-micron mechanical alignment
of optical waveguides between these active and passive functional elements achieving highest performance, highest yields and lowest cost. We believe that TERAPICS<SUP>TM</SUP> is an important
technology platform for addressing some of the key challenges of OEMs, namely reduction of power consumption, size and cost. The first products leveraging this platform are the 40Gbps/100Gbps coherent
receivers, 40GbE (4x10GbE) and 10x10Gbps DWDM TOSA/ROSA (transmit and receive optical subassembly). </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>83</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>The
following is a summary of our products in each of our market segments: </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Access network segment.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We offer one of the broadest portfolios of optical devices and components for the Access network segment serving the optical networking
unit, or ONU, at the customer premises and the optical line terminal, or OLT, in the central office. </FONT></P>
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<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Product family</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Products&nbsp;&amp; product description</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Product form factor</B></FONT><BR></TH>
</TR>
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<TD COLSPAN=5 style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
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<TD style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B>Devices</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B> Chips and TO-can</B></FONT><FONT  style="font-size:8pt;line-height:9pt;"><BR>
&nbsp;&nbsp;<BR>
For integration into TO-can or TOSA/ROSA, BOSA (bidirectional optical subassembly)<BR>
&#149;&nbsp;2.5Gbps DML<BR>
&#149;&nbsp;10Gbps DML<BR>
&#149;&nbsp;10Gbps EAM laser<BR>
&#149;&nbsp;2.5Gbps and 10Gbps APD</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B>
<IMG SRC="g361846.jpg" ALT="GRAPHIC" WIDTH="60" HEIGHT="33">
 </B></FONT><FONT  style="font-size:8pt;line-height:9pt;"><BR>
<BR>
<BR></FONT> <FONT  style="font-size:8pt;line-height:9pt;"><B>
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<TD COLSPAN=5 style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
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<TD style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B> Components on Board (COB)</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B> GPON Bidirectional Optical Sub-Assembly (BOSA)</B></FONT><FONT  style="font-size:8pt;line-height:9pt;"><BR>
&nbsp;<BR></FONT> <FONT  style="font-size:8pt;line-height:9pt;"><B>10GEPON Bidirectional Optical Sub-Assembly (BOSA)</B></FONT><FONT  style="font-size:8pt;line-height:9pt;"><BR>
&nbsp;<BR>
For integration into&nbsp;GPON ONU Transceivers or onto linecards</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B>
<IMG SRC="g329765.jpg" ALT="GRAPHIC" WIDTH="157" HEIGHT="123">
 </B></FONT></TD>
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<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:0pt;margin-left:20pt;text-indent:-20pt;"><FONT  style="font-size:8pt;line-height:9pt;">  </FONT><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT  style="font-size:8pt;line-height:9pt;">used in customer premise equipment providing voice, data
and internet access over optical FTTH or business</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:0pt;margin-left:20pt;text-indent:-20pt;"><FONT  style="font-size:8pt;line-height:9pt;">  </FONT><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT  style="font-size:8pt;line-height:9pt;">used in customer premise equipment providing voice, data
and internet access over optical FTTH or business</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
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<TD COLSPAN=5 style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
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<TD style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B>Large Form Factor Components</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B> 40Gbps Laser</B></FONT><FONT  style="font-size:8pt;line-height:9pt;"><BR>
For integration into 300pin Transponder, connecting routers with DWDM Transponder cards<BR>
&#149;&nbsp;cooled EAM laser for 2km transmission</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B>
<IMG SRC="g422301.jpg" ALT="GRAPHIC" WIDTH="114" HEIGHT="85">
 </B></FONT></TD>
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 <P style="font-family:arial;"><FONT SIZE=2><B><I> Enterprise/Data Center network segments.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We offer a broad portfolio of devices and components for the Enterprise/Data Center market. </FONT></P>
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<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Product family</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Products&nbsp;&amp; product description</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Product form factor</B></FONT><BR></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=5 style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
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<TD style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B>Devices</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B> Chips</B></FONT><FONT  style="font-size:8pt;line-height:9pt;"><BR>
For integration into TOSA/ROSA</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B>
<IMG SRC="g361846.jpg" ALT="GRAPHIC" WIDTH="60" HEIGHT="33">
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<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;25Gbps DML chips on carrier on LAN-WDM grid<BR>
&#149;&nbsp;40Gbps EAM laser chip on carrier for short reach (VSR) (2km) application<BR>
&#149;&nbsp;25Gbps PIN detectors</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B>
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<TD style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B> Small Form Factor Components</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B> TOSA</B></FONT><FONT  style="font-size:8pt;line-height:9pt;"><BR>
&nbsp;<BR>
For integration into SFP+ or 100G CFP Transceiver<BR>
&#149;&nbsp;10Gbps FP<BR>
&#149;&nbsp;10Gbps DML<BR>
&#149;&nbsp;10Gbps CWDM DML for 40GbE</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Product family</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Products&nbsp;&amp; product description</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Product form factor</B></FONT><BR></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=5 style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
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<TD style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B> PIC-Based Components<BR>
and Next-generation<BR>
Modules (Transceivers)</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B> 40GbE TOSA/ROSA (based on TERAPICS<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">TM</font> platform)</B></FONT><FONT  style="font-size:8pt;line-height:9pt;"><BR>
&nbsp;&nbsp;<BR>
For integration into QSFP Transceiver</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B>
<IMG SRC="g715571.jpg" ALT="GRAPHIC" WIDTH="126" HEIGHT="57">
 </B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:0pt;margin-left:20pt;text-indent:-20pt;"><FONT  style="font-size:8pt;line-height:9pt;">  </FONT><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT  style="font-size:8pt;line-height:9pt;">TOSA integrates 4x10Gbps CWDM DMLs with Optical
Multiplexer</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:0pt;margin-left:20pt;text-indent:-20pt;"><FONT  style="font-size:8pt;line-height:9pt;">  </FONT><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT  style="font-size:8pt;line-height:9pt;">ROSA integrates 4x10Gbps PIN photo-detectors with Optical
Demultiplexer</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
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<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:0pt;margin-left:20pt;text-indent:-20pt;"><FONT  style="font-size:8pt;line-height:9pt;">  </FONT><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT  style="font-size:8pt;line-height:9pt;">10km reach</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
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 <P style="font-family:arial;"><FONT SIZE=2><B><I> Long Haul/Metro network segments.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our portfolio for the Long Haul/Metro market includes differentiated products such as tunable lasers with narrow linewidth for
coherent applications, one of the most compact integrated coherent receivers for 40Gbps and 100Gbps, DWDM TOSAs with low power dissipation for integration into SFP+ transceivers and miniaturized
10x10G TOSA/ROSA and CFP modules. </FONT></P>
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<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Product family</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Products&nbsp;&amp; product description</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Product form factor</B></FONT><BR></TH>
</TR>
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<TD COLSPAN=5 style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
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<TD style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B>Devices</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B> Chips and TO-can</B></FONT><FONT  style="font-size:8pt;line-height:9pt;"><BR>
&nbsp;&nbsp;<BR>
For integration into TO-can or TOSA/ROSA</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B>
<IMG SRC="g361846.jpg" ALT="GRAPHIC" WIDTH="60" HEIGHT="33">
 </B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;2.5Gbps DWDM/CWDM DMLs</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;10Gbps DWDM EAM lasers</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;2.5Gbps and 10Gbps PIN and APD chip or chip-on-carrier</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
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<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;2.5Gbps 1550nm TDM or CWDM DML (up to 80km) integrated into a cylindrical TO package</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
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<TD style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B> Devices</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B> Optical Sub-Assembly (OSA)</B></FONT><FONT  style="font-size:8pt;line-height:9pt;"><BR>
&nbsp;<BR>
For integration into TOSA<BR>
&#149;&nbsp;Assembly of 10Gbps EAM laser, lens and back facet monitor photo- detector on Silicon Optical Carrier</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B>
<IMG SRC="g916728.jpg" ALT="GRAPHIC" WIDTH="66" HEIGHT="55">
 </B></FONT></TD>
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<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;40km, 80km, time division multiplexing (TDM) and DWDM</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
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<TD style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B> Large Form Factor Components</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B> Tunable Laser, Integrated Tunable Laser Assembly (ITLA)</B></FONT><FONT  style="font-size:8pt;line-height:9pt;"><BR>
&nbsp;&nbsp;<BR>
For integration into 300pin Transponders<BR>
&#149;&nbsp;Full C-Band tunability</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B>
<IMG SRC="g433346.jpg" ALT="GRAPHIC" WIDTH="148" HEIGHT="94">
 </B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;High Output power 16dBm</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
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<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;Narrow Linewidth of 100kHz</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
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<TD style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B>Small Form Factor Components</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B> Transmit Optical Subassembly (TOSA),</B></FONT><BR>
<FONT  style="font-size:8pt;line-height:9pt;"><B>Receive Optical Subassembly (ROSA)</B></FONT><FONT  style="font-size:8pt;line-height:9pt;"><BR>
&nbsp;&nbsp;<BR>
For integration into 10G Form Factor Pluggable (XFP), Standard Form Factor Pluggable Plus (SFP+) and Standard Form Factor Pluggable (SFP) transceivers, compatible with 10G/s Miniature Device (XMD) Multisource agreement (MSA)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B>
<IMG SRC="g916060.jpg" ALT="GRAPHIC" WIDTH="130" HEIGHT="94">
 </B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;2.5Gbps DML TOSA for up to 200km DWDM and CWDM applications</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
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<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;10Gbps DML TOSA, CWDM, 1270nm-1610nm</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>
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<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Product family</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Products&nbsp;&amp; product description</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Product form factor</B></FONT><BR></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=5 style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
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<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;10Gbps EAM laser TOSA, up to 80km, TDM, CWDM and DWDM, standard and extended temperature (-40 to 90 degrees Celsius)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
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<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;10Gbps EAM laser TOSA, up to 80km, TDM, CWDM and DWDM for lowest power consumption enabling DWDM in SFP+</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
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<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;10Gbps high sensitivity APD</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
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<TD COLSPAN=5 style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
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<TD style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B>PIC-Based Components and Next-generation Modules (Transceivers)</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B> 40G/100G Integrated Coherent Receiver (based on TERAPICS<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">TM</font> platform)</B></FONT><FONT  style="font-size:8pt;line-height:9pt;"><BR>
&nbsp;&nbsp;<BR>
For integration into 300pin Transponders and onto linecards<BR>
&#149;&nbsp;Integrating polarization splitters, coherent mixers with photo-detectors and Trans-Impedance Amplifier (TIA) ICs</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B>
<IMG SRC="g374210.jpg" ALT="GRAPHIC" WIDTH="118" HEIGHT="88">
 </B></FONT></TD>
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<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;Compact package adhering to the Optical Internetworking Form (OIF) Implementation Agreement</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
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<TD COLSPAN=5 style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
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<TD style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B> PIC-Based Components and Next-generation Modules (Transceivers)</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B> 10x10Gbps TOSA/ROSA (based on TERAPICS<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">TM</font> platform)</B></FONT><FONT  style="font-size:8pt;line-height:9pt;"><BR>
&nbsp;<BR>
For integration into CFP Transceiver<BR>
&#149;&nbsp;TOSA integrates ten channel DWDM&nbsp;10Gbps EAM laser arrays with Optical Multiplexer</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B>
<IMG SRC="g415936.jpg" ALT="GRAPHIC" WIDTH="117" HEIGHT="81">
 </B></FONT></TD>
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<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;ROSA integrates 10 10Gbps PIN/APD photo-detectors with Optical Demultiplexer</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
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<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;100GHz channel spacing</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
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<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;65km reach</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
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<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;40 channels in C-Band to support 40x10Gbps or 4x100Gbps</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
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</TR>
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<TD style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B>PIC-Based Components and Next-generation Modules (Transceivers)</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B> 10x10Gbps CFP Module (based on TERAPICS<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">TM</font> platform)</B></FONT><FONT  style="font-size:8pt;line-height:9pt;"><BR>
&nbsp;&nbsp;<BR>
For integration into Datacom and Telecom switches and routers<BR>
&#149;&nbsp;Hot pluggable module</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"><B>
<IMG SRC="g235221.jpg" ALT="GRAPHIC" WIDTH="145" HEIGHT="78">
 </B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;Integrates 10 Transmit and 10 Receive channels each operating at 10.3Gbps</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;100GHz channel spacing</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;65km reach</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#149;&nbsp;4 variants covering the C-Band to support 40x10Gbps or 4x100Gbps</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
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<TD COLSPAN=5 style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
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 <P style="font-family:arial;"><FONT SIZE=2><B><I> Emerging end market applications.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We design and manufacture tailored products leveraging our Indium Phosphide, Silica-on-Silicon&nbsp;PLC
and automated packaging capabilities for a variety of emerging end market applications, such as the defense and avionics, high performance computing, medical and security markets. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=3><B> Customer support  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We offer our customers a range of support offerings, including on-site product training, application support, product
warranties and around the clock multi-level technical support. Our customer support is provided by our employees, and we believe that providing ongoing support is critical to successful
long-term relationships with, and follow-on sales to, our customers and partners. We are committed to providing our customers and partners with the highest levels of support. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>86</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=3><B> Marketing and sales  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We market and sell our products primarily through our direct sales force, supported by marketing, application engineering and product
management personnel. We also use distribution or support partners to enter new markets or when requested by a potential customer. Our sales team has significant previous experience with the buying
process and sales cycles typical of high-value technology products. We expect to continue to add sales, marketing, application engineering and product management support employees as we
grow our business. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
sales process for our products entails substantial collaborations with prospective customers, analyzing their existing technology portfolio and future product roadmap and identifying how they can
utilize our tailored-manufacturing, technology and product capabilities. As part of the sales cycle, our customers perform qualification tests and field trials of our products before making a
purchasing decision. Upon successful completion, the customer generally accepts the products and may continue with commercial deployment of additional products. We believe
that the lengthy, multi-stage nature of the sales cycle in the optical networking industry, from initial contact with a customer through the signing of a purchase agreement, fosters
long-term customer partnerships. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Direct sales force.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our sales team sells directly to customers worldwide with strong development and factory support. Our direct sales teams are based in the
United States, China and Taiwan. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Indirect sales force.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We employ business consultants, resale partners and sales agents to assist in our sales efforts. We work with channel partners to assist our
customers in the design and integration of our products into modules and line cards and have entered into distribution and resale agreements to facilitate the sale of products in certain international
markets. We maintain an indirect sales presence in many geographies, including the United States, Canada, Brazil, Europe, China, Japan, Korea, Singapore and India. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><I> Marketing, application engineering and product management.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our product management and application engineering team is responsible for defining the new product
features and product development roadmaps. They also support our sales efforts with product and application engineering expertise. Our marketing team works to create demand for our products by
communicating our value proposition and differentiation through direct customer interaction, including product announcements, tradeshows, industry events and other marketing channels. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Research and development  </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Our research and development team consists of engineers with optoelectronics expertise in Indium Phosphide and
Silica-on-Silicon optical device design, optical, mechanical, thermal and electrical package design, firmware development and module design. We have a rigorous product
development process, which includes sampling and engineering verification, design verification testing and volume production verification. In order for a product to move to the next step in the
process, it must pass through a series of checkpoints to verify both technical and commercial performance. For example, our research and development activities incorporate design for manufacturing
principles to help ensure the high-volume and cost-effective manufacturability of our products, which are verified at each checkpoint. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>87</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>We
have dedicated product development and product engineering teams in Breinigsville, Pennsylvania, South Plainfield, New Jersey, Matamoros, Mexico and Taipei, Taiwan. These teams conduct research,
product roadmap definitions, new product development, manufacturing and process engineering, quality control and continuous improvement and cost reduction relating to chip fabrication or package
assembly and test. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Research
and development expenses were $12.0&nbsp;million, $19.5&nbsp;million and $19.0&nbsp;million in 2010, 2009 and 2008, respectively, and $3.5&nbsp;million for the three months ended
March&nbsp;31, 2011. Our research and development expenses decreased substantially from 2009 to 2010 due to our dissolution of PGT. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Manufacturing  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We have invested significant time and capital to develop and improve the manufacturing process that we use to produce and package our
products. This includes significant investments in personnel and the facilities to manufacture and package our products in Breinigsville, Pennsylvania, South Plainfield, New Jersey and Matamoros,
Mexico. We also have invested in automating our manufacturing process and in training, maintaining and enhancing the quality of our manufacturing workforce. Our manufacturing processes have been
developed over more than 25&nbsp;years of research, development and investments, including those made by the former optoelectronics divisions of Lucent Technologies and Bell Labs, which we obtained
through our acquisition of a division of TriQuint Semiconductor,&nbsp;Inc. in 2005, and are protected by our trade secrets, technical expertise and extensive industry know-how. There are
several important aspects of our manufacturing platforms: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Vertical integration for active and passive devices.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We are
vertically integrated with laser and detector device design, device fabrication and final assembly and test of transmitter and receiver packages. In the design and manufacturing process we use our
accumulated knowledge in areas such as Indium Phosphide and Silica-on-Silicon&nbsp;PLC materials and epitaxial growth, wafer processing and packaging automation. We believe
that the combination of our vertically integrated technology and manufacturing platforms and our know-how and expertise enable us to control and continuously innovate at all phases of the
development and manufacturing process and to offer our customers several product benefits, including better and more reliable performance, continuity and quality of supply, higher data rates, lower
cost, smaller form factor, lower power consumption, greater functionality and shorter time to market.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Comprehensive in-house operations.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our Indium
Phosphide cleanroom fabrication operations are comprehensive, ranging from epitaxial growth to wafer and chip processing. Our wafer and chip fab is one of the most highly automated lines of its kind
utilizing both commercially available and in-house built proprietary tools. Our broad fabrication competencies include a variety of processes by which we can develop custom,
high-performance, high-quality products at high yields. Our core competencies include the precise control of the epitaxial growth parameters, selective area growth and
re-growth, low loss coupling waveguide interconnects and advanced device characterization techniques. Moreover, our Indium Phosphide-based laser transmitter and receiver device product
development teams are co-located with our fabrication operations in Breinigsville, Pennsylvania. The proximity, alignment and close interaction between our experienced product development
teams and our Indium Phosphide fabrication operations enable us to </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>88</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>rapidly
develop, test and deliver devices with increasing functionality tailored to our customers' needs in a timely, cost-efficient manner.
<BR></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
have comprehensive Silica-on-Silicon&nbsp;PLC fabrication operations in South Plainfield, New Jersey, where we do turn-key cleanroom fabrication from bulk or
thin film deposition to wafer and chip fabrication. Our core competencies are in the integration of waveguide materials with different optical properties on the same chip for optimized performance
with the smallest chip size. We offer our customers not only monolithic integration of active and passive components in Indium Phosphide but also hybrid integration of Indium Phosphide with
Silica-on-Silicon&nbsp;PLCs, thereby increasing the range of integration versus performance options.
<BR></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
high volume automated component assembly and test operations for planar style packages are located in Matamoros, Mexico, addressing our commercial products, and in Breinigsville, PA for
prototyping and our defense and avionics products. By leveraging proprietary, in-house designed and built pick and place robotics our assembly and test line is one of the most automated
lines of its kind in the industry. In addition to the level of automation we provide, we also believe that our sub-micron alignment capability between optical elements is a key
differentiator the enables low coupling loss for hybrid or multi-chip photonic integration. This represents a considerable investment that enables us to accelerate the volume production of
highly integrated, complex component packages. The combination of our agile manufacturing operations and design competencies enable us to deliver a wider range of single and multi-chip
components and packages tailored to our customers' specific needs in a timely, cost-efficient manner.  </FONT></P>

</UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>Decreased time to market.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We believe that our extensive
know-how and in-house control of the entire optical component manufacturing process enables us to respond more quickly to changing market and customer requirements and to
accelerate the market introduction of new products by achieving best in class manufacturing yields and performance consistency, resulting in reduced manufacturing costs that drive market adoption and
penetration.
<BR></FONT>
<BR>

<P style="font-family:arial;"><FONT SIZE=2>By
using common, high volume, well characterized and well controlled building blocks, or optical submounts, across the device fabrication and package assembly process, we are able to reduce the
development time with fewer design iterations for new product introductions. For example, our management team pioneered the use of such building blocks in optical packaging dating back to 1995, when
we introduced the Optical Subassembly, or OSA, concept, which still provides a common platform across all laser families.
<BR></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
broad portfolio of Indium Phosphide active laser and detector devices, as well as passive devices in Silica-on-Silicon&nbsp;PLCs enables us to perform single chip or
multi-chip integration for a number of different application optimized solutions and thereby deliver highly integrated PICs to our customers in a relatively short timeframe. The
co-location of our development and manufacturing teams helps to shorten the time to market and achieve or exceed manufacturing cost and quantity targets.
<BR></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Finally,
the versatility and scalability of our automated assembly and test equipment enables the manufacturing of a broad range of package assemblies on the same equipment platforms and allows a fast
ramp to volume. The equipment's re-usability and
re-configurability for different manufacturing needs enables us to address changing market requirements quickly and reduces our capital investment needs. </FONT></P>

</DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>89</FONT></P>

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<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><B><I>High quality standards.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We have stringent quality control and
management procedures in place for the entire design and manufacturing process from device to package. We follow established introduction processes for new products to ensure product reliability and
manufacturability, including our own in-house quality assurance surveillance procedures and industry-standard quality and testing requirements. Our manufacturing facilities are certified
to the ISO&nbsp;9001:2000 standard. We employ a custom database that allows us to automatically track the complete history of a manufactured part across our entire manufacturing operation, from the
time the raw materials arrive (i.e.,&nbsp;piece part lot information) to the time it ships to our customer (including assembly and test data). </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=3><B> Backlog  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Sales of our products generally are made pursuant to purchase orders, often with short lead times. These purchase orders are
typically made without deposits and are often subject to revision or cancellation. The quantities actually purchased by our customers, as well as the shipment schedules, are frequently revised to
reflect changes in our customers' needs and in our supply of products. Because of the possibility of changes in delivery or acceptance schedules, cancellations, modifications or price reductions with
limited or no penalties, we do not believe that backlog is a reliable indicator of our future revenue and do not rely on backlog to manage our business or evaluate our performance. Changes in the
amount of our backlog do not necessarily reflect a corresponding change in the level of actual or potential sales. We define backlog to be the total value of sales orders that have been placed by our
customers for products that have not yet been delivered. As of December&nbsp;31, 2010, our backlog was $37.7&nbsp;million compared to a backlog of $16.1&nbsp;million as of December&nbsp;31,
2009. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Intellectual property  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We have built an extensive intellectual property portfolio both as a core part of our internal research and development and technical
strategies and through our strategic acquisitions, which were driven in part by the acquisition of intellectual property assets. Our intellectual property portfolio extends throughout our vertically
integrated operations, from materials, design, integration and wafer fabrication to module and subsystem assembly and test. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
success as a company depends in part upon our ability to obtain and maintain proprietary protections for our technology and intellectual property and prevent others from infringing these
proprietary rights. To accomplish this objective, we rely on a combination of intellectual property rights, including patent, trademark, trade secret, and unfair competition laws, as well as license
agreements and other contractual protections. As an example, we have established broad license agreements for optical technologies with LSI Corporation (formerly Agere Technologies) and TriQuint
Semiconductor as well as with others. We have and will file patent applications to protect our proprietary information, and will pursue such applications, as well as applications for registrations for
other intellectual property rights, as applicable. We have 26 issued patents in the United States. Our patents will expire between 2020 and 2030. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
intellectual property covers a broad range of technologies and capabilities that encompasses over six different product families. We seek to protect our intellectual property rights by having our
employees and independent consultants enter into a confidentiality and inventions assignment agreements when they join us. Additionally, we enter into </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>90</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>non-disclosure
agreements with other third parties who may have access to our proprietary technologies and information. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
addition, we are applying to register the trademark "CyOptics" in the United States and selected other international jurisdictions. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=3><B> Customers  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We have a global customer base that includes most of the leading module manufacturers and OEMs&nbsp;that sell into the
communications network markets and other emerging end market segments, such as defense and avionics. We sell our products directly to OEMs&nbsp;and indirectly to OEMs&nbsp;through optical module
manufacturers, optical design manufacturers or sub-systems providers. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
collaborate closely with our customers throughout design cycles that often last several years and entail analyzing their existing technology portfolio and future product roadmap and mapping them to
our tailored manufacturing, technology and product capabilities. As part of the design cycle, our customers also perform extensive qualification tests and field trials of our products before making a
purchasing decision. Due to the lengthy, multi-stage nature of the design cycles and as our technology becomes embedded into our customers' systems or modules, we are able to develop
long-term relationships with them. In instances where commercial solutions are not meeting customer requirements or are not available, especially for next generation optical networking and
for specialized market segments, we have and will continue to establish very strong customer collaborations through development contracts. In the manufacturing phase, our customers then purchase from
us directly or, in many cases, indirectly through their designated contract manufacturers. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>During
the year ended December&nbsp;31, 2010, we sold our products to more than 180 customers. Sales to customers or contract manufacturers in Asia accounted for 76.3%, 70.7% and 62.1% of our total
revenue in the years ended December 2010, 2009 and 2008, respectively. Historically, we believe our customers have increasingly located their manufacturing operations in Asia. Many of our customers
also maintain design teams in North America and Europe and in 2010, 18.9% of our new design wins were added outside of Asia. Although a large percentage of our sales is made to customers or contract
manufacturers in Asia, we believe that a significant number of the systems and modules designed by these customers and incorporating our products are then sold to end users outside Asia. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
number of leading module manufacturers and OEMs&nbsp;is fairly concentrated, and we currently rely, and expect to continue to rely, on this group of customers for more than 50% of our revenue.
In the years ended December 2010, 2009 and 2008, our ten largest customers accounted for 61.9%, 60.3% and 61.3%, respectively, of our total revenue. In 2010, our largest customer, Finisar, accounted
for 15.3% of our revenue and no other customer accounted for more than 10.0% of sales during this period. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Competition  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The market for optical components and modules is highly competitive. While we believe that no company competes against us in all of
our product areas, our competitors range from large </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>international
companies offering a wide range of products to smaller companies operating in niche markets. We believe the principal competitive factors in this market are: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>ability to meet customers' specific requirements;  </FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>price to performance characteristics;  </FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT
SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>time-to-market and time-to-volume production;  </FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>ability to design and consistently manufacture products in high volume and high quality;
 </FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>ability to meet customer lead time demands;  </FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>depth of relationships with and proximity to key customers globally;
 </FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>breadth of product solutions; and  </FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>financial stability. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>We
believe we compete favorably with respect to these factors. We believe our principal competitors are the Optical Divisions of large Japanese conglomerates, including Mitsubishi, NEC Corporation,
NTT Electronics Corporation, Sumitomo Electric Device Innovations,&nbsp;Inc., and Fujitsu Optical Components, as well as smaller, narrowly focused companies, including Multiplex&nbsp;Inc.,
BinOptics Corporation, Santur Corp., Emcore Corporation, u2t Photonics AG and Picometrix. We also compete with various other companies, including some of our customers who evaluate our capabilities
against the merits of manufacturing optical components internally. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Employees  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As of March&nbsp;31, 2011, we employed approximately 550 full-time employees, including 9 in sales and marketing, 49 in product
development, 14 in general and administrative, 36 in business operations and 442 in manufacturing engineering and operations. As of such date, we had 266 employees in the United States and 284
employees internationally. We also engage a number of temporary employees and consultants. Other than our production employees in our Matamoros, Mexico factory, who are subject to a collective
bargaining agreement, none of our employees is represented by a labor union with respect to his or her employment with us. We have not experienced any work stoppages and we consider our relations with
our employees to be good. Our future success will depend upon our ability to attract and retain qualified personnel. Competition for qualified personnel remains intense and we may not be successful in
retaining our key employees or attracting skilled personnel. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Facilities  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our corporate headquarters are located in Breinigsville, Pennsylvania where we lease approximately 117,379 square feet of office,
lab, and manufacturing space. The table below summarizes our facilities as of March&nbsp;31, 2011. We do not own any real property. We consider our facilities sufficient to meet our current and
planned operational requirements. We believe </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>92</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>that
suitable additional or substitute space will be available as needed to accommodate any expansion of our operations. </FONT></P>
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<TD WIDTH="147pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="119pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=5 style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Size (approx. square feet)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Lease expiration</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Functions</B></FONT><BR></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=5 style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>Breinigsville, PA<BR>
(103,000&nbsp;sq&nbsp;ft.)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>October&nbsp;31, 2017</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Manufacturing, Research and Development Lab, Corporate Headquarters</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><BR><FONT SIZE=2>Breinigsville, PA<BR>
(14,379&nbsp;sq&nbsp;ft.)</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><BR><FONT SIZE=2>July&nbsp;31, 2014</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><BR><FONT SIZE=2>Manufacturing, Corporate Headquarters</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><BR><FONT SIZE=2>South Plainfield, NJ<BR>
(21,104&nbsp;sq&nbsp;ft.)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>July&nbsp;31, 2014</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Research and Development Lab, Office and Warehouse</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><BR><FONT SIZE=2>Matamoros, Mexico<BR>
(81,750&nbsp;sq&nbsp;ft.)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>December&nbsp;31, 2011</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Manufacturing, Office and Warehouse</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><BR><FONT SIZE=2>New Taipei City, Taiwan<BR>
(1,800&nbsp;sq&nbsp;ft.)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>March&nbsp;15, 2013</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Office, Research and Development Lab</FONT></TD>
</TR>
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<TD COLSPAN=5 style="font-family:arial;border-bottom:solid #000000 1.0pt;"><BR>&nbsp;</TD>
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<TD style="font-family:arial;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
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 <P style="font-family:arial;"><FONT SIZE=3><B> Environmental, health and safety matters  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our research and development and manufacturing operations and our products are subject to a variety of federal, state, local and
foreign environmental, health and safety laws and regulations relating to discharges of pollutants to air, water, and soil; the remediation of soil and groundwater contamination; the use, storage,
handling and disposal of hazardous materials; employee health and safety; and the hazardous material content in our products. Liability under environmental, health and safety laws can be joint and
several and without regard to fault or negligence. There can be no assurance that violations of these laws will not occur in the future as a result of human error, accident, equipment failure, or
other causes. We use, store and dispose of hazardous materials in our manufacturing operations and hazardous materials are present in our products. We incur costs to comply with existing
environmental, health and safety requirements, and any failure to comply, or the identification of contamination for which we are found liable, could cause us to incur substantial costs, including
cleanup costs, monetary fines, or civil or criminal penalties, and subject us to property damage and personal injury claims, and result in the suspension of production or alteration of our
manufacturing processes, or curtailment of sales and adverse publicity. We expect that our operations and products will be affected by new environmental requirements on an ongoing basis.
Environmental, health and safety requirements have become more stringent over time, and changes to existing requirements could restrict our ability to expand our facilities, require us to acquire
costly pollution control equipment, or cause us to incur other significant expenses or to modify our manufacturing processes or the hazardous material contents of our products. Some jurisdictions in
which our products are sold have enacted requirements regarding the hazardous material content of certain products. For example, member states of the European Union, are among a growing number of
jurisdictions, which have placed restrictions on the use of lead, among other chemicals, in electronic products, which affects the composition and packaging of our products. The passage of such
requirements in additional jurisdictions, or the tightening of standards or elimination of certain exemptions in jurisdictions where our products are already subject to such requirements, could cause
us to incur significant </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>93</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>expenditures
to make our products compliant with new requirements, or could limit the markets into which we may sell our products. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Additionally,
increasing efforts to control emissions of greenhouse gases, or GHG, may also impact us. Additional restrictions, limits, taxes, or other controls on GHG emissions could significantly
increase our operating costs and, while it is not possible to estimate the specific impact any final GHG regulations will have on our operations, there can be no assurance that these measures will not
have significant additional impact on us. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Legal proceedings  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>From time to time, we are involved in various legal proceedings arising from the normal course of business activities. We are not
presently a party to any litigation the outcome of which, we believe, if determined adversely to us, would individually or in the aggregate have a material adverse effect on our business, results of
operations or financial condition. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>94</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg76301a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="du76301_management"> </A>
<A NAME="toc_du76301_1"> </A>
<BR></FONT><FONT SIZE=4><B>  Management  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Executive officers and directors  </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>The following table sets forth the names, ages and positions of our executive officers and directors as of June&nbsp;30, 2011: </FONT></P>
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<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=6 style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Name</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Age</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Position</B></FONT><BR></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=6 style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Ettore J. Coringrato, Jr.&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>53</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>President, Chief Executive Officer and Director</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Matthew C. Riley</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>59</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Chief Financial Officer and Secretary</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Ali A. Abouzari</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>56</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Vice President, Sales</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Joseph P. Keska</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>48</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Vice President, Operations</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Leonard J.P. Ketelsen</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>52</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Vice President, Product Development</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Stefan M. Rochus</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>48</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Vice President, Marketing and Business Development</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Erel N. Margalit</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>50</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Director and Chairman of the Board</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Mark J. DeNino(1)(2)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>58</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Robert Finzi(2)(3)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>57</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>John V. Pilitsis(1)(3)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>67</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sean D. S. Sebastian(1)(2)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>49</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Noah D. Yago</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>35</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
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<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(1)&nbsp;&nbsp;&nbsp;Member
of the Audit Committee </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(2)&nbsp;&nbsp;&nbsp;Member
of the Compensation Committee </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(3)&nbsp;&nbsp;&nbsp;Member
of the Nominating and Corporate Governance Committee </FONT></P>
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=3><B> Executive officers  </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I>Ettore J. Coringrato, Jr.</I></B></FONT><FONT SIZE=2> has served as our President and Chief Executive Officer and
as a member of our board of directors since 2005, and as our Vice President of Business Development from 2003 through the end of 2004. From 2000 until 2003, Mr.&nbsp;Coringrato was
co-founder and served as Chief Financial Officer of CENiX,&nbsp;Inc., an optical start-up that developed high-speed optical modules using an automated manufacturing platform.
Mr.&nbsp;Coringrato also worked for 18&nbsp;years at AT&amp;T and Lucent Technologies, where he held positions in engineering, marketing&nbsp;and sales, strategic planning, business development and
product management. Mr.&nbsp;Coringrato holds a BS degree in Industrial Engineering and Systems Management and an MBA from The Pennsylvania State University. As our President and Chief Executive
Officer and with extensive experience in strategy, business development, operations, product management and finance, Mr.&nbsp;Coringrato brings many valuable perspectives to our board of directors. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I>Matthew C. Riley</I></B></FONT><FONT SIZE=2> has served as our Chief Financial Officer since 2005. Prior to his temporary retirement from 2002 to 2005, Mr.&nbsp;Riley was Senior
Vice President&nbsp;&amp; Controller of Agere Systems Inc., a publicly traded semiconductor company, from 2001 to 2002. From 1998 to 2001, he served as Chief Financial Officer of the Lucent
Microelectronics Group. During his career with AT&amp;T and Lucent Technologies, Mr.&nbsp;Riley held financial, information systems and strategic planning positions. Mr.&nbsp;Riley holds a BS in
Business Finance from Mount Saint Mary's University and an MBA from Fairleigh Dickinson University. </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><B><I>Ali A. Abouzari</I></B></FONT><FONT SIZE=2> has served as our Vice President of Sales since 2003. Previously, Mr.&nbsp;Abouzari was Vice President of Business Development, Sales
and Marketing for Opticalis, a private technology company, where he launched the company's US operations and recruited the senior management team. Prior to that, he served as Director of Marketing for
Agere Systems, and was responsible for marketing initiatives and product strategies for the Microelectronics Group for the Asia/Pacific and China regions. Prior to that, Mr.&nbsp;Abouzari worked at
Lucent Technologies, where he was responsible for marketing optoelectronic components products worldwide to telecom and data networking customers. Mr.&nbsp;Abouzari holds a BS in Mathematics and
Industrial Engineering from the University of Utah, and an ME in Mechanical Engineering/Business Administration from the University of Colorado. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I>Joseph P. Keska</I></B></FONT><FONT SIZE=2> has served as our Vice President of Operations since 2005. Previously, he served as the Director of Package Development and
Manufacturing Operations at TriQuint Semiconductor, a publicly traded technology company. Before that, he was the Director of Process Development for Agere Systems&nbsp;Inc. Mr.&nbsp;Keska began
his career at AT&amp;T where he held positions in manufacturing and engineering, and subsequently joined Bell Labs where he was a member of the technical staff responsible for receiver development.
Mr.&nbsp;Keska holds a BS in Electrical Engineering from the University of Scranton. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I>Leonard J.P. Ketelsen</I></B></FONT><FONT SIZE=2> has served as our Vice President of Product Development since 2005. From 2003 to 2005, Dr.&nbsp;Ketelsen worked at TriQuint
Semiconductor, first in its Source Laser Research and Development Department and later in its Optoelectronics Research and Development Department. From 1985 to 2003, Dr.&nbsp;Ketelsen worked for
Bell Labs, AT&amp;T and Lucent Technologies, where he held positions in the Semiconductor Laser Development Department, Optoelectronics Division and the Photonic Research Laboratory. He holds a BS in
Physics from Clarkson College of Technology, and a Masters and a PhD in Physics from the University of Illinois at Urbana-Champaign. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I>Stefan M. Rochus</I></B></FONT><FONT SIZE=2> has served as our Vice President of Marketing and Business Development since 2005. From 2003 to 2005, he served as a Marketing Director
for TriQuint Semiconductor's Optoelectronics Division and held various director positions in marketing and product line management at Lucent Technologies and Agere Systems managing their EDFA, pump
laser and passives businesses. From 2000 until 2002, Dr.&nbsp;Rochus served as a product line director for Lucent Technologies and Agere Systems Inc. Dr.&nbsp;Rochus also ran Lucent Technologies'
European optoelectronics sales and marketing operations from 1998 to 2000. Dr.&nbsp;Rochus holds a Masters of Science in Optoelectronics from the Technical University of Braunschweig and a PhD in
Electrical Engineering from the Technical University of Munich. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Non-employee directors  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I>Erel N. Margalit</I></B></FONT><FONT SIZE=2> has served on our board of directors since 2007 and as Chairman of
the Board since October 2007. He also served on our board of directors from 1999 to 2006. Dr.&nbsp;Margalit is the founder and chairman of Jerusalem Venture Partners, a leading Israeli venture
capital fund which he founded in 1993. Over the last 18&nbsp;years, Dr.&nbsp;Margalit has orchestrated some of the largest exits to come out of Israel. Prior to this, Dr.&nbsp;Margalit was the
Director of Business Development for the City of Jerusalem. Dr.&nbsp;Margalit also served on the board of directors of Cogent Communications,&nbsp;Inc., Allot Communications&nbsp;Ltd. and Qlik
Technologies,&nbsp;Inc., as well as on the board of directors of numerous private companies including Siano Mobile Silicon,&nbsp;Inc. and Cyber-Ark Software,&nbsp;Ltd. He holds a BA
in Philosophy from Hebrew University, an MA and </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>a
PhD in Philosophy from Columbia University and serves on the Hebrew University Board of Governors. As founder of Jerusalem Venture Partners, our largest stockholder that acquired a controlling
interest in January 2011, Dr.&nbsp;Margalit has a thorough understanding of our business and industry and brings substantial experience in growth-oriented technology companies having both invested
in and served on the board of directors of numerous companies. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I>Mark J. DeNino</I></B></FONT><FONT SIZE=2> has served on our board of directors since 2010. Mr.&nbsp;DeNino has been a Managing Director at TL Ventures since 1994. Prior to
joining TL Ventures, Mr.&nbsp;DeNino worked at Fidelity Bank (now Wells Fargo) and also helped create an S.B.I.C., Fidelcor Capital, to invest in early-stage technology companies. He holds a BS in
Finance and Accounting from Boston College and an MBA from Harvard Business School. Mr.&nbsp;DeNino's extensive investment experience in technology companies and his past service on the board of
directors of numerous public and private companies make him a valuable asset to our board. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I>Robert Finzi </I></B></FONT><FONT SIZE=2>has served on our board of directors since April 2009. In May 1991, Mr.&nbsp;Finzi joined Sprout Group, a venture capital firm, and since
November 2003 served as co-managing partner until April 2010 and is now Managing Partner. From October 1984 to May 1991, Mr.&nbsp;Finzi was a partner of Merrill Lynch Venture Capital and
was promoted to general partner in 1985. From May 1983 to October 1984, Mr.&nbsp;Finzi was an associate at Menlo Ventures, a venture capital firm. From August 1976 to August 1981, Mr.&nbsp;Finzi
was a consultant at Arthur Andersen's Administrative Services Division, a consultancy now known as Accenture&nbsp;Ltd. Mr.&nbsp;Finzi currently serves on the board of directors of Aurora
Networks,&nbsp;Inc., Cleantech Group, Teachscape and Womens' Health USA, each a privately-held company. Mr.&nbsp;Finzi previously served on the board of directors of Calix and Concur
Technologies. Mr.&nbsp;Finzi holds an MBA from Harvard Business School, where he received the Baker Scholar Designation, an MS degree in Industrial Engineering from Lehigh University and a BS in
Industrial Engineering from Lehigh University. Mr.&nbsp;Finzi brings to our board of directors extensive experience in board governance, financial management, operations and reporting and management
information systems. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I>John V. Pilitsis </I></B></FONT><FONT SIZE=2>has served on our board of directors since 2001. Dr.&nbsp;Pilitsis is the Managing Partner of Pilitsis&nbsp;&amp;
Associates,&nbsp;LLC. From 2001 until 2005, Dr.&nbsp;Pilitsis served as our Chief Executive Officer and President. He served as the CEO of FiTEL Technologies,&nbsp;Inc., currently a publicly
traded company in Canada, from 1999 until 2001. In addition, he was the CEO of MKE-Quantum Components&nbsp;LLC from 1998 to 1999 and the President of the Optoelectronics Group of Lucent
Technologies from 1993 until 1999. He also worked as the Vice President of International Marketing and Sales for AT&amp;T Microelectronics,&nbsp;Inc., formerly a division of Lucent Technologies from
1990 to 1993. Dr.&nbsp;Pilitsis served on the board of directors of Syntune,&nbsp;Inc., a private Indium Phosphide photonics components company, until 2009. Dr.&nbsp;Pilitsis holds a BS in
Mechanical Engineering from Farleigh Dickinson University, and a Master of Science and a PhD from the University of Buffalo in Systems Engineering. Due to Dr.&nbsp;Pilitsis' long history with us and
strong leadership and management background, we believe he will be able to continue to make valuable contributions to our board and company as we transition from a private to a public company. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I>Sean D.S. Sebastian </I></B></FONT><FONT SIZE=2>has served on our board of directors since 2005. Mr.&nbsp;Sebastian is a Partner at Birchmere Ventures, where he has worked since
its formation in 1996. Prior to founding Birchmere Ventures, he served in PNC Bank's Corporate Finance Group. He was previously a founder and CEO of the Telford Group, a technology consulting firm to
financial services clients. He also provided management consulting services to major banking and insurance </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>clients
at International Systems Services. Mr.&nbsp;Sebastian holds a BS in Mechanical Engineering from Worcester Polytechnic Institute and an MBA from Rensselaer Polytechnic Institute.
Mr.&nbsp;Sebastian brings substantial investing experience in the technology sector and he has been instrumental in our development since joining our board in 2005. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I>Noah D. Yago</I></B></FONT><FONT SIZE=2> has served on our board of directors since January 2011. Mr.&nbsp;Yago is a Principal at Jerusalem Venture Partners, where he has worked
since 2009 and is a director of several private companies in the group's portfolio. Prior to joining Jerusalem Venture Partners, Mr.&nbsp;Yago was a Vice President at Millennium Technology Ventures
and an Associate at Veronis Suhler Stevenson. He also worked at Saban Capital Group following his experience as the co-founder of Subvergent Media Studios, a Los Angeles-based interactive
consultancy serving the media and apparel industries. He holds a BA in Computer Science and German from Tufts University and an MBA from the Stanford Graduate School of Business. Mr.&nbsp;Yago
brings to our board significant experience in capital raising, strategic transactions and complex financing structures and will be a valuable asset in our transition from a private to public company. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=3><B> Board composition  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our Board of Directors is currently composed of seven members. Four of our directors are independent within the meaning of the
independent director guidelines of The NASDAQ Stock Market. Immediately prior to this offering, our Board of Directors will be divided into three staggered classes of directors. At each annual meeting
of stockholders, a class of directors will be elected for a three-year term to succeed the same class whose terms are then expiring. The terms of the directors will expire upon the
election and qualification of successor directors at the Annual Meeting of Stockholders to be held during the years 2012 for the Class&nbsp;I directors, 2013 for the Class&nbsp;II directors and
2014 for the Class&nbsp;III directors.  </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Our Class&nbsp;I directors will be&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
 </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Our Class&nbsp;II directors will
be&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
</FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Our Class&nbsp;III directors will
be&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
</FONT></DD></DL>


<P style="font-family:arial;"><FONT SIZE=2>Our
amended and restated certificate of incorporation and bylaws provide that the number of our directors, which is currently seven members, shall be fixed from time to time by a resolution of the
majority of our Board of Directors. Each officer serves at the discretion of the Board of Directors and holds office until his successor is duly elected and qualified or until his or her earlier
resignation or removal. There are no family relationships among any of our directors or executive officers. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
division of our Board of Directors into three classes with staggered three-year terms may delay or prevent a change of our management or a change of control. See "Description of
capital stock&#151;Anti-takeover effects of Delaware law and our certificate of incorporation and bylaws" for a discussion of other anti-takeover provisions found in our
certificate of incorporation. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Director independence  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Upon the completion of this offering, we anticipate that our common stock will be listed on The NASDAQ Global Select Market. Under
the rules of The NASDAQ Stock Market, </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>independent
directors must comprise a majority of a listed company's board of directors within a specified period of the completion of this offering. In addition, the rules of The NASDAQ Stock Market
require that, subject to specified exceptions, each member of a listed company's audit, compensation and corporate governance and nominating committees be independent. Audit committee members must
also satisfy the independence criteria set forth in Rule&nbsp;10A-3 under the Securities Exchange Act of 1934, as amended. Under the rules of The NASDAQ Stock Market, a director will
only qualify as an "independent director" if, in the opinion of that company's board of directors, that person does not have a relationship that would interfere with the exercise of independent
judgment in carrying out the responsibilities of a director. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
order to be considered to be independent for purposes of Rule&nbsp;10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of
the audit committee, the board of directors, or any other board committee:
(1)&nbsp;accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries; or (2)&nbsp;be an affiliated person of the listed
company or any of its subsidiaries. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
July, 2011, our Board of Directors undertook a review of its composition, the composition of its committees and the independence of each director. Based upon information requested from and provided
by each director concerning his background, employment and affiliations, including family relationships, our board of directors has determined that none of Messrs.&nbsp;Finzi, DeNino or Sebastian or
Dr.&nbsp;Pilitsis, representing four of our seven directors, has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and
that each of these directors is "independent" as that term is defined under the rules of The NASDAQ Stock Market. Our Board of Directors also determined that Messrs.&nbsp;DeNino and Sebastian and
Dr.&nbsp;Pilitsis, who comprise our audit committee, Messrs.&nbsp;DeNino, Finzi and Sebastian, who comprise our compensation committee, and Mr.&nbsp;Finzi and Dr.&nbsp;Pilitsis, who comprise
our nominating and corporate governance committee, satisfy the independence standards for those committees established by applicable SEC rules and the rules of The NASDAQ Stock Market. In making this
determination, our Board of Directors considered the relationships that each non-employee director has with our company and all other facts and circumstances our board of directors deemed
relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Board committees  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our Board has an audit committee, a compensation committee and a nominating and corporate governance committee, each of which has the
composition and the responsibilities described below. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Audit committee.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our audit committee oversees our corporate accounting and financial reporting process and assists the Board of Directors in monitoring our
financial systems and our legal and regulatory compliance. Our audit committee is responsible for, among other things: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>appointing, compensating and overseeing the work of our independent auditors;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>approving engagements of the independent auditors to render any audit or permissible non-audit services; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>reviewing the qualifications and independence of the independent auditors; </FONT></DD></DL>
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<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>monitoring the rotation of partners of the independent auditors on our engagement team as required by law; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>reviewing our financial statements and reviewing our critical accounting policies and estimates; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>reviewing the adequacy and effectiveness of our internal controls; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>reviewing and discussing with management and the independent auditors the results of our annual audit, our quarterly
financial statements and our publicly filed reports. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>The
members of our audit committee are Messrs.&nbsp;DeNino and Sebastian and Dr.&nbsp;Pilitsis. Mr.&nbsp;Sebastian is our audit committee chairman and our board of directors has designated each
of Dr.&nbsp;Pilitsis and Mr.&nbsp;Sebastian as an "audit committee financial expert," as defined under the applicable rules of the Securities and Exchange Commission. Our Board of Directors has
concluded that the composition of our audit committee meets the requirements for independence under the current requirements of The NASDAQ Stock Market and SEC rules and regulations. We believe that
the functioning of our audit committee complies with the applicable requirements of The NASDAQ Stock Market and SEC rules and regulations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Compensation committee.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our compensation committee oversees our corporate compensation policies, plans and programs. The compensation committee is responsible for,
among other things: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>reviewing and recommending policies, plans and programs relating to compensation and benefits of our directors, officers
and employees;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>reviewing and recommending compensation and the corporate goals and objectives relevant to compensation of our Chief
Executive Officer;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>reviewing and approving compensation and corporate goals and objectives relevant to compensation for executive officers
other than our Chief Executive Officer;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>evaluating the performance of our executive officers in light of established goals and objectives;
and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>administering our equity compensations plans for our employees and directors. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>The
members of our compensation committee are Messrs.&nbsp;DeNino, Finzi and Sebastian. Mr.&nbsp;Finzi is the chairman of our compensation committee. Our Board of Directors has determined that
each member of our compensation committee is independent within the meaning of the independent director guidelines of The NASDAQ Stock Market. We believe that the composition of our compensation
committee meets the requirements for independence under, and the functioning of our compensation committee complies with, any applicable requirements of The NASDAQ Stock Market and SEC rules and
regulations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Nominating and corporate governance committee.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our nominating and corporate governance committee oversees and assists our Board of Directors in reviewing and
recommending </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>corporate
governance policies and nominees for election to our Company's Board of Directors. The nominating and corporate governance committee is responsible for, among other
things: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>evaluating and making recommendations regarding the organization and governance of the Board of Directors and its
committees;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>assessing the performance of members of the Board of Directors and making recommendations regarding committee and chair
assignments;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>recommending desired qualifications for Board of Directors membership and conducting searches for potential members of the
Board of Directors; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>reviewing and making recommendations with regard to our corporate governance guidelines. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>The
members of our nominating and corporate governance committee are Mr.&nbsp;Finzi and Dr.&nbsp;Pilitsis. Dr.&nbsp;Pilitsis is the chairman of our nominating and corporate governance committee.
Our Board of Directors has determined that each member of our nominating and corporate governance committee is independent within the meaning of the independent director guidelines of The NASDAQ Stock
Market. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
Board of Directors may from time to time establish other committees. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Director compensation  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>With the exception of Dr.&nbsp;Pilitsis, no members of our board of directors received any compensation from us in their role as
directors in the fiscal year ended December&nbsp;31, 2010, nor did they have any stock option awards vested or outstanding as of December&nbsp;31, 2010. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
paid Dr.&nbsp;Pilitsis $6,250 in consulting fees for his role as a director during the fiscal year ended December&nbsp;31, 2010. As of December&nbsp;31, 2010, Dr.&nbsp;Pilitsis had 35,094
stock options vested and outstanding that were awarded to him in March 2002 when he served as our chief executive officer. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Upon
consummation of our initial public offering, non-employee directors will receive an annual retainer of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. The chair of the audit committee will be paid an additional
annual retainer of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, and members of the audit committee other than the chair will be paid an additional annual retainer of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. The chair of the compensation committee
will be paid an additional annual retainer of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, and members of the compensation committee other than the chair will be paid an additional annual retainer of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. The chair
of the corporate governance and nominating committee will be paid an additional annual retainer of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, and members of the corporate governance and nominating committee other
than the
chair will be paid an additional annual retainer of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. The lead independent director will be paid an additional annual retainer of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Under
the policy, each non-employee director, who first becomes a non-employee director following the effective date of the first registration statement filed by us and
declared effective with respect to any class of our securities, will be automatically granted a stock option to
purchase&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of our common stock on the date such person first
becomes a non-employee director. A director who is an employee and
who ceases to be an employee, but who remains a director will not receive such an initial award. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>101</FONT></P>

<HR NOSHADE>
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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
addition, each non-employee director will be automatically granted an annual stock option to
purchase&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of our common stock on the date of each annual
meeting beginning on the date of the first annual meeting that is held at least six months after such non-employee director received his or her initial award. In connection with the
pricing of this initial public offering, each non-employee director serving on our Board of Directors at the time of this offering will be automatically granted an option to purchase
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of our common stock at the price per share at which such common stock is sold in this offering. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
exercise price of all stock options granted pursuant to the policy will be equal to the fair market value of our common stock on the date of grant. The term of all stock options will be
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;years. Subject to the adjustment provisions of the 2011 Equity Incentive Plan, initial awards will vest annually over three years, provided such non-employee
director continues to serve as a director through each such date. Subject to the adjustment provisions of the 2011 Equity Incentive Plan, the annual awards, including such awards granted in connection
with this offering, will vest on the first anniversary of the date of grant, provided such non-employee director continues to serve as a director through such date. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
administrator of the 2011 Equity Incentive Plan in its discretion may change or otherwise revise the terms of awards granted under the outside director equity compensation policy. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
the event of a "change in control," as defined in our 2011 Equity Incentive Plan, with respect to awards granted under the 2011 Equity Incentive Plan to non-employee directors, the
participant non-employee director will fully vest in and have the right to exercise awards as to all shares underlying such awards and all restrictions on awards will lapse, and all
performance goals or other vesting criteria will be deemed achieved at&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of target level and all other terms and conditions met. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Code of business conduct and ethics  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Prior to the completion of this offering, we will adopt a code of business conduct that is applicable to all of our employees,
officers and directors. In addition, we will adopt a code of ethics that is applicable to our chief executive and senior financial officers. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Compensation committee interlocks and insider participation  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>None of the members of our compensation committee is an officer or employee of our company. None of our executive officers currently
serves, or in the past year has served, as a member of the Board of Directors or compensation committee of any entity that has one or more executive officers serving on our Board of Directors or
compensation committee. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>102</FONT></P>

<HR NOSHADE>
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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg76301a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="dw76301_compensation_discussion_and_analysis"> </A>
<A NAME="toc_dw76301_1"> </A>
<BR></FONT><FONT SIZE=4><B>  Compensation discussion and analysis  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>This Compensation discussion and analysis provides information about the material components of our executive compensation program
for: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:100%;margin-left:0%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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</FONT></P>

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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Name</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Position(s)</B></FONT><BR></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>Ettore J. Coringrato, Jr.&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>President, Chief Executive Officer and Director</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>Matthew C. Riley</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Chief Financial Officer and Secretary</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>Leonard J.P. Ketelsen</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Vice President, Product Development</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>Joseph P. Keska</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Vice President, Operations</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>Stefan M. Rochus</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Vice President, Marketing and Business Development</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
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</TR>
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 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>We refer to these executive officers collectively in this Compensation discussion and analysis and the related compensation tables as the "named executive
officers." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Specifically,
this Compensation discussion and analysis provides an overview of our executive compensation philosophy, the overall objectives of our executive compensation program and each
compensation component that we provide. In addition, we explain how and why the compensation committee of our board of directors, or the Committee, recommended, and our board of directors approved,
the specific compensation policies and decisions involving our executive officers during 2010. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>This
Compensation discussion and analysis contains forward-looking statements that are based on our current plans, considerations, expectations and determinations regarding future compensation
programs. The actual compensation programs that we adopt in the future may differ materially from currently planned programs as summarized in this discussion. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=3><B> Executive compensation philosophy and objectives  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our compensation philosophy is based on the following objectives and principles: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>attract, retain and motivate top-level executive talent;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>provide compensation levels and structures that are both competitive with our peer companies and fiscally responsible; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>create a culture in which executive compensation aligns with our pay-for-performance business
model;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>align the interests of our executive officers and stockholders by providing equity incentives, while avoiding unreasonable
levels of stockholder dilution; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>maintain simplicity, transparency and ease of administration. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=3><B> Compensation program design  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The compensation of our executive officers, including our named executive officers, consists of a base salary, an annual cash bonus
opportunity, equity-based awards and employee-benefits programs. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>103</FONT></P>

<HR NOSHADE>
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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>To
date, the primary components of our executive compensation program have been base salary and annual cash bonus opportunities. We have emphasized cash compensation, especially bonuses, to focus our
employees on the achievement of specific near-term financial, strategic and operational objectives that will further our longer-term growth objectives. Though we believe the
cash compensation we offer to our executive officers is competitive, we have historically offered base salaries at the lower end of an identified market range as determined in the collective judgment
of our board of directors, and have emphasized cash bonuses to reward outstanding performance. We believe that cash bonuses are the best motivator for our employees and reflect our
pay-for-performance philosophy. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
addition, we have granted stock options to purchase shares of our common stock to our executives. We believe that stock options offer our key employees, including our named executive officers, a
valuable long-term incentive that aligns their interests with the interests of our stockholders. We also believe that, for technology companies, stock-based compensation in the form of
stock options continues to be a significant motivator in attracting and retaining employees. Though historically our equity compensation has been towards the low end for a technology company, as we
transition to a public company, we expect that we will rebalance the compensation packages to place greater emphasis on equity compensation, similar to our anticipated peer group companies. We believe
this shift in emphasis will encourage our employees to focus on growing our overall enterprise value, and correspondingly, to create sustainable long-term value for our stockholders. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>To
date, we have not employed any policies or guidelines for allocating compensation between current and long-term compensation, between cash and non-cash compensation, or
among different forms of non-cash compensation. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=3><B> Compensation-setting process  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Role of the board and compensation committee  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Prior to the formation of the Committee several years ago, our board of directors primarily determined the compensation for our named executive
officers. Since its formation, the Committee has been responsible for overseeing our executive
compensation philosophy and compensation programs, consulting with management on compensation actions and decisions and recommending compensation packages, including cash compensation, equity awards
and benefits, to our board of directors for its approval. Our board of directors has approved a charter for the Committee, which was last revised in May 2010, and we intend to adopt a new charter in
connection with this offering to comply with the applicable rules and regulations of a public company listed on The NASDAQ Stock Market. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Following
this offering, we intend that the Committee will assume the responsibility of administering our executive compensation program as well as determining and approving the compensation for our
executive officers, including the named executive officers, from our board of directors. The Committee intends to review on a periodic basis our executive compensation program, including any incentive
compensation plans, to determine whether they are appropriate, properly coordinated and achieve their intended purposes. The Committee will have the authority to establish and implement any
modifications or new plans or arrangements. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>104</FONT></P>

<HR NOSHADE>
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<P style="font-family:arial;"><FONT SIZE=2><A
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<P style="font-family:arial;"><FONT SIZE=2><B><I> Role of management  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In carrying out their responsibilities, our board of directors and the Committee have worked with members of our management team, including our chief
executive officer. Our board of directors and the Committee also work with our chief financial officer to evaluate the financial, accounting and tax implications, and with our outside legal counsel to
evaluate the legal implications of our various compensation programs. Historically, our management team has assisted our board of directors and the Committee by providing information on corporate and
individual performance, market data and management's perspective and recommendations on compensation matters. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Typically,
our chief executive officer has made recommendations to our board of directors and the Committee regarding the compensation of our employees, including our executive officers (except with
respect to his own compensation), and attends that portion of the meetings in which compensation matters are discussed (except he recuses himself from that portion of meetings with respect to
discussions involving his own compensation). </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>While
our board of directors and the Committee have solicited and reviewed our chief executive officer's recommendations and proposals with respect to compensation-related matters, they have only used
these recommendations and proposals as one factor in making compensation decisions for our employees, including our executive officers. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Role of compensation consultant  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Committee is authorized to retain the services of compensation consultants and other advisors from time to time, as it sees fit, in connection
with the establishment of cash and equity compensation plans and arrangements and related policies. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
July 2011, the Committee engaged Compensia,&nbsp;Inc., a national compensation consulting firm providing executive compensation advisory services, to assist it in developing a set of executive
compensation guiding principles, to evaluate the competitiveness of our executive officers' compensation and to assist the Committee in developing public company-oriented executive and director
compensation programs. Compensia serves at the discretion of the Committee. Compensia has not provided any other services to us in 2011. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Use of competitive data  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>To assess the competitiveness of our executive compensation program and compensation levels going forward, the Committee has instructed Compensia to
develop a peer group of comparable technology companies. The companies comprising the peer group will be selected by the Committee, with the assistance of Compensia, on the basis of their similarity
to us in size as determined by factors such as revenue and market capitalization, geography and industry sector. Data from this peer group will be used to assess current compensation levels and to
assist the Committee in setting compensation levels for 2011 and thereafter. Following development of the initial peer group, the Committee intends to review the peer group at least annually and make
adjustments to its composition as necessary. In 2010, the Committee did not use a peer group to assess the competitiveness of our executive compensation program. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>105</FONT></P>

<HR NOSHADE>
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<P style="font-family:arial;"><FONT SIZE=3><B> Executive compensation program components  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following describes each component of our executive compensation program, the rationale for each component and how awards are
determined. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Base salary  </I></B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Base salary represents the fixed portion of our executive officers' compensation and is set at a minimum level sufficient to attract, retain and
motivate highly talented executive officers when included as one component of our overall total compensation opportunity. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
past years, our board of directors and the Committee have reviewed the base salaries of our executive officers, including the named executive officers, in the second quarter of each year, taking
into consideration our chief executive officer's base salary recommendations, the executive officer's performance, individual contributions, responsibilities, experience, prior salary level and, in
the case of a promotion, position. In the future, we expect the Committee to continue to conduct an annual review of each executive officer's base salary, with input from our chief executive officer,
and to make adjustments it determines to be reasonable and necessary after a review of similar considerations, but also including competitive market practices, including a review of the compensation
policies of our peer group. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
base salaries of our named executive officers were increased between 1.2% and 4.1% from 2009 to 2010 and between 6.2% and 9.7% from 2010 to 2011. The primary reasons for these increases were to
reward individual performance and contributions to the company as determined by our board of directors following recommendations by the Committee. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Cash bonuses  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Historically, the Committee has recommended and our board of directors has established parameters for annual cash bonus payments to our executive
officers, including the named executive officers, and other key employees. Bonus payments have been based on the overall financial performance and strategic and operating achievements of the company,
as well as the individual performance and overall compensation of the employee, and were considered by the Committee and our board of directors to be appropriate individually and in the aggregate
based on our overall performance. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> 2010 Cash bonus plan</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In April 2010, following consultations with management, including our chief executive officer, the Committee recommended and our board of
directors approved the general parameters for an annual cash bonus plan for 2010 to reward our executive officers, including our named executive officers. The 2010 cash bonus plan was primarily based
on the degree of achievement of certain financial performance and operational objectives, but the Committee and our board of directors also desired to retain the flexibility to make final bonus
determinations based on each participant's individual performance and contributions to the company. As part of the 2010 cash bonus plan, the Committee recommended and our board of directors approved
2010 target bonus opportunities and target upside bonus amounts for each named executive officer, calculated as a percentage of each officer's base salary (as shown in the table below). </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>For
2010, the Committee and our board of directors selected revenue, gross margin, net income and end of period cash as the principal corporate financial and operational metrics on which to determine
the overall bonus pools, as these metrics were deemed aligned with our </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>106</FONT></P>

<HR NOSHADE>
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<BR>

<P style="font-family:arial;"><FONT SIZE=2>financial
performance and the creation of stockholder value. Each of these metrics was assigned a weight within each executive officer's target bonus opportunity. Further, the size of each award was
determined by whether we achieved at least a threshold performance level for the year in each financial and operational objective. The Committee believed that these financial metrics, conditions and
thresholds would encourage our executive officers to manage our business in a cost-effective manner and make decisions that would contribute to revenue growth and overall profitability. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
following weightings were applied for our named executive officers: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>revenue&#151;30%;  </FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>gross margin&#151;15-25%;  </FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>net income&#151;10-15%;
and  </FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>end of period cash&#151;10-30%. </FONT></DD></DL>


<P style="font-family:arial;"><FONT SIZE=2>The
remainder of each target bonus opportunity consisted of company strategic, development and manufacturing objectives that were designed separately for each executive officer. Annual revenue was
generally weighted more heavily than the other metrics because, at this point in our development, the Committee and our board of directors believed that revenue growth was the primary driver of
near-term value. For 2010, our target revenue was $81.7&nbsp;million, our target gross margin was 21.3%, our target net income was $(1.9&nbsp;million) and our target end of period cash
was $10.2&nbsp;million. If we achieved between 80-99.99% of the target for each metric, each executive officer would be paid between 50%-99.99% of his or her target bonus for
that metric, calculated on a sliding scale, with no payment for performance less than 80% of the target level. If we achieved between 100-109.99% of the target for a metric, the executive
officers would be paid 100% of their target bonus for that metric. If we achieved 110% or above the target for a metric, the executive officers would be paid 110% of their target bonus for that
metric, with payment of the full target upside bonus opportunities (as shown in the table below) for performance of 110% or above the targets in all metrics. The Committee and our board of directors
believed that the target levels for these financial and operations objectives, and the performance thresholds, were attainable but challenging. In addition, the Committee and our board of directors
reserved an additional $100,000 in the bonus pool to use in its discretion to award outstanding individual performance. This bonus structure is similar to the practice we have implemented in prior
years. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
February 2011, following consultation with management, including our chief executive officer, the Committee and our board of directors determined the amount of the overall cash bonus awards for our
executive officers, including our named executive officers, and other key employees for 2010. In making these determinations, the Committee evaluated our financial and operating performance and the
level of achievement against the financial and operational objectives for the year. The Committee and our board of directors determined that we had exceeded the target level objectives for each of the
four principal metrics as follows: We achieved 132.6% of our annual revenue target, 132.4% of our annual gross margin target, 494.7% of our net income target and 121.6% of our end of period cash
target. The Committee and our board of directors determined that these results supported the payment of the target upside bonus to each of our named executive officers as set forth below. In addition,
the Committee recommended and our board of directors approved additional discretionary bonuses to our chief executive officer and chief financial officer of $50,000 and $25,000, </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>107</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
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<BR>

<P style="font-family:arial;"><FONT SIZE=2>respectively,
based on their individual contributions, specifically in connection with securing private financing for us in the first quarter of 2011. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>The
following table summarizes the original target bonus opportunities under the 2010 bonus incentive plan and the actual cash bonuses paid to our named executive officers for 2010 performance: </FONT></P>
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<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Name</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2010 Target bonus (% of base salary)(1)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2010 Target<BR>
upside<BR>
bonus (% of<BR>
base salary)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2010 Target bonus($)(1)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2010 Target<BR>
upside bonus<BR>
($)(1)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2010 Actual<BR>
bonus ($)<BR>
(includes<BR>
discretionary<BR>
bonus)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2010 Actual<BR>
bonus (% of<BR>
base salary)(1)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=19 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Ettore J. Coringrato, Jr.&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>36%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>55%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>80,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>120,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>170,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>77%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Matthew C. Riley</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>25%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>35%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>49,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>68,600</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>93,600</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>48%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Leonard J.P. Ketelsen</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>25%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>35%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>42,500</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>59,500</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>59,500</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>35%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Joseph P. Keska</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>25%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>35%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>40,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>56,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>56,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>35%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Stefan M. Rochus</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>25%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>35%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>40,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>56,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>56,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>35%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
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<TD COLSPAN=19 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
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<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT  style="font-size:8pt;line-height:9pt;">
(1)&nbsp;&nbsp;&nbsp;The target bonuses are calculated based on percentages of the named executive officer's base salary currently in place at the time the target bonuses are determined. Once the target
bonuses have been determined, they are not adjusted even if the name executive receives a base salary adjustment later in the year. </FONT></P>
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2><I> 2011 Cash bonus plan</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In February 2011, following consultations with management, including our chief executive officer, the Committee recommended and our board of
directors approved the general parameters for an annual cash bonus plan for 2011. Structured similar to the 2010 cash bonus plan, the 2011 cash bonus plan is primarily based on certain financial
performance and operational objectives, namely revenue, gross margin, net income before taxes and end of period cash. The target bonus opportunities for our named executive officers were set from
25-35% of base salary, and the upside target bonus opportunities were set from 35-50% of base salary. The Committee and our board of directors also tentatively set aside
$100,000 for discretionary bonuses to award outstanding individual performance. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Equity compensation  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We use equity awards to motivate and reward our executive officers, including the named executive officers, for long-term corporate
performance based on the value of our common stock, and to align the interests of our executive officers with those of our stockholders. We believe that stock options, when granted with exercise
prices equal to the fair market value of our common stock on the date of grant, provide an appropriate long-term incentive for our executive officers, because
they reward them only to the extent that our stock price increases and stockholders realize value following their grant date. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>To
promote the long-term incentive and retention features of equity compensation, we have typically granted stock options subject to our standard four-year vesting schedule.
Under the vesting schedule, 25% of the stock option becomes exercisable one year after a specified vesting commencement date, and then vesting occurs quarterly thereafter over the remaining
three-year period. On occasion, we have also granted stock options with non-standard vesting or early exercise features, mostly in case-by-case
situations for senior executives, directors, consultants, advisors and other employees. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
have not applied a rigid formula to determine the size of the stock option awards that have been granted to our executive officers. Instead, these awards were determined in the judgment of the
Committee and our board of directors taking into consideration, among other </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>108</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>things,
the performance of the company and the executive officer during the past year, the prospective role and responsibility of the executive officer, competitive factors, the amount of equity-based
compensation held by the executive officer and the portion that is vested or unvested and the cash compensation received by the executive officer. Based upon these factors, our board of directors or
the Committee has determined the size of each stock option award at levels it considers appropriate to create a meaningful opportunity for long-term incentive predicated on the creation of
long-term stockholder value. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>To
date, we have not granted any equity awards other than stock options to our executive officers. Typically, our executive officers have received an initial stock option grant at the time of hire,
with only periodic additional awards thereafter. In connection with this offering, we expect the Committee to oversee the development of a long-term equity incentive plan. While this plan
is likely to provide for a variety of different types of equity awards, we expect that, reflecting our focus on long-term growth, the Committee will continue to use stock options as our
primary form of long-term incentive compensation. We also expect that the Committee may decide to grant equity awards to our executive officers on a more frequent (for example, annual)
basis than in the past, to the extent that the Committee determines it to be in the best interests of the company based upon its review of competitive market data. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>There
were no equity awards granted to the named executive officers during 2010. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Retirement and other benefits  </I></B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>We have established a tax-qualified Section&nbsp;401(k) retirement savings plan for our executive officers, including the named
executive officers and other employees. Under this plan, participants may elect to make pre-tax contributions, not to exceed the applicable statutory income tax limitation (which was
$16,500 in 2010). In addition, we may make discretionary contributions to the plan in any year, up to certain limits, although we have not made any such contributions to date. We intend for the plan
to qualify under Section&nbsp;401(a) of the Internal Revenue Code so that contributions by participants to the plan, and income earned on plan contributions, are not taxable to participants until
withdrawn from the plan. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Additional
benefits received by our executive officers, including the named executive officers, include medical and dental benefits, medical and dependent care flexible spending accounts,
short-term and long-term disability insurance, travel, accidental death and dismemberment insurance and basic life insurance coverage. These benefits are provided on the same
basis to all of our full-time employees. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
design our employee benefits programs to be affordable and competitive in relation to the market, as well as compliant with applicable laws and practices. We adjust our employee benefits programs
as needed based upon regular monitoring of applicable laws and practices and the competitive market. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Historically
we have not provided perquisites or other personal benefits to our executive officers. Currently, we do not view perquisites or other personal benefits as a significant component of our
executive compensation program. In the future, however, we may provide such items in limited circumstances, such as where we believe it is appropriate to assist an individual in the performance of his
or her duties, to make our executive officers more efficient and effective and for recruitment, motivation or retention purposes. All future practices with respect to perquisites or other personal
benefits will be approved and subject to periodic review by the Committee. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>109</FONT></P>

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<A HREF="#bg76301a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Employment agreements and post-employment compensation  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We have entered into employment offer letters with each of our named executive officer other than our chief executive officer,
usually as part of the hiring process, that provide for "at-will" employment, base salary, eligibility to participate in the executive bonus plans, standard employee benefit plan
participation and recommendations for initial stock option grants. These agreements are subject to our standard proprietary information and invention assignment terms. We have entered into an
employment agreement with our chief executive officer that contains certain severance and change of control payments and benefits. This arrangement (including potential payments and terms) are
discussed in more detail in the "Executive compensation&#151;Employment agreements and potential payments upon termination or change in control" section below. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
believe that these agreements are an important retention tool, and incent the named executive officers to maintain continued focus and dedication to their assigned duties and to
maximize stockholder value. The terms of these agreements were determined after review by the Committee of our retention goals for each named executive officer, as well as analysis of market data and
as a result of individual negotiations with each executive officer. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Other compensation policies  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Stock ownership guidelines  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As of the date of this prospectus, we have not implemented a policy regarding minimum stock ownership requirements for our executive officers,
including the named executive officers. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Compensation recovery policy  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As of the date of this prospectus, we have not implemented a policy regarding retroactive adjustments to any cash or equity-based incentive
compensation paid to our executive officers and other employees where the payments were predicated upon the achievement of financial results that were subsequently the subject of a financial
restatement. We intend to adopt a general compensation recovery, or clawback, policy covering our annual and long-term incentive award plans and arrangements once the SEC adopts final
rules implementing the requirement of Section&nbsp;954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Tax and accounting considerations  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Deductibility of executive compensation  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Generally, Section&nbsp;162(m) of the Internal Revenue Code disallows a tax deduction to any publicly-held corporation for any
remuneration in excess of $1&nbsp;million paid in any taxable year to its chief executive officer and each of its three next most highly-compensated executive officers (other than its chief
financial officer). Remuneration in excess of $1&nbsp;million may be deducted if, among other things, it qualifies as "performance-based compensation" within the meaning of the Internal Revenue
Code. In this regard, the compensation income realized upon the exercise of stock options granted under a stockholder-approved stock option plan generally will be deductible so long as the options are
granted by a committee whose members are non-employee directors and certain other conditions are satisfied. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>110</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=113,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=220159,FOLIO='110',FILE='DISK104:[11ZCB1.11ZCB76301]DY76301A.;31',USER='BFLANNO',CD='12-AUG-2011;03:01' -->
<A NAME="page_dy76301_1_111"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As
we are not currently publicly-traded, the Committee has not previously taken the deductibility limit imposed by Section&nbsp;162(m) into consideration in setting compensation for our executive
officers. We expect that when the Committee deems advisable, it will adopt a policy that, where reasonably practicable, we will seek to qualify the variable compensation paid to our executive officers
for the "performance-based compensation" exemption from this deductibility limit. As such, in approving the amount and form of compensation for our executive officers in the future, the Committee will
consider all elements of the cost to us of providing such compensation, including the potential impact of Section&nbsp;162(m). The Committee may, in its judgment, authorize compensation payments
that do not comply with any of the exemptions in Section&nbsp;162(m) when it believes that such payments are appropriate to attract and retain executive talent. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Taxation of "parachute" payments  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Sections&nbsp;280G and 4999 of the Internal Revenue Code provide that executive officers, persons who hold significant equity interests and certain
other highly-compensated service providers may be subject to an excise tax if they receive payments or benefits in connection with a change in control of the company that exceeds certain
prescribed limits, and that the company (or a successor) may forfeit a deduction on the amounts subject to this additional tax. We did not provide any executive officer, including any named executive
officer, with a "gross-up" or other reimbursement payment for any tax liability that he or she might owe as a result of the application of Sections&nbsp;280G or 4999 during 2010 and we
have not agreed and are not otherwise obligated to provide any executive officer, including any named executive officer, with such a "gross-up" or other reimbursement. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Compensation risk assessment  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We believe that although a portion of the compensation provided to our executive officers and other employees is performance-based,
our executive compensation program does not encourage excessive or unnecessary risk taking. As a result, we do not believe that our compensation programs are reasonably likely to have a material
adverse effect on the company. In fact, our compensation programs are designed to encourage our executive officers and other employees to remain focused on both short-term and
long-term strategic goals, in particular in connection with our pay-for-performance compensation philosophy. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>111</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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<A NAME="page_dy76301_1_112"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="dy76301_executive_compensation"> </A>
<A NAME="toc_dy76301_1"> </A>
<BR></FONT><FONT SIZE=4><B>  Executive compensation  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Summary compensation table  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following table presents, for services rendered to the company during 2010, summary information regarding the total compensation
awarded to, earned by or paid to each of the named executive officers. </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT  style="font-size:8pt;line-height:9pt;">


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 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="8pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="49pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="73pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="73pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="46pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=14 style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Name and principal position</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Base<BR>
salary($)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Non-equity<BR>
incentive plan<BR>
compensation<BR>
($)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>All other<BR>
compensation<BR>
($)(1)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Total($)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=14 style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Ettore J. Coringrato, Jr.&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">223,365</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">170,000</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">9,493</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">402,858</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 President, Chief Executive Officer and Director</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"> Matthew C. Riley</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR></FONT><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
198,692</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR></FONT><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
93,600</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
7,891</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR></FONT><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
300,183</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Chief Financial Officer and Secretary</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Leonard J.P. Ketelsen</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
176,539</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR></FONT><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
59,500</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR></FONT><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
9,433</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
245,472</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Vice President, Product Development</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;"> Joseph P. Keska</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
166,538</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR></FONT><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
56,000</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR></FONT><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
3,961</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
226,499</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Vice President, Operations</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Stefan M. Rochus</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR></FONT><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
159,904</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><BR><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
56,000</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR></FONT><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
9,394</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR></FONT><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
225,298</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Vice President, Marketing and Business Development</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=14 style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
<DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT  style="font-size:8pt;line-height:9pt;">
(1)&nbsp;&nbsp;&nbsp;The amounts reported in the "All other compensation" column consist of medical, dental, life and disability (short and long term) insurance premiums paid by the company on behalf of
each named executive officer. </FONT></P>
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=3><B> Grants of plan-based awards  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following table presents information on plan-based awards for the fiscal year ended December&nbsp;31, 2010 to our
named executive officers: </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Grants of plan based awards  </I></B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:54%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT  style="font-size:8pt;line-height:9pt;">


<!-- COMMAND=ADD_TABLEWIDTH,"150%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="150%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="45pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="45pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="54pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="69pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="69pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="73pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="69pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=22 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH ROWSPAN=5 style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=5 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>All other<BR>
stock awards:<BR>
number of<BR>
shares of<BR>
stock or<BR>
units<BR>
(#)</B></FONT><BR></TH>
<TH ROWSPAN=5 style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=5 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>All other<BR>
option awards:<BR>
number of<BR>
securities<BR>
underlying<BR>
options<BR>
(#)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH ROWSPAN=3 style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=8 ROWSPAN=3 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Estimated possible payouts under<BR>
non-equity incentive plan<BR>
awards(1) </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH ROWSPAN=3 style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=3 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Grant date<BR>
fair value of<BR>
stock and<BR>
option awards<BR>
($)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Exercise price<BR>
of option award<BR>
($ per share)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Name</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Threshold<BR>
($)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Target<BR>
($)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Maximum<BR>
($)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=22 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Ettore J. Coringrato, Jr.&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">40,000</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">80,000</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">120,000</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Matthew C. Riley</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">24,500</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">49,000</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">68,600</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Leonard J.P. Ketelsen</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">21,225</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">42,500</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">59,500</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Joseph P. Keska</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">20,000</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">40,000</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">56,000</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Stefan M. Rochus</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">20,000</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">40,000</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">56,000</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=22 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
<DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT  style="font-size:8pt;line-height:9pt;">
(1)&nbsp;&nbsp;&nbsp;The amounts shown in the threshold, target and maximum columns reflect the minimum, target and maximum amounts potentially payable under our 2010 Cash Bonus Plan, respectively,
assuming the minimum performance goals and other conditions were achieved. A threshold of performance of at least 80% of the target level for each financial metric is required for a named executive
officer to receive the portion of the bonus attributable to that metric. With performance of 80% of the target for a certain metric, each executive receives 50% of the target bonus attributable to
that metric. In addition, the Committee and our board of directors reserve the right to pay discretionary bonuses for exceptional individual performance. Hence the reason for Messrs.&nbsp;Coringrato
and Riley receiving actual cash bonuses in 2010 in excess of the maximum set forth above. </FONT></P>
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=3><B> Outstanding equity awards at year-end  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following table presents, for each of the named executive officers, information regarding outstanding stock options and other
equity awards held as of December&nbsp;31, 2010. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>112</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=3,SEQ=115,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=727503,FOLIO='112',FILE='DISK104:[11ZCB1.11ZCB76301]DY76301A.;31',USER='BFLANNO',CD='12-AUG-2011;03:01' -->
<A NAME="page_dy76301_1_113"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Outstanding equity awards at fiscal year-end  </I></B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:62%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT  style="font-size:8pt;line-height:9pt;">


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<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
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<TD WIDTH="46pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=15 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=13 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Option awards </B></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Name</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Number of<BR>
securities<BR>
underlying<BR>
unexercised<BR>
options (#)<BR>
exercisable</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Number of<BR>
securities<BR>
underlying<BR>
unexercised<BR>
options (#)<BR>
unexercisable</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Equity incentive<BR>
plan awards:<BR>
number of securities<BR>
underlying<BR>
unexercised<BR>
unearned options<BR>
(#)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Option exercise<BR>
price($)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Option<BR>
expiration<BR>
date</B></FONT><BR></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=15 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Ettore J. Coringrato, Jr.&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">4,807</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(1)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">21.32</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">5/22/13</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">



<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


</FONT>
</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">23,034</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(1)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1.04</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1/20/15</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


</FONT>
</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">17</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(2)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">3.64</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1/31/17</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-top:10pt;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Matthew C. Riley</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
17,307</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>(1)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
2.08</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
11/15/15</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">17</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(2)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">3.64</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1/31/17</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-top:10pt;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Leonard J.P. Ketelsen</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
7,692</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>(1)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
1.04</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
7/20/15</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">


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</FONT>
</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">3,846</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(1)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2.08</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">11/15/15</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">



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</FONT>
</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">17</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(2)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">3.64</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1/31/17</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-top:10pt;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Joseph P. Keska</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
6,730</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>(1)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
1.04</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
7/20/15</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,884</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(1)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2.08</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">11/15/15</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">17</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(2)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">3.64</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1/31/17</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-top:10pt;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">


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 Stefan M. Rochus</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
4,230</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>(1)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
1.04</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
7/20/15</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">


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</FONT>
</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">576</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(1)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2.08</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">11/15/15</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">


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</FONT>
</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">17</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(2)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">3.64</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1/31/17</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=15 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
<DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT  style="font-size:8pt;line-height:9pt;">
(1)&nbsp;&nbsp;&nbsp;Stock option is fully vested as of December&nbsp;31, 2010. </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(2)&nbsp;&nbsp;&nbsp;Stock
option vests at the rate of 25% of the total number of shares of our common stock subject to the option after one year and 6.25% per quarter thereafter for the next three years. </FONT></P>
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=3><B> Option exercises and stock vested  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>During the fiscal year ended December&nbsp;31, 2010, there were no stock option exercises by any of the named executive officers. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Pension benefits  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We did not sponsor any defined benefit pension or other actuarial plan for the named executive officers during 2010. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Nonqualified deferred compensation  </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>We did not maintain any nonqualified defined contribution or other deferred compensation plans or arrangements for the named
executive officers during 2010. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Employment agreements and potential payments upon termination or change in control  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We have entered into a written employment agreements or employment offer letters with each of our named executive officers. These
agreements provide for "at-will" employment and establish the executive officer's base salary, eligibility to participate in an annual incentive bonus plan, standard employee benefit plan
participation as of the time of their execution and recommendations for initial stock option grants. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
addition, Ettore J. Coringrato, Jr., our President and Chief Executive Officer, is eligible to receive certain severance payments and benefits in connection with his termination of </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>113</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=4,SEQ=116,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=380084,FOLIO='113',FILE='DISK104:[11ZCB1.11ZCB76301]DY76301A.;31',USER='BFLANNO',CD='12-AUG-2011;03:01' -->
<A NAME="page_dy76301_1_114"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:arial;"><FONT SIZE=2>employment
under various circumstances, including following a change in control of the company. For a summary of the material terms and conditions of the severance and change in control payments and
benefits for Mr.&nbsp;Coringrato, as well as the estimated potential severance payments and benefits payable to Mr.&nbsp;Coringrato in the event of termination of employment as of
December&nbsp;31, 2010, see below. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
actual amounts that would be paid or distributed to Mr.&nbsp;Coringrato as a result of one of the termination events occurring in the future may be different than those presented below, as many
factors will affect the amount of any payments and benefits upon a termination of employment. For example, some of the factors that could affect the amounts payable include Mr.&nbsp;Coringrato's
base salary and the market price of our common stock at the time of the change in control. In addition, although we have entered into a written arrangement to provide severance payments and benefits
to Mr.&nbsp;Coringrato in connection with a termination of employment under particular circumstances, we may mutually agree with Mr.&nbsp;Coringrato on severance terms that vary from those
provided in the pre-existing arrangement. Finally, in addition to the amounts presented below, Mr.&nbsp;Coringrato would also be able to exercise any vested stock options that he held as
of the time of the termination of employment. For more information about the named executive officers outstanding equity awards as of December&nbsp;31, 2010, see the table captioned "Outstanding
equity awards at fiscal year-end" table. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
addition to the severance payments and benefits described in Mr.&nbsp;Coringrato's employment agreement, the named executive offers are eligible to receive any benefits accrued under our
broad-based benefit plans, such as disability benefits and accrued vacation pay, in accordance with those plans and policies. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Involuntary termination of employment not in connection with change in control  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In the event of an involuntary termination of employment (defined as either a termination of employment by us without "cause" or by
the executive officer for "good reason") not in connection with a change in control, Mr.&nbsp;Coringrato will be eligible to receive (i)&nbsp;a lump-sum cash payment equal to
6&nbsp;months of his base salary as in effect as of the date of termination, (ii)&nbsp;6&nbsp;months of continued health coverage under our health plans, and (iii)&nbsp;6&nbsp;months of
continued vesting in accordance with his normal vesting schedule. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Involuntary termination of employment in connection with change in control  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In the event of an involuntary termination of employment (defined as either a termination of employment by us without "cause" or by
the executive officer for "good reason") in connection with a change in control, Mr.&nbsp;Coringrato will be eligible to the same benefits described above with respect to an involuntary termination
not in connection with a change in control. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>114</FONT></P>

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<A HREF="#bg76301a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Potential payments and benefits upon termination of employment  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following table sets forth the potential estimated payments and benefits to which Mr.&nbsp;Coringrato would have been entitled
to assuming termination of his employment as of December&nbsp;31, 2010, as specified under the terms and conditions of his employment agreement: </FONT></P>
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<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="134pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="134pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Executive payments and benefits</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Involuntary termination<BR>
of employment not<BR>
in connection with<BR>
change in control</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Involuntary termination<BR>
of employment<BR>
in connection with<BR>
change in control</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Severance Payments</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> $165,375</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> $165,375</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accelerated Vesting of Stock Options</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(1</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(1</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Continued benefits</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>9,709</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>9,709</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
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 <DL compact>
<DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;">(1)</FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">As
there was no public trading market for our common stock at the time of vesting of the stock and option awards listed below, the values realized on
exercise have been calculated based on our estimated initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, the midpoint of the range on the front cover of this prospectus. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=3><B> Employee stock plans  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following table provides information as of December&nbsp;31, 2010 regarding the compensation plans under which our equity
securities are authorized for issuance: </FONT></P>
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<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="134pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="135pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="114pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Plan category</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Number of securities to be<BR>
issued upon exercise of<BR>
outstanding options,<BR>
warrants and rights</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Weighted average exercise<BR>
price of outstanding<BR>
options, warrants<BR>
and rights</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Number of securities<BR>
remaining available<BR>
for future issuance<BR>
under equity<BR>
compensation plans(1)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equity compensation plans approved by stockholders(2)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>404,708</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>(3)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5.516</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>491,856</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equity compensation plans not approved by stockholders(4)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>19,230</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>83.20</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>0</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>423,938</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>491,856</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
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<DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT  style="font-size:8pt;line-height:9pt;">
(1)&nbsp;&nbsp;&nbsp;Excludes securities to be issued upon exercise of outstanding options, warrants and rights. </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(2)&nbsp;&nbsp;&nbsp;Consists
of the 1999 Plan and 2007 Plan </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(3)&nbsp;&nbsp;&nbsp;Consists
of 404,708 shares of common stock underlying stock options. </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(4)&nbsp;&nbsp;&nbsp;Represents
a grant of s stock option outside the company's stock plans. This grant expired on April&nbsp;1, 2011. </FONT></P>
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2><B><I> 2011 Equity Incentive Plan  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our board of directors has adopted our 2011 Equity Incentive Plan (the "2011 Plan"). The 2011 Plan will be effective upon the completion of this
offering. The 2011 Plan permits the grant of incentive stock options, within the meaning of Code Section&nbsp;422, to our employees and any of our subsidiary corporations' employees, and the grant
of non-statutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance units, performance shares, deferred stock units or dividend equivalents to
our employees, directors and consultants and our subsidiary corporations' employees and consultants. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>115</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
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<P style="font-family:arial;"><FONT SIZE=2><I> Shares under the plan.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The maximum aggregate number of shares issuable under the 2011 Plan will be determined by our board of directors prior to this offering, and
will equal approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of the estimated shares of common stock outstanding as of this offing. In addition, shares issuable under the 2011 Plan will include (i)&nbsp;any shares
that, as of the completion of this offering, have been reserved but not issued pursuant to awards granted under
our&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and are
not subject to any awards granted thereunder,
(ii)&nbsp;any shares subject to stock options or similar awards granted under the&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Plan
that expire or terminate without having been exercised in full and (iii)&nbsp;any unvested
shares issued pursuant to awards granted under
the&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Plan
that are forfeited to or repurchased by us, with the maximum number of shares to be added to the 2011 Plan pursuant to
(i)&nbsp;through (iii)&nbsp;above equal to a cap to be determined by our board of directors prior to this offering. In addition, the number of shares available for issuance under the 2011 Plan
will be annually increased on the first day of each of our fiscal years, beginning with 2012, by an amount equal to the least of: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>a number of shares to be specified;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>% of the outstanding shares of our common stock as of the last day of our immediately preceding fiscal year;
or  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>such other amount as our board of directors may determine. </FONT></DD></DL>


<P style="font-family:arial;"><FONT SIZE=2>Shares
issued pursuant to awards under the 2011 Plan that we repurchase or that expire or are forfeited, as well as shares tendered in payment of the exercise price of an award or to satisfy the tax
withholding obligations related to an award, will become available for future grant or sale under the 2011 Plan. In addition, to the extent that an award is paid out in cash rather than shares, such
cash payment will not reduce the number of shares available for issuance under the 2011 Plan. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Plan administration.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The 2011 Plan will be administered by our board of directors which, at its discretion or as legally required, may delegate such administration
to our compensation committee and/or one or more additional committees (referred to as the "Administrator"). In the case of awards intended to qualify as "performance-based compensation" within the
meaning of Code Section&nbsp;162(m), the committee will consist of two or more "outside directors" within the meaning of Code Section&nbsp;162(m). </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Subject
to the provisions of the 2011 Plan, the Administrator has the power to determine the terms of awards, including the recipients, the exercise price, if any, the number of shares covering each
award, the fair market value of a share of our common stock, the vesting schedule applicable to the awards, together with any vesting acceleration, the form of consideration, if any, payable upon
exercise of the award and the terms of the award agreement for use under the 2011 Plan. The Administrator also has the authority, subject to the terms of the 2011 Plan, to amend existing awards to
reduce or increase their exercise price, to allow participants the opportunity to transfer outstanding awards to a financial institution or other person or entity selected by the Administrator, to
institute an exchange program by which outstanding awards may be surrendered in exchange for awards that may have different exercise prices and terms, to prescribe rules and to construe and interpret
the 2011 Plan and awards granted under the 2011 Plan. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>116</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Stock options.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Administrator may grant incentive and/or nonstatutory stock options under the 2011 Plan, provided that incentive stock options are only granted
to employees. The exercise price of such options must equal at least the fair market value of our common stock on the date of grant. The term of an incentive stock option may not exceed ten years;
provided, however, that an incentive stock option held by a participant who owns more than 10% of the total combined voting power of all classes of our common stock, or of certain of our subsidiary
corporations, may not have a term in excess of five years and must have an exercise price of at least 110% of the fair market value of our common stock on the grant date. The Administrator will
determine the methods of payment of the exercise price of an option, which may include cash, shares, broker-assisted cashless exercise or other consideration permitted by applicable law and acceptable
to the Administrator. Subject to the provisions of the 2011 Plan, the Administrator determines the remaining terms of the options (e.g.,&nbsp;vesting). After the termination of service of an
employee, director or consultant, the participant may exercise his or her options, to the extent vested as of such date of termination, for the period of time stated in his or her award agreement.
However, in no event may an option be exercised later than the expiration of its term. The specific terms will be set forth in an award agreement. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Restricted stock.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Restricted stock may be granted under the 2011 Plan. Restricted stock awards are grants of shares of our common stock that are subject to various
restrictions, including restrictions on transferability and forfeiture provisions. Shares of restricted stock will vest, and the restrictions on such shares will lapse, in accordance with terms and
conditions established by the Administrator. The Administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed. Recipients of restricted stock
awards generally will have voting and dividend rights with respect to such shares upon grant without regard to vesting, unless the Administrator provides otherwise. Shares of restricted stock that do
not vest for any reason will be forfeited by the recipient and will revert to us. The specific terms will be set forth in an award agreement. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Restricted stock units.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Restricted stock units may be granted under the 2011 Plan. Each restricted stock unit granted is a bookkeeping entry representing an amount
equal to the fair market value of one share of our common stock. The Administrator determines the terms and
conditions of restricted stock units including the vesting criteria, which may include achievement of specified performance criteria or continued service to us, and the form and timing of payment. The
Administrator, in its sole discretion, may reduce or waive any vesting criteria that must be met to receive a payout. The Administrator determines in its sole discretion whether an award will be
settled in stock, cash or a combination of both. The specific terms will be set forth in an award agreement. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Stock appreciation rights.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Stock appreciation rights may be granted under the 2011 Plan. Stock appreciation rights allow the recipient to receive the appreciation
in the fair market value of our common stock between the exercise date and the date of grant. Subject to the provisions of the 2011 Plan, the Administrator determines the terms of stock appreciation
rights, including when such rights vest and become exercisable and whether to settle such awards in cash or with shares of our common stock, or a combination thereof, except that the per share
exercise price for the shares to be issued pursuant to the exercise of a stock appreciation right will be no less than 100% of the fair market value per share on the date of grant. The specific terms
will be set forth in an award agreement. </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><I> Performance units/performance shares.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Performance units and performance shares may be granted under our 2011 Plan. Performance units and performance shares are
awards that will result in a payment to a participant only if performance goals established by the Administrator are achieved or the awards otherwise vest. The Administrator determines the terms and
conditions of performance units and performance shares including the vesting criteria, which may include achievement of specified performance criteria or continued service, which, depending on the
extent to which they are met, will determine the number and/or value of performance units and performance shares to be paid out to participants. After the grant of a performance unit or performance
share, the Administrator, in its sole discretion, may reduce or waive any performance objectives or other vesting provisions for such performance units or performance shares. Performance units shall
have an initial dollar value established by the Administrator prior to the grant date. Performance shares will have an initial value equal to the fair market value of our common stock on the grant
date. The Administrator, in its sole discretion, may pay earned performance units or performance shares in the form of cash, in shares or in any combination thereof. The specific terms will be set
forth in an award agreement. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Deferred stock units.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Deferred stock units may be granted under the 2011 Plan. Deferred stock units are restricted shares, restricted stock units, performance
shares or performance units granted under the 2011 Plan that the Administrator permits to be paid out on an installment or deferred basis, in accordance with rules and procedures determined by the
Administrator. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Dividend equivalents.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Dividend equivalents may be granted under the 2011 Plan. Dividend equivalents are credits, paid in cash, equal to the amount of cash
dividends paid on shares represented by awards held by participants. Dividend equivalents may be subject to the same vesting restrictions as the shares subject to an award. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Transferability of awards.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Unless the Administrator provides otherwise, the 2011 Plan generally does not allow for the transfer of awards and only the recipient of
an option or stock appreciation right may exercise such an award during his or her lifetime. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Certain adjustments.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In the event of certain changes in our capitalization, to prevent diminution or enlargement of the benefits or potential benefits available
under the 2011 Plan, the Administrator will make adjustments to one or more of the number and class of shares that may be delivered under the 2011 Plan and/or the number, class and price of shares
covered by each outstanding award. In the event of a proposed dissolution or liquidation, the Administrator will notify participants as soon as practicable prior to the effective date of such proposed
transaction, and all awards, to the extent not previously exercised, will terminate immediately prior to the consummation of such proposed transaction. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Merger or change in control.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The 2011 Plan provides that in the event of a merger or Change in Control, as defined under the 2011 Plan, each outstanding award will
be treated as the Administrator determines, except that if a successor corporation or its parent or subsidiary does not assume or substitute an equivalent award for any outstanding award, then such
award will fully vest, all restrictions on such award will lapse, all performance goals or other vesting criteria applicable to such award will be deemed achieved at 100% of target levels and such
award will become fully exercisable, if applicable, for a specified period prior to the transaction. The award will then terminate to the extent unexercised upon the expiration of the specified period
of time. If the service of an outside director is terminated on or following </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>a
merger or Change in Control, other than pursuant to a voluntary resignation, his or her awards will become fully vested and exercisable, and all performance goals or other vesting requirements will
be deemed achieved at 100% of target levels. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Clawback requirement.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The 2011 Plan provides that if the company is required to restate its financial statements due to material noncompliance with financial
reporting requirements under the securities laws, executive officers will be required to repay compensation received pursuant to awards under the 2011 Plan during the three years preceding the
restatement that is in excess of the amount to which they would be entitled under the restated financial statements, in accordance with Section&nbsp;10D of the Securities Exchange Act of 1934. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Plan amendment, termination.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors has the authority to amend, alter, suspend or terminate the 2011 Plan provided such action does not impair the
existing rights of any participant. The 2011 Plan will automatically terminate in 2021, unless terminated earlier by our board of directors. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> 2007 Stock Plan  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The 2007 Stock Plan (as amended, the "2007 Plan") was adopted by our Board of Directors and approved by our stockholders in 2007 The 2007 Plan
provides for
the grant of stock options and restricted stock to employees, directors and consultants of us and our related companies. As of the effective date of this offering, the 2007 Plan will be terminated and
we will not grant any additional awards under the 2007 Plan. However, the 2007 Plan will continue to govern the terms and conditions of outstanding awards granted thereunder. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Shares under the plan.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2011, there were 707 options to purchase shares of our common stock outstanding and 92,291 shares were available for
future grant under the 2007 Plan. Shares subject to options that expire or become unexercisable without having been exercised in full, or that are used to pay the exercise price of an option or to
satisfy the tax withholding obligations related to an option (including any shares subject to options or similar awards granted under our 2007 Plan that expire or terminate without having been
forfeited to or repurchased by us), will not be returned to the 2007 Plan and will not become available for future grant, following this offering, under the 2011 Plan. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Plan administration.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors or a committee appointed by our board of directors administers the 2007 Plan. Under the 2007 Plan, the administrator
has the power to determine the terms and conditions of the awards, including the recipients, the exercise price, the number of shares covering each award and the vesting schedule of awards. The
administrator also has the authority, subject to the terms of the 2007 Plan, to prescribe rules and to construe and interpret the 2007 Plan and awards granted under the 2007 Plan. The administrator
also has the authority, subject to the terms of the 2007 Plan, to amend existing options (including to reduce the option's exercise price), to institute an exchange program by which outstanding
options may be surrendered in exchange for options that may have different exercise prices and terms and/or cash, to prescribe rules and to construe and interpret the 2007 Plan and options granted
under the 2007 Plan. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Option terms.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The 2007 Plan permits the grant of stock options. The exercise price of such options has to be at least equal to 100% of the fair market value of a
share of our common stock on the date of grant except that the price can not be less than 110% of such fair market value with respect to any person who owned securities of more than 10% of the total </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>119</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>combined
voting power of all classes of our securities and any securities of our subsidiaries. The option term may not exceed ten years. After termination of continuous service with us or a
related company, an optionee may exercise his or her option, to the extent vested as of such date of termination, for the period of time stated in the option agreement (which period of time will be
three months if no period is specified). Generally, if termination is due to disability, or in the event of death, the options will remain exercisable for six months. However, an option may not be
exercised later than the expiration of its term. The 2007 Plan generally does not allow for the transfer of options other than by will or the laws of descent and distribution, and during the
optionee's lifetime, may only be exercised by the optionee. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Restricted stock.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The 2007 Plan permits the grant of restricted stock awards. After the administrator determines that it will grant a restricted stock award, the
terms, conditions and restrictions related to the award were set forth in a restricted stock agreement. The 2007 Plan generally does not allow the transfer of restricted stock other than by will or
the laws of descent and distribution, unless the administrator determines otherwise. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Certain adjustments.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In the event of certain changes in our capitalization, including changes in our capitalization resulting from the issuance of any of our
shares as a share dividend, the administrator will make adjustments to the number and type of shares and exercise price of shares subject to outstanding options and the number and type of shares that
may be delivered under the 2007 Plan. In the event of a proposed liquidation or dissolution, the administrator will notify participants as soon as practicable and all options will terminate to the
extent unexercised immediately prior to the consummation of such proposed transaction. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Merger or other transaction.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The 2007 Plan provides that in the event of our merger into or consolidation with another entity in which we are not the surviving
entity, or we are liquidated or we sell or dispose of all or substantially all of our assets to another entity, then the successor corporation or its parent or subsidiary will assume or substitute an
equivalent award for each outstanding award under the 2007 Plan. If there is no assumption or substitution of outstanding options and restricted stock awards, then such options will become fully
vested and exercisable, and the right of repurchase will lapse with respect to such restricted stock awards. In addition, the administrator will notify participants in writing or electronically that
options under the 2007 Plan will be exercisable for a period of 15&nbsp;days, and will terminate upon expiration of such period to the extent unexercised. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Plan amendment, termination.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors has the authority to amend or terminate
the 2007 Plan provided such action does not adversely affect the rights of any award holder. Our Board of Directors will terminate the 2007 Plan in connection with this offering. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> 1999 Stock Option Plan  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Amended and Restated 1999 Stock Option Plan (as amended, the "1999 Plan") was adopted by our Board of Directors and approved by our stockholders
in 1999 and 2000, respectively. The 1999 Plan provides for the grant of stock options and restricted stock to employees, directors and consultants of us and our related companies. As of the effective
date of this offering, the 1999 Plan will be terminated and we will not grant any additional awards under the 1999 Plan. However, the 1999 Plan will continue to govern the terms and conditions of
outstanding awards granted thereunder. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>120</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><I> Shares under the plan.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2011, there were 379,633 options to purchase shares of our common stock outstanding and 1,756,625 shares were
available for future grant under the 1999 Plan. Shares subject to options that expire or become unexercisable without having been exercised in full, or that are used to pay the exercise price of an
option or to satisfy the tax withholding obligations related to an option (including any shares subject to options or similar awards granted under our 1999 Plan that expire or terminate without having
been forfeited to or repurchased by us), will become available for future grant, following this offering, under the 2011 Plan. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Plan administration.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors or a committee appointed by our board of directors administers the 1999 Plan. Under the 1999 Plan, the administrator
has the power to determine the terms and conditions of the awards, including the recipients, the exercise price, the number of shares covering each award and the vesting schedule of awards. The
administrator also has the authority, subject to the terms of the 1999 Plan, to prescribe rules and to construe and interpret the 1999 Plan and awards granted under the 1999 Plan. The administrator
also has the authority, subject to the terms of the 1999 Plan, to amend existing options (including to reduce the option's exercise price), to institute an exchange program by which outstanding
options may be surrendered in exchange for options that may have different exercise prices and terms and/or cash, to prescribe rules and to construe and interpret the 1999 Plan and options granted
under the 1999 Plan. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Option terms.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The 1999 Plan permits the grant of stock options. The exercise price of such options has to be at least equal to 100% of the fair market value of a
share of our common stock on the date of grant except that the price can not be less than 110% of such fair market value with respect to any person who owned securities of more than 10% of the total
combined voting power of all classes of our securities and any securities of our subsidiaries. The option term may not exceed ten years. After termination of continuous service with us or a related
company, an optionee may exercise his or her option, to the extent vested as of such date of termination, for the period of time stated in the option agreement (which period of time will be three
months if no period is specified). Generally, if termination is due to disability, or in the event of death, the options will remain exercisable for six months. However, an option may not be exercised
later than the expiration of its term. The 1999 Plan generally does not allow for the transfer of options other than by will or the laws of descent and distribution, and during the optionee's
lifetime, may only be exercised by the optionee. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Restricted stock.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The 1999 Plan permits the grant of restricted stock awards. After the administrator determines that it will grant a restricted stock award, the
terms, conditions and restrictions related to the award were set forth in a restricted stock agreement. The 1999 Plan generally does not allow the transfer of restricted stock other than by will or
the laws of descent and distribution, unless the administrator determines otherwise. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Certain adjustments.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In the event of certain changes in our capitalization, including changes in our capitalization resulting from the issuance of any of our
shares as a share dividend, the administrator will make adjustments to the number and class of shares and exercise price of shares subject to outstanding options and the number and class of shares
that may be delivered under the 1999 Plan. In the event of a proposed liquidation or dissolution, the administrator will notify participants as soon as practicable and all options will terminate to
the extent unexercised immediately prior to the consummation of such proposed transaction. </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><I> Merger or change in control.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The 1999 Plan provides that in the event of our merger or change in control, the successor corporation or its parent or subsidiary
will assume or substitute an equivalent award for each outstanding option. If there is no assumption or substitution of outstanding options, the options will become fully vested and exercisable. In
addition, the administrator will notify participants in writing or electronically that options under the 1999 Plan will be exercisable for a period of time determined by the administrator, and will
terminate to the extent unexercised upon expiration of such period. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Plan amendment, termination.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors has the authority to amend or terminate the 1999 Plan provided such action does not adversely affect the rights
of any award holder. Our Board of Directors will terminate the 1999 Plan in connection with this offering. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Limitation on liability and indemnification matters  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our amended and restated certificate of incorporation and bylaws that will become effective upon the completion of this offering
contain provisions that limit the personal liability of our directors for monetary damages to the fullest extent permitted by Delaware law. Consequently, our directors will not be personally liable to
us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>any breach of the director's duty of loyalty to us or our stockholders;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section&nbsp;174 of the
Delaware General Corporation Law; or  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>any transaction from which the director derived an improper personal benefit. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>Our
amended and restated certificate of incorporation that will become effective upon the completion of this offering, provides that we indemnify our directors to the fullest extent permitted by
Delaware law. In addition, our amended and restated bylaws, that will become effective upon the completion of this offering, provide that we indemnify our directors and officers to the fullest extent
permitted by Delaware law. Our amended and restated bylaws, that will become effective upon the completion of this offering, also provide that we shall advance expenses incurred by a director or
officer in advance of the final disposition of any action or proceeding, and permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of
his or her actions in that capacity, regardless of whether we would otherwise be permitted to indemnify him or her under the provisions of Delaware law. We have entered and expect to continue to enter
into agreements to indemnify our directors, executive officers and other employees as determined by the Board of Directors. With certain exceptions, these agreements provide for indemnification for
related expenses including, among others, attorneys' fees, judgments, fines and settlement amounts incurred by any of these individuals in any action or proceeding. We believe that these bylaw
provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers. We also maintain directors' and officers' liability insurance. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
limitation of liability and indemnification provisions in our amended and restated certificate of incorporation and bylaws, that will become effective upon the completion of this </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>offering,
may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty of care. They may also reduce the likelihood of derivative litigation against our
directors and officers, even though an action, if successful, might benefit us and other stockholders. Further, a stockholder's investment may be adversely affected to the extent that we pay the costs
of settlement and damage awards against directors and officers. At present, there is no pending litigation or proceeding involving any of our directors, officers or employees for which indemnification
is sought, and we are not aware of any threatened litigation that may result in claims for indemnification. </FONT></P>

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<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
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<BR></FONT><FONT SIZE=4><B>  Certain relationships and related party transactions  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Since January&nbsp;1, 2007, there has not been, nor is there currently proposed, any transaction or series of similar transactions
to which we were or are a party in which the amount involved exceeded or exceeds $120,000 and in which any of our directors, executive officers, holders of more than 5% of any class of our voting
securities, or any member of the immediate family of any of the foregoing persons, had or will have a direct or indirect material interest, other than compensation arrangements with directors and
executive officers, which are described where required under the "Management" section of this prospectus, and the transactions described below. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Private placement financings  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Bridge financing  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In February 2008, we sold an aggregate of $4,122,500 in subordinated convertible promissory notes. Of that amount, we sold $1,721,354 in subordinated
promissory notes to investors that are our affiliates, including entities affiliated with Jerusalem Venture Partners, entities affiliated with Sprout Venture Capital, and entities affiliated with
Birchmere Ventures. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Series&nbsp;C financing  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In July 2008 and September 2008, we sold 2,228,666 shares of our Series&nbsp;C preferred stock at a price of $14.35963828 per share for an
aggregate price of $32,003,074. Of that amount, we sold 25,312,887 shares of our Series&nbsp;C preferred stock for an aggregate price of $5,901,712 to investors that are our affiliates, including
entities affiliated with Jerusalem Venture Partners, entities affiliated with Sprout Venture Capital, entities affiliated with Soros Fund Management, entities affiliated with TL Ventures and entities
affiliated with Birchmere Ventures. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Series&nbsp;C-1 financing  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In January 2011, we sold 7,692,307 shares of our Series&nbsp;C-1 preferred stock at a price of $6.50 per share for an aggregate price
of $49,999,995. Of that amount, we sold 7,343,846 shares of our Series&nbsp;C-1 preferred stock for an aggregate price of $47,734,999 to investors that are our affiliates, including
entities affiliated with Jerusalem Venture Partners, entities affiliated with Sprout Venture Capital, and entities affiliated with Birchmere Ventures. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> Investor rights agreement  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In connection with our Series&nbsp;C-1 financing described above, we entered into an amended and restated investor rights agreement
with our preferred stockholders, including entities affiliated with Jerusalem Venture Partners, entities affiliated with Sprout Venture Capital, entities affiliated with Soros Fund Management,
entities affiliated with TL Ventures and entities affiliated with Birchmere Ventures. The amended and restated investor rights agreement, among other things: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>grants such stockholders certain registration rights with respect to shares of our common stock issuable upon conversion
of the shares of the preferred stock held by them;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>provides for the voting of shares with respect to the constituency of the board of directors; </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>124</FONT></P>

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<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>grants our major investors a right of first offer with respect to sales of our shares by us, subject to specified
exclusions (which exclusions are expected to include the sale of the shares pursuant to this prospectus);  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>obligates us to deliver periodic financial statements to our major investors; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>grants Finisar Corporation, or Finisar, one of our stockholders and our largest customer, the right of first refusal with
respect to any proposed offer from a non-affiliated third party that would result in a change of control. Finisar will have 10&nbsp;days following receipt of a third-party offer notice
to submit to us a written offer to acquire the company in a sale transaction on terms and conditions at least as favorable to us and our stockholders as those proposed by the third-party offer. In
addition, Finisar has a right of first offer in the event we seek to initiate a sale process with one or more non-affiliated prospective third party purchasers. Finisar will have seven
days following receipt of a notice from us to determine whether it wants to enter into a 37-day exclusive negotiation period to discuss acquiring us in a sale transaction. The parties
would need to negotiate in good faith. If no deal is reached, any sale transaction by a third party would remain subject to Finisar's right of first refusal. Both the right of first refusal and the
right of first offer shall terminate and cease to be of further force and effect immediately upon the consummation of the offering contemplated by this prospectus. </FONT></DD></DL>


<P style="font-family:arial;"><FONT SIZE=2>In
addition, under the agreement, Finisar has a right of first negotiation in the event we seek to solicit, encourage, pursue or negotiate an offer from one non-affiliated third-party
purchaser to effect a sale of the company, or a Targeted Solicitation. In the event our board of directors has resolved to pursue a Targeted Solicitation, we must deliver to Finisar a notice
describing the material terms and conditions of the solicited sale transaction. Finisar then has five days to deliver a negotiation notice if it desires to initiate a process to make an offer to
acquire the company. If Finisar fails to deliver the notice, we may freely proceed towards consummating a Targeted Solicitation. If Finisar delivers the notice, we may not enter into an exclusive
negotiating or standstill agreement with any third party and are required to negotiate with Finisar in good faith towards effecting a sale transaction for 25&nbsp;days. If we are unable to come to
an agreement with Finisar during this period, we may enter into a sale transaction in respect of the Targeted Solicitation within the next 12&nbsp;months, subject to certain extensions. In the event
we enter into a letter of intent with Finisar regarding a sale transaction, the agreement must include a reasonable break up fee and reasonable exclusive negotiating or standstill period. For the sake
of clarity, Finisar's right of first negotiation does not compel us to accept and offer a sale transaction with Finisar. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>This
is not a complete description of the amended and restated investor rights agreement and is qualified by the full text of the 2011 Amended and Restated Investor Rights Agreement filed as an
exhibit to the registration statement of which this prospectus is a part. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>For
more information regarding this agreement, please refer to "Description of capital stock&#151;Registration rights." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Co-sale agreement  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In connection with our Series&nbsp;C-1 financing described above, we entered into an amended and restated co-sale agreement
with our preferred stockholders, including entities affiliated with Jerusalem Venture Partners, entities affiliated with Sprout Venture Capital, entities affiliated </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>125</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>with
Soros Fund Management, entities affiliated with TL Ventures and entities affiliated with Birchmere Ventures. This agreement grants our major investors certain rights of first refusal with respect
to proposed transfers of our securities by other major investors. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>This
is not a complete description of the amended and restated co-sale agreement and is qualified by the full text of the amended and restated co-sale agreement filed as an
exhibit to the registration statement of which this prospectus is a part. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Product Sales and Purchase Transactions with Certain Investors  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>During 2010, 2009 and 2008, we entered into various transactions for the purchase of our products in the ordinary course of business
by Finisar, one of our stockholders. We recognized $16.5&nbsp;million, $11.1&nbsp;million and $8.0&nbsp;million of revenue pursuant to such sales during the years ended December&nbsp;31, 2010,
2009 and 2008, respectively. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>During
2010, 2009 and 2008, we also entered into various transactions for the purchase of certain materials in the ordinary course of business from Finisar. We incurred $4.6&nbsp;million,
$1.3&nbsp;million and $1.3&nbsp;million of expenses pursuant to such purchases during the years ended December&nbsp;31, 2010, 2009 and 2008, respectively. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Stock option awards  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Certain stock option grants to our directors and executive officers and related option grant policies are described above in this
prospectus under the caption "Management." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Employment agreements  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We have entered into employment agreements and/or offer letters containing compensation, termination and change of control provisions
with, among others, Ettore J. Coringrato, Jr., our President and Chief Executive Officer, as described under the caption "Executive compensation&#151;Employment agreements and potential
payments upon termination or change in control" above. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Indemnification of officers and directors  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We have also entered into indemnification agreements with each of our directors and executive officers. The indemnification
agreements and our certificate of incorporation and bylaws require us to indemnify our directors and executive officers to the fullest extent permitted by Delaware law. See
"Management&#151;Limitations on liability and indemnification matters" above. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>126</FONT></P>

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<BR></FONT><FONT SIZE=4><B>  Principal stockholders  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following table sets forth information regarding beneficial ownership of our common stock as of March&nbsp;31, 2011 and as
adjusted to reflect the shares of common stock to be issued and sold in the offering assuming no exercise of the underwriters' over-allotment option, by: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>each person or group of affiliated persons known by us to be the beneficial owner of more than 5% of our common stock; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>each of our named executive officers;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>each of our directors; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>all executive officers and directors as a group. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>We
have determined beneficial ownership in accordance with SEC rules. The information does not necessarily indicate beneficial ownership for any other purpose. Under these rules, the number of shares
of common stock deemed outstanding includes shares issuable upon exercise of options and warrants held by the respective person or group which may be exercised or converted within 60&nbsp;days after
March&nbsp;31, 2011. For purposes of calculating each person's or group's percentage ownership, stock options and warrants exercisable within 60&nbsp;days after March&nbsp;31, 2011 are included
for that person or group but not the stock options or warrants of any other person or group. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Applicable
percentage ownership is based on 14,359,377 shares of common stock outstanding at March&nbsp;31, 2011, assuming the automatic conversion of (i)&nbsp;all outstanding shares of our
Series&nbsp;A Preferred Stock, Series&nbsp;B Preferred Stock, Series&nbsp;B-2 Preferred Stock, Series&nbsp;C Preferred Stock and Series&nbsp;C-1 Preferred Stock on a
one-for-one basis into 12,399,825 shares of common stock and (ii)&nbsp;all outstanding shares of our Series&nbsp;B-1 Preferred Stock on a one for 1.161144499
basis into 665,013 shares of common stock. For purposes of the table below, we have assumed
that&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of common stock will be outstanding upon completion of this offering, based upon
an assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Unless
otherwise indicated and subject to applicable community property laws, to our knowledge, each stockholder named in the following table possesses sole voting and investment power over the shares
listed. Unless otherwise noted below, the address of each </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>127</FONT></P>

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<BR>

<P style="font-family:arial;"><FONT SIZE=2>person
listed on the table is c/o CyOptics,&nbsp;Inc., 9999 Hamilton Boulevard, Breinigsville, PA 18031. </FONT></P>
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<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="63pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="63pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=14 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Shares beneficially<BR>
owned prior<BR>
to the offering </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Shares beneficially<BR>
owned after<BR>
the offering </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Name and address of beneficial owner</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Shares</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Percentage</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Shares</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Percentage</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=14 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>5% stockholders:</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Funds affiliated with Jerusalem Venture Partners(1)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,810,984</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>54.4%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,810,984</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Funds affiliated with Sprout Capital(2)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,556,036</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10.8%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,556,036</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Funds affiliated with Soros Fund Management LLC(3)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>787,265</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5.5%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>787,265</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Funds affiliated with TL&nbsp;Ventures(4)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>750,690</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5.2%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>750,690</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Named executive officers and directors:</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Ettore J. Coringrato, Jr.(5)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>27,860</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>*&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>27,860</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Matthew C. Riley(6)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>17,326</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>*&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>17,326</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Len Ketelsen(7)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>11,557</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>*&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>11,557</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Joe Keska(8)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,633</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>*&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,633</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Stefan M. Rochus(9)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,825</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>*&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,825</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Mark DeNino(10)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>750,690</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5.2%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>750,690</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Robert Finzi(11)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,556,036</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10.8%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,556,036</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Erel N. Margalit(12)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,810,984</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>54.4%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,810,984</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>John Pilitsis(13)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>42,786</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>*&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>42,786</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sean Sebastian(14)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>692,416</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4.8%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>692,416</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Noah D. Yago</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>*&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>All directors and executive officers as a group(15)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>11,711,378</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>81.5%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>11,711,378</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=14 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 </DIV>
<DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT  style="font-size:8pt;line-height:9pt;">
(*)&nbsp;&nbsp;&nbsp;Represents beneficial ownership of less than 1%. </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(1)&nbsp;&nbsp;&nbsp;Includes
(i)&nbsp;356,048 shares held by Jerusalem Venture Partners,&nbsp;L.P., (ii)&nbsp;333,252 shares held by Jerusalem Venture Partners III,&nbsp;L.P.,
(iii)&nbsp;220,277 shares held by Jerusalem Venture Partners IV,&nbsp;L.P., (iv)&nbsp;1,857 shares held by Jerusalem Venture Partners IV-A,&nbsp;L.P., (v)&nbsp;1,972 shares held
by Jerusalem Venture Partners Entrepreneurs Fund IV,&nbsp;L.P., (vi)&nbsp;25,628 shares held by Jerusalem Venture Partners Entrepreneur Fund III,&nbsp;L.P., (vii)&nbsp;31,140 shares held by
Jerusalem Venture Partners (Israel),&nbsp;L.P., (viii)&nbsp;9,315 shares held by Jerusalem Venture Partners III (Israel),&nbsp;L.P., (ix)&nbsp;5,299 shares held by Jerusalem Venture Partners
IV (Israel),&nbsp;L.P., (x)&nbsp;509,959 shares held by JVP III Annex Fund,&nbsp;L.P., and (xi)&nbsp;6,316,237 shares held by JVP Opportunity Fund,&nbsp;L.P., as nominee for itself, JVP
Opportunity Fund-A,&nbsp;L.P., JVP Opportunity Entrepreneur Fund,&nbsp;L.P., Jerusalem Venture Partners IV,&nbsp;L.P., Jerusalem Venture Partners IV-A,&nbsp;L.P.,
Jerusalem Venture Partners Entrepreneurs Fund IV,&nbsp;L.P., Jerusalem Venture Partners IV (Israel),&nbsp;L.P., JVP IV Annex Fund,&nbsp;L.P., JVP IV Annex Entrepreneur Fund,&nbsp;L.P., JVP
Media V,&nbsp;L.P., JVP Media V Entrepreneur Fund,&nbsp;L.P. and JVP Media V (Israel),&nbsp;L.P. Jerusalem Partners,&nbsp;L.P. is the general partner of Jerusalem Venture Partners,&nbsp;L.P.
and may be deemed to have sole voting and dispositive power with respect to shares held by that fund. J.V.P. Jerusalem Venture Partners (Israel) Management&nbsp;Ltd. is the general partner of
Jerusalem Venture Partners (Israel),&nbsp;L.P. and may be deemed to have sole voting and dispositive power with respect to shares held by that fund. Jerusalem Partners III,&nbsp;L.P. is the
general partner of Jerusalem Venture Partners III,&nbsp;L.P. and Jerusalem Venture Partners Entrepreneur Fund III,&nbsp;L.P. and may be deemed to have sole voting and dispositive power with
respect to shares held by those funds. Jerusalem Venture Partners III (Israel) Management Company&nbsp;Ltd. is the general partner of Jerusalem Venture Partners III (Israel),&nbsp;L.P. and may be
deemed to have sole voting and dispositive power with respect to shares held by that fund. Jerusalem Annex Partners III,&nbsp;L.P. is the general partner of JVP III Annex Fund,&nbsp;L.P. and may
be deemed to have sole voting and dispositive power with respect to shares held by that fund. Jerusalem Partners IV,&nbsp;L.P. is the general partner of Jerusalem Venture Partners IV,&nbsp;L.P.,
Jerusalem Venture Partners IV-A,&nbsp;L.P. and Jerusalem Venture Partners Entrepreneurs Fund IV,&nbsp;L.P. and may be deemed to have sole voting and dispositive power with respect to
shares held by those funds. Jerusalem Partners&#151;Venture Capital,&nbsp;L.P. is the general partner of Jerusalem Venture Partners IV (Israel),&nbsp;L.P. and may be deemed to have sole
voting and dispositive power with respect to shares held by that fund. JP Media V,&nbsp;L.P. is the general partner of JVP IV Annex Fund,&nbsp;L.P., JVP IV Annex Entrepreneur Fund,&nbsp;L.P.,
JVP Media V,&nbsp;L.P., JVP Media V Entrepreneur Fund,&nbsp;L.P. and JVP Media V (Israel),&nbsp;L.P. and may be deemed to have sole voting and dispositive power with respect to shares held by
those funds. JP Opportunity Fund,&nbsp;L.P. is the general partner of JVP Opportunity Fund,&nbsp;L.P., JVP
</font></p>
</DIV>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>128</FONT></P>

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<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=2,SEQ=131,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=1000334,FOLIO='128',FILE='DISK104:[11ZCB1.11ZCB76301]EE76301A.;24',USER='BFLANNO',CD='12-AUG-2011;03:01' -->
<A NAME="page_ee76301_1_129"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<BR>
 <DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
<p style="font-family:arial;"></FONT><FONT  style="font-size:8pt;line-height:9pt;">
Opportunity Fund-A,&nbsp;L.P. and JVP Opportunity Entrepreneur Fund,&nbsp;L.P. and may be deemed to have sole voting and dispositive power with respect to shares held by each fund of
which it is a general partner. Jerusalem Venture Partners Corporation is the general partner of Jerusalem Partners,&nbsp;L.P., Jerusalem Partners III,&nbsp;L.P. and Jerusalem Annex Partners
III,&nbsp;L.P. and may be deemed to have sole voting and dispositive power with respect to the shares held by those funds. JVP Corp IV is the general partner of Jerusalem Partners IV,&nbsp;L.P.,
JP Media V,&nbsp;L.P. and JP Opportunity Fund and may be deemed to have sole voting and dispositive power with respect to the shares held by those funds. The mailing address of the individuals and
entities related to Jerusalem Venture Partners is 156 Fifth Avenue, Suite&nbsp;410, New York, NY 10010. </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(2)&nbsp;&nbsp;&nbsp;Includes
697,568 shares held by CyOptics I&nbsp;LLC, 45,615 shares held by CyOptics II&nbsp;LLC, 682,658 shares held by Sprout Capital VIII,&nbsp;L.P., 81,762 shares held by
Sprout Venture Capital&nbsp;L.P., 4,510 shares held by DLJ Capital Corporation and 43,923 shares held by DLJ ESC II,&nbsp;L.P. The mailing address of Sprout Capital is 11&nbsp;Madison Avenue,
13<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">th</font> Floor New York, NY 10010. </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(3)&nbsp;&nbsp;&nbsp;Includes
657,761 shares held by Tapot&nbsp;LLC ("Tapot"), a Delaware limited liability company, and 129,504 shares held by SFM Domestic Investments&nbsp;LLC ("SFMD"), a Delaware
limited liability company. Quantum Industrial Partners LDC ("QIP"), an exempted limited duration company formed under the laws of the Cayman Islands, is the sole member and manager of Tapot. QIH
Management Investor,&nbsp;L.P. ("QIHMI"), an investment advisory firm organized as a Delaware limited partnership, is a minority stockholder of, and is vested with investment discretion with respect
to portfolio assets held for the account of QIP. The sole general partner of QIHMI is QIH Management&nbsp;LLC ("QIH Management"), a Delaware limited liability company. Soros Fund
Management&nbsp;LLC ("SFM"), a Delaware limited liability company, is the sole managing member of QIH Management. SFM is also the manager of SFMD. George Soros serves as Chairman of SFM, Robert
Soros serves as Deputy Chairman of SFM, and Jonathan Soros serves as President and Deputy Chairman of SFM. The principal address of SFM is at 888 Seventh Avenue, 33rd&nbsp;Floor, New York, New York
10106. </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(4)&nbsp;&nbsp;&nbsp;Includes
12,762 shares held by TL Ventures V Interfund&nbsp;L.P. and 737,928 shares held by TL Ventures V,&nbsp;L.P., including the conversion of certain shares of
Series&nbsp;B-1 Preferred Stock into common stock at a conversion ratio of 1.161144499 per share. TL Ventures V&nbsp;LLC is the general partner of TL Ventures V Interfund,&nbsp;L.P.
and TL Ventures V Management&nbsp;L.P., which is the general partner of TL Ventures V,&nbsp;L.P. and may be deemed to have sole voting and dispositive power with respect to shares held by each
fund of which it is a general partner. The mailing address of TL&nbsp;Ventures is 435&nbsp;Devon Park Drive, 700&nbsp;Building, Wayne, PA&nbsp;19087. </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(5)&nbsp;&nbsp;&nbsp;Includes
options to purchase 27,860 shares of common stock that are exercisable within 60&nbsp;days of March&nbsp;31, 2011. </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(6)&nbsp;&nbsp;&nbsp;Includes
options to purchase 17,326 shares of common stock that are exercisable within 60&nbsp;days of March&nbsp;31, 2011. </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(7)&nbsp;&nbsp;&nbsp;Includes
options to purchase 11,557 shares of common stock that are exercisable within 60&nbsp;days of March&nbsp;31, 2011. </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(8)&nbsp;&nbsp;&nbsp;Includes
options to purchase 9,633 shares of common stock that are exercisable within 60&nbsp;days of March&nbsp;31, 2011. </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(9)&nbsp;&nbsp;&nbsp;Includes
options to purchase 4,825 shares of common stock that are exercisable within 60&nbsp;days of March&nbsp;31, 2011. </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(10)&nbsp;Includes
12,762 shares held by TL Ventures V Interfund&nbsp;L.P. and 737,928 shares held by TL Ventures V,&nbsp;L.P., including the conversion of certain shares of
Series&nbsp;B-1 Preferred Stock into common stock at a conversion ratio of 1.161144499 per share. TL Ventures V&nbsp;LLC is the general partner of TL Ventures V Interfund,&nbsp;L.P.
and TL Ventures V Management&nbsp;L.P., which is the general partner of TL Ventures V,&nbsp;L.P. and may be deemed to have sole voting and dispositive power with respect to shares held by each
fund of which it is a general partner. Mr.&nbsp;DeNino, a member of our board of directors, is a managing director of TL Ventures and may be deemed to have sole voting and dispositive power with
respect to the shares held by funds related to TL Ventures. Mr.&nbsp;DeNino disclaims beneficial ownership of all such shares except to the extent of his pecuniary interest therein. </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(11)&nbsp;Includes
697,568 shares held by CyOptics I&nbsp;LLC, 45,615 shares held by CyOptics II&nbsp;LLC, 682,658 shares held by Sprout Capital VIII,&nbsp;L.P., 81,762 shares held by
Sprout Venture Capital&nbsp;L.P., 4,510 shares held by DLJ Capital Corporation, 43,923 shares held by DLJ ESC II,&nbsp;L.P. Mr.&nbsp;Finzi is a member of our board of directors, is the managing
director of Sprout Group, and may be deemed to have sole voting and dispositive power with respect to the shares held by Sprout Group-related funds. Mr.&nbsp;Finzi disclaims beneficial ownership to
all such shares except to the extent of his pecuniary interest therein. </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(12)&nbsp;Includes
(i)&nbsp;356,048 shares held by Jerusalem Venture Partners,&nbsp;L.P., (ii)&nbsp;333,252 shares held by Jerusalem Venture Partners III,&nbsp;L.P.,
(iii)&nbsp;220,277 shares held by Jerusalem Venture Partners IV,&nbsp;L.P., (iv)&nbsp;1,857 shares held by Jerusalem Venture Partners IV-A,&nbsp;L.P., (v)&nbsp;1,972 shares held
by Jerusalem Venture Partners Entrepreneurs Fund IV,&nbsp;L.P., (vi)&nbsp;25,628 shares held by Jerusalem Venture Partners Entrepreneur Fund III,&nbsp;L.P., (vii)&nbsp;31,140 shares held by
Jerusalem Venture Partners (Israel),&nbsp;L.P., (viii)&nbsp;9,315 shares held by Jerusalem Venture Partners III (Israel),&nbsp;L.P., (ix)&nbsp;5,299 shares held by Jerusalem Venture Partners
IV (Israel),&nbsp;L.P., (x)&nbsp;509,959 shares held by JVP III Annex Fund,&nbsp;L.P., and (xi)&nbsp;6,316,237 shares held by JVP Opportunity Fund,&nbsp;L.P., as nominee for itself, JVP
Opportunity Fund-A,&nbsp;L.P., JVP Opportunity Entrepreneur Fund&nbsp;L.P., Jerusalem Venture Partners IV,&nbsp;L.P., Jerusalem Venture Partners IV-A,&nbsp;L.P.,
Jerusalem Venture Partners Entrepreneurs Fund IV,&nbsp;L.P., Jerusalem Venture Partners IV (Israel),&nbsp;L.P., JVP IV Annex Fund,&nbsp;L.P., JVP IV Annex Entrepreneur Fund,&nbsp;L.P., JVP
Media V,&nbsp;L.P., JVP Media V Entrepreneur Fund,&nbsp;L.P. and JVP Media V (Israel),&nbsp;L.P. Jerusalem Partners,&nbsp;L.P. is the general partner of Jerusalem Venture Partners,&nbsp;L.P.
and may be deemed to have sole voting and dispositive power with respect to shares held by that fund. J.V.P. Jerusalem Venture Partners (Israel) Management&nbsp;Ltd. is the general partner of
Jerusalem Venture Partners (Israel),&nbsp;L.P. and may be deemed to have sole voting and dispositive power with respect to shares held by that fund. Jerusalem Partners III,&nbsp;L.P. is the
general partner of Jerusalem Venture Partners III,&nbsp;L.P. and Jerusalem Venture Partners Entrepreneur Fund III,&nbsp;L.P. and may be deemed to have sole voting and dispositive power with
respect to shares held by those funds. Jerusalem Venture Partners III (Israel) Management Company&nbsp;Ltd. is the general partner of Jerusalem Venture Partners III (Israel),&nbsp;L.P. and may be
deemed to have sole voting and dispositive power with respect to shares held by that fund. Jerusalem Annex Partners III,&nbsp;L.P. is the general partner of JVP III Annex Fund,&nbsp;L.P. and may
be deemed to have sole voting and dispositive power with respect to shares held by that fund. Jerusalem Partners IV,&nbsp;L.P. is the general partner of Jerusalem Venture Partners IV,&nbsp;L.P.,
Jerusalem Venture Partners IV-A,&nbsp;L.P. and Jerusalem Venture Partners Entrepreneurs Fund IV,&nbsp;L.P. and may be deemed to have sole voting and dispositive power with respect to
</font></p>
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<p style="font-family:arial;"></FONT><FONT  style="font-size:8pt;line-height:9pt;">
shares held by those funds. Jerusalem Partners&#151;Venture Capital,&nbsp;L.P. is the general partner of Jerusalem Venture Partners IV (Israel),&nbsp;L.P. and may be deemed to have sole
voting and dispositive power with respect to shares held by that fund. JP Media V,&nbsp;L.P. is the general partner of JVP IV Annex Fund,&nbsp;L.P., JVP IV Annex Entrepreneur Fund,&nbsp;L.P.,
JVP Media V,&nbsp;L.P., JVP Media V Entrepreneur Fund,&nbsp;L.P. and JVP Media V (Israel),&nbsp;L.P. and may be deemed to have sole voting and dispositive power with respect to shares held by
those funds. JP Opportunity Fund,&nbsp;L.P. is the general partner of JVP Opportunity Fund,&nbsp;L.P., JVP Opportunity Fund-A,&nbsp;L.P. and JVP Opportunity Entrepreneur
Fund,&nbsp;L.P. and may be deemed to have sole voting and dispositive power with respect to shares held by each fund of which it is a general partner. Jerusalem Venture Partners Corporation is the
general partner of Jerusalem Partners,&nbsp;L.P., Jerusalem Partners III,&nbsp;L.P. and Jerusalem Annex Partners III,&nbsp;L.P. and may be deemed to have sole voting and dispositive power with
respect to the shares held by those funds. JVP Corp IV is the general partner of Jerusalem Partners IV,&nbsp;L.P., JP Media V,&nbsp;L.P. and JP Opportunity Fund and may be deemed to have sole
voting and dispositive power with respect to the shares held by those funds. Dr.&nbsp;Margalit, a member of our board of directors, is a director of Jerusalem Venture Partners Corporation, J.V.P.
Jerusalem Venture Partners (Israel) Management&nbsp;Ltd., Jerusalem Venture Partners III (Israel) Management Company&nbsp;Ltd., and JVP Corp IV and may be deemed to have sole voting and
dispositive power with respect to the shares. Dr.&nbsp;Margalit disclaims beneficial ownership of all such shares. </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(13)&nbsp;Includes
options to purchase 35,094 shares of common stock that are exercisable within 60&nbsp;days of March&nbsp;31, 2011. </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(14)&nbsp;Includes
692,416 shares held by Birchmere Ventures III,&nbsp;LP. Mr. Sebastian, a member of our board of directors, is a partner of Birchmere Ventures and may be deemed to have
sole voting and dispositive power with respect to the shares held by funds related to Birchmere Ventures except to the extent of his pecuniary interest therein. </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(15)&nbsp;Consists
of (i)&nbsp;11,711,378 shares held of record by the current directors and executive officers; and (ii)&nbsp;106,295 shares exercisable within 60&nbsp;days of
March&nbsp;31, 2011, all of which are vested. </FONT></P>
 </DIV>
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<A NAME="toc_eg76301_1"> </A>
<BR></FONT><FONT SIZE=4><B>  Description of capital stock  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> General  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following is a summary of the rights of our common stock and preferred stock and certain provisions of our amended and restated
certificate of incorporation and amended and restated bylaws, as they will be in effect upon the completion of this offering. For more detailed information, please see our amended and restated
certificate of incorporation and bylaws, which are filed as exhibits to the registration statement of which this prospectus is a part. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Immediately
following the completion of this offering, our authorized capital stock will consist of 525,000,000 shares, with a par value of $0.001 per share, of which: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>500,000,000 shares are designated as common stock, and  </FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>25,000,000 shares are designated as preferred stock. </FONT></DD></DL>


<P style="font-family:arial;"><FONT SIZE=2>At
March&nbsp;31, 2011, assuming the conversion of all outstanding shares of our convertible preferred stock into common stock, we had outstanding 14,359,377 shares of common stock, held of record
by 142&nbsp;stockholders. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Common stock  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The holders of our common stock are entitled to one vote per share on all matters to be voted on by the stockholders. Subject to
preferences that may be applicable to any outstanding shares of preferred stock, holders of common stock are entitled to receive ratably such dividends as may be declared by the board of directors out
of funds legally available therefor. In the event we liquidate, dissolve or wind up, holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities and the
liquidation preferences of any outstanding shares of preferred stock. Holders of common stock have no preemptive, conversion or subscription rights. There are no redemption or sinking fund provisions
applicable to the common stock. All outstanding shares of common stock are, and all shares of common stock to be outstanding upon completion of this offering will be, fully paid and
non-assessable. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Preferred stock  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our board of directors has the authority, without further action by the stockholders, to issue from time to time the preferred stock
in one or more series, to fix the number of shares of any such series and the designation thereof and to fix the rights, preferences, privileges and restrictions granted to or imposed upon such
preferred stock, including dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption, redemption prices, liquidation preference and sinking fund terms, any or
all of which may be greater than or senior to the rights of the common stock. The issuance of preferred stock could adversely affect the voting power of holders of common stock and reduce the
likelihood that such holders will receive dividend payments and payments upon liquidation. Such issuance could have the effect of decreasing the market price of the common stock. The issuance of
preferred stock or even the ability to issue preferred stock could have the effect of delaying, deterring or preventing a change in control. We have no present plans to issue any shares of preferred
stock. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>131</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=3><B> Warrants  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As of March&nbsp;31, 2011, the Company had outstanding warrants to purchase 6,301 shares of Series&nbsp;B-1 Preferred
Stock at any exercise price of approximately $16.0 per share, which represents 7,316&nbsp;shares of Common Stock on an as converted basis, 18,691 shares of Series&nbsp;B Preferred Stock at an
exercise price of approximately $8.02 per share, and 31 shares of common stock at an exercise price of approximately $4.16 per share. Each warrant contains provisions for the adjustment of the
exercise price and the number of shares issuable upon the exercise of the warrant in the event of certain stock dividends, stock splits, reclassifications and consolidations. Upon the closing of this
offering, the warrants will become exercisable for 26,038&nbsp;shares of common stock. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Registration rights  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The holders of an aggregate of 13,067,700 shares of our common stock and warrants to purchase 26,038 shares of our common stock, or
their permitted transferees, are entitled to rights with respect to the registration of these shares under the Securities Act. These rights are provided under the terms of an investor rights agreement
between us and the holders of these shares, and include demand registration rights, short-form registration rights and piggyback registration rights. All fees, costs and expenses of
underwritten registrations will be borne by us and all selling expenses, including underwriting discounts and selling commissions, will be borne by the holders of the shares being registered. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Demand registration rights.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The holders of an aggregate of 13,067,700 shares of our common stock and warrants to purchase 26,038 shares of our common stock, or
their permitted transferees, are entitled to demand registration rights. Under the terms of the registration agreement, we will be required, upon the written request of holders of thirty percent (30%)
or more of these shares, to use our commercial best efforts to register all or a portion of these shares for public resale. We are required to effect only two registrations pursuant to this provision
of the registration agreement. We are not required to effect a demand registration prior to 180&nbsp;days after the completion of this offering. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Short form registration rights.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The holders of an aggregate of 13,067,700 shares of our common stock and warrants to purchase 26,038 shares of our common stock, or
their permitted transferees, are also entitled to short form registration rights. If we are eligible to file&nbsp;a registration statement on Form&nbsp;S-3, these holders have the
right, upon the written request of holders of thirty percent (30%) or more of these shares, to have such shares registered by us at our expense. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><I> Piggyback registration rights.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The holders of an aggregate of 13,067,700 shares of our common stock and warrants to purchase 26,038 shares of our common stock, or
their permitted transferees, are entitled to piggyback registration rights. If we register any of our securities either for our own account or for the account of other security holders, the holders of
these shares are entitled to include their shares in the registration. Subject to certain exceptions, we
and the underwriters may limit the number of shares included in the underwritten offering if the underwriters believe that including these shares would adversely affect the offering. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>132</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=3><B> Anti-takeover effects of Delaware law and our certificate of incorporation and bylaws  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Certain provisions of Delaware law, our amended and restated certificate of incorporation and our bylaws contain provisions that
could have the effect of delaying, deferring or discouraging another party from acquiring control of us. These provisions, which are summarized below, may have the effect of discouraging coercive
takeover practices and inadequate takeover bids. These provisions are also designed, in part, to encourage persons seeking to acquire control of us to first negotiate with our board of directors. We
believe that the benefits of increased protection of our potential ability to negotiate with an unfriendly or unsolicited acquiror outweigh the disadvantages of discouraging a proposal to acquire us
because negotiation of these proposals could result in an improvement of their terms. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Undesignated preferred stock.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;As discussed above, our board of directors has the ability to issue preferred stock with voting or other rights or preferences that
could impede the success of any attempt to change control of us. These and other provisions may have the effect of deferring hostile takeovers or delaying changes in control or management of our
company. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Limits on ability of stockholders to call a special meeting.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our bylaws provide that special meetings of the stockholders may be called only by the board of
directors or a committee of the board of directors. A stockholder may not call a special meeting, which may delay the ability of our stockholders to force consideration of a proposal or for holders
controlling a majority of our capital stock to take any action, including the removal of directors. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Requirements for advance notification of stockholder nominations and proposals.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our bylaws establish advance notice procedures with respect to stockholder
proposals and the nomination of candidates for election as directors. However, our bylaws may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are
not followed. These provisions may also discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquirer's own slate of directors or otherwise attempting to
obtain control of our company. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> No cumulative voting.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Delaware General Corporation Law provides that stockholders are not entitled to the right to cumulate votes in the election of directors
unless our amended and restated certificate of incorporation provides otherwise. Our amended and restated certificate of incorporation and amended and restated bylaws do not expressly provide for
cumulative voting. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Transfer agent and registrar  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Upon the completion of this offering, the transfer agent and registrar for our common stock will
be&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>133</FONT></P>

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<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="ei76301_shares_eligible_for_future_sale"> </A>
<A NAME="toc_ei76301_1"> </A>
<BR></FONT><FONT SIZE=4><B>  Shares eligible for future sale  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Before this offering, there has not been a public market for shares of our common stock. Future sales of substantial amounts of
shares of our common stock, including shares issued upon the exercise of outstanding options, in the public market after this offering, or the possibility of these sales occurring, could cause the
prevailing market price for our common stock to fall or impair our ability to raise equity capital in the future. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Upon
the completion of this offering, a total of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock will be outstanding,
assuming that there are no exercises of options after March&nbsp;31, 2011. Of these
shares, all&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock sold in this offering by us, plus any shares sold upon
exercise of the underwriters' over-allotment option, will be freely tradable in
the public market without restriction or further registration under the Securities Act, unless these shares are held by "affiliates," as that term is defined in Rule&nbsp;144 under the Securities
Act. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
remaining 14,359,377 shares of common stock will be "restricted securities," as that term is defined in Rule&nbsp;144 under the Securities Act. These restricted securities are eligible for
public sale only if they are registered under the Securities Act or if they qualify for an exemption from registration under Rules&nbsp;144 or 701 under the Securities Act, which are summarized
below. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Subject
to the lock-up agreements described below and the provisions of Rules&nbsp;144 and 701 under the Securities Act, these restricted securities will be available for sale in the
public market as follows: </FONT></P>
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<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Date</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Number of shares</B></FONT><BR></TH>
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<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>On the date of this prospectus</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
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<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT
SIZE=2>Between&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;days after the date of this prospectus</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>At various times beginning more than&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;days after the date of this
prospectus</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>In addition, of the 399,570 shares of our common stock that were subject to stock options outstanding as of March&nbsp;31, 2011 options to purchase 371,969
shares of common stock were exercisable as of March&nbsp;31, 2011 and will be eligible for sale 90&nbsp;days following the effective date of this offering (includes outstanding options under both
our 1999 Stock Option Plan and our 2007 Stock Plan). </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Lock-up agreements  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We and all of our directors and officers, as well as the other holders of substantially all shares of common stock outstanding
immediately prior to this offering, have agreed that, without the prior written consent of J.P. Morgan Securities&nbsp;LLC and Barclays
Capital&nbsp;Inc., on behalf of the underwriters, we and they will not, during the period ending 180&nbsp;days after the date of this prospectus: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares of our common stock or any securities </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>134</FONT></P>

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<UL>

<P style="font-family:arial;"><FONT SIZE=2>convertible
into or exercisable, or exchangeable for shares of our common stock or publicly disclose the intention to make any such offer, sale, pledge or disposition; or  </FONT></P>

</UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences
of ownership of our common stock; </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>whether
any transaction described above is to be settled by delivery of shares of our common stock or such other securities, in cash or otherwise. In addition, such directors, officers and
stockholders have agreed further that, without the prior written consent of J.P.&nbsp;Morgan Securities&nbsp;LLC and Barclays Capital&nbsp;Inc., on behalf of the underwriters, they will not,
during the same period make any demand for or exercise any right with respect to the registration of any shares of our common stock or any security convertible into or exercisable or exchangeable for
common stock. The period may be extended by up to 34&nbsp;days. This agreement is subject to certain exceptions, and is also subject to extension for up to additional days, as set forth in
"Underwriting." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Rule&nbsp;144  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In general, under Rule&nbsp;144 as currently in effect, once we have been subject to public company reporting requirements for at
least 90&nbsp;days, a person who is not deemed to have been one of our affiliates for purposes of the Securities Act at any time during 90&nbsp;days preceding a sale and who has beneficially owned
the shares proposed to be sold
for at least six months, including the holding period of any prior owner other than our affiliates, is entitled to sell such shares without complying with the manner of sale, volume limitation or
notice provisions of Rule&nbsp;144, subject to compliance with the public information requirements of Rule&nbsp;144. If such a person has beneficially owned the shares proposed to be sold for at
least one year, including the holding period of any prior owner other than our affiliates, then such person is entitled to sell such shares without complying with any of the requirements of
Rule&nbsp;144. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
general, under Rule&nbsp;144, as currently in effect, our affiliates or persons selling shares on behalf of our affiliates are entitled to sell upon expiration of the lock-up
agreements described above, within any three-month period beginning 90&nbsp;days after the date of this prospectus, a number of shares that does not exceed the greater of: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>1% of the number of shares of common stock then outstanding, which will equal
approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
immediately after this offering; or </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the average weekly trading volume of the common stock during the four calendar weeks preceding the filing of a notice on
Form&nbsp;144 with respect to such sale. </FONT></DD></DL>


<P style="font-family:arial;"><FONT SIZE=2>Sales
under Rule&nbsp;144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the
availability of current public information about us. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Rule&nbsp;701  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Rule&nbsp;701 generally allows a stockholder who purchased shares of our common stock pursuant to a written compensatory plan or
contract and who is not deemed to have been an affiliate of our company during the immediately preceding 90&nbsp;days to sell these shares in reliance upon Rule&nbsp;144, but without being
required to comply with the public information, holding period, </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>135</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>volume
limitation or notice provisions of Rule&nbsp;144. Rule&nbsp;701 also permits affiliates of our company to sell their Rule&nbsp;701 shares under Rule&nbsp;144 without complying with the
holding period requirements of Rule&nbsp;144. All holders of Rule&nbsp;701 shares, however, are required to wait until 180&nbsp;days after the date of this prospectus before selling such shares
pursuant to Rule&nbsp;701. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As
of March&nbsp;31, 2011, 107,997 shares of our outstanding common stock had been issued in reliance on Rule&nbsp;701 as a result of exercises of stock options and stock awards. These shares will
be eligible for resale in reliance on this rule upon expiration of the lockup agreements described above. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Stock options  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We intend to file&nbsp;a registration statement on Form&nbsp;S-8 under the Securities Act covering all of the shares
of our common stock subject to options outstanding or reserved for issuance under our stock plans and shares of our common stock issued upon the exercise of options by employees. We expect to file
this registration statement as soon as practicable after this offering. In addition, we intend to file&nbsp;a registration statement on Form&nbsp;S-8 or such other form as may be
required under the Securities Act for the resale of shares of our common stock issued upon the exercise of options that were not granted under Rule&nbsp;701. We expect to file this registration
statement as soon as permitted under the Securities Act. However, the shares registered on Form&nbsp;S-8 will be subject to volume limitations, manner of sale, notice and public
information requirements of Rule&nbsp;144 and will not be eligible for resale until expiration of the lock-up agreements to which they are subject. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Registration rights  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Upon completion of this offering, the holders of 13,067,700 shares of our common stock and warrants to purchase 26,038 shares of our
common stock or their respective transferees will be entitled to various rights with respect to the registration of these shares under the Securities Act. Registration of these shares under the
Securities Act would result in these shares becoming fully tradable without restriction under the Securities Act immediately upon the effectiveness of the registration, except for shares purchased by
affiliates. See "Description of capital stock&#151;Registration rights" for additional information. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>136</FONT></P>

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<A HREF="#bg76301a_main_toc">Table of Contents</A> </FONT></P>

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<BR></FONT><FONT SIZE=4><B>  Material United States federal income tax and estate tax<BR>  consequences to non-U.S. holders  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following is a summary of the material U.S. federal income tax and estate tax consequences of the ownership and disposition of
our common stock to non-U.S. holders, but does not purport to be a complete analysis of all the potential tax considerations relating thereto. This summary is based upon the provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), Treasury regulations promulgated thereunder, administrative rulings and judicial decisions, all as of the date hereof. These authorities may
be changed, possibly retroactively, so as to result in U.S. federal income or estate tax consequences different from those set forth below. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>This
summary does not address the tax considerations arising under the laws of any non-U.S., state or local jurisdiction or under U.S. federal gift and estate tax laws, except to the
limited extent below. In addition, this discussion does not address tax considerations applicable to an investor's particular circumstances or to investors that may be subject to special tax rules,
including, without limitation: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>banks, insurance companies or other financial institutions;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>persons subject to the alternative minimum tax;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>tax-exempt organizations;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>controlled foreign corporations, passive foreign investment companies and corporations that accumulate earnings to avoid
United States federal income tax;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>dealers in securities or currencies;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>traders in securities that elect to use a mark-to-market method of accounting for their securities
holdings;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>persons that own, or are deemed to own, more than five percent of our capital stock (except to the extent specifically set
forth below);  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>certain former citizens or long-term residents of the United States;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>persons who hold our common stock as a position in a hedging transaction, "straddle," "conversion transaction" or other
risk reduction transaction;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>persons who do not hold our common stock as a capital asset within the meaning of Section&nbsp;1221 of the Code
(generally, for investment purposes); or  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>persons deemed to sell our common stock under the constructive sale provisions of the Code. </FONT></DD></DL>


<P style="font-family:arial;"><FONT SIZE=2>In
addition, if a partnership or entity classified as a partnership for U.S. federal income tax purposes holds our common stock, the tax treatment of a partner generally will depend on the status of
the partner and upon the activities of the partnership. Accordingly, partnerships that hold our common stock, and partners in such partnerships, should consult their tax advisors. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B>You are urged to consult your tax advisor with respect to the application of the United States federal income tax laws to your particular situation, as well as any tax
consequences of the  </B></FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><B> purchase, ownership and disposition of our common stock arising under the United States federal estate or gift tax rules or under the laws of any state, local, non-U.S. or other taxing
jurisdiction or under any applicable tax treaty.</B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Non-U.S. holder defined  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>For purposes of this discussion, you are a non-U.S. holder if you are any holder (other than a partnership or entity
classified as a partnership for U.S. federal income tax purposes) that is not: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>an individual citizen or resident of the United States;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>a corporation or other entity taxable as a corporation created or organized in the United States or under the laws of the
United States or any political subdivision thereof;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>an estate whose income is subject to U.S. federal income tax regardless of its source; or  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>a trust (x)&nbsp;whose administration is subject to the primary supervision of a U.S. court and which has one or more
U.S. persons who have the authority to control all substantial decisions of the trust or (y)&nbsp;which has made an election to be treated as a U.S. person. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=3><B> Distributions  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We have not made any distributions on our common stock, and we do not plan to make any distributions for the foreseeable future.
However, if we do make distributions on our common stock, those payments will constitute dividends for U.S. tax purposes to the extent paid from our current or accumulated earnings and profits, as
determined under U.S. federal income tax principles. To the extent those distributions exceed
both our current and our accumulated earnings and profits, they will constitute a return of capital and will first reduce your basis in our common stock, but not below zero, and then will be treated
as gain from the sale of stock, subject to the tax treatment described below in "Gain on disposition of common stock." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Any
dividend paid to you generally will be subject to U.S. withholding tax either at a rate of 30% of the gross amount of the dividend or such lower rate as may be specified by an applicable income
tax treaty. In order to receive a reduced treaty rate, you must provide us with an IRS Form&nbsp;W-8BEN or other appropriate version of IRS Form&nbsp;W-8 certifying
qualification for the reduced rate. A non-U.S. holder of shares of our common stock eligible for a reduced rate of U.S. withholding tax pursuant to an income tax treaty may obtain a refund
of any excess amounts withheld by filing an appropriate claim for refund with the IRS. If the non-U.S. holder holds the stock through a financial institution or other agent acting on the
non-U.S. holder's behalf, the non-U.S. holder will be required to provide appropriate documentation to the agent, which then will be required to provide certification to us or
our paying agent, either directly or through other intermediaries. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Dividends
received by you that are effectively connected with your conduct of a U.S. trade or business (and, if an income tax treaty applies, attributable to a permanent establishment maintained by
you in the United States) are exempt from such withholding tax. In order to obtain this exemption, you must provide us with an IRS Form&nbsp;W-8ECI or other applicable IRS
Form&nbsp;W-8 properly certifying such exemption. Such effectively connected dividends, although not subject to withholding tax, are generally taxed at the same graduated rates
applicable to </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>U.S.
persons, net of certain deductions and credits. In addition, if you are a corporate non-U.S. holder, dividends you receive that are effectively connected with your conduct of a U.S.
trade or business may also be subject to a branch profits tax at a rate of 30% or such lower rate as may be specified by an applicable income tax treaty. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Gain on disposition of common stock  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>You generally will not be required to pay U.S. federal income tax on any gain realized upon the sale or other disposition of our
common stock unless: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the gain is effectively connected with your conduct of a U.S. trade or business (and, if an income tax treaty applies, the
gain is attributable to a permanent establishment maintained by you in the United States);  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>you are an individual who is present in the United States for a period or periods aggregating 183&nbsp;days or more
during the calendar year in which the sale or disposition occurs and certain other conditions are met; or  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>we were a "United States real property holding corporation" for U.S. federal income tax purposes (a "USRPHC") at any time
within the shorter of the five-year period preceding the disposition or your holding period for our common stock. </FONT></DD></DL>


<P style="font-family:arial;"><FONT SIZE=2>In
general, we would be a USRPHC if interests in U.S. real property comprised at least 50% of the fair market value of our assets. We believe that we are not currently and will not become a USRPHC.
However, because the determination of whether we are a USRPHC depends on the fair market value of our U.S. real property relative to the fair market value of our other business assets, there can be no
assurance that we will not become a USRPHC in the future. Even if we become a USRPHC, however, as long as our common stock is regularly traded on an established securities market, such common stock
will be treated as a U.S. real property interest only if you actually or constructively hold more than five percent of such regularly traded common stock at any time during the applicable period
described above. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>If
you are a non-U.S. holder described in the first bullet above, you will generally be required to pay tax on the gain derived from the sale (net of certain deductions or credits) under
regular graduated U.S. federal income tax rates, and corporate non-U.S.
holders described in the first bullet above may be subject to branch profits tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty. If you are an individual
non-U.S. holder described in the second bullet above, you will be required to pay a flat 30% tax on the gain derived from the sale, which tax may be offset by U.S. source capital losses
(even though you are not considered a resident of the United States). You should consult any applicable income tax or other treaties that may provide for different rules. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=3><B> Federal estate tax  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our common stock beneficially owned by an individual who is not a citizen or resident of the United States (as defined for United
States federal estate tax purposes) at the time of death will generally be includable in the decedent's gross estate for United States federal estate tax purposes, unless an applicable estate tax
treaty provides otherwise. </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=3><B> Backup withholding and information reporting  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Generally, we must report annually to the IRS the amount of dividends paid to you, your name and address, and the amount of tax
withheld, if any. A similar report will be sent to you. Pursuant to applicable income tax treaties or other agreements, the IRS may make these reports available to tax authorities in your country of
residence. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Payments
of dividends or of proceeds on the disposition of stock made to you may be subject to additional information reporting and backup withholding at a current rate of 28% unless you establish an
exemption, for example by properly certifying your non-U.S. status on a Form&nbsp;W-8BEN or another appropriate version of IRS Form&nbsp;W-8. Notwithstanding
the foregoing, backup withholding and information
reporting may apply if either we or our paying agent has actual knowledge, or reason to know, that you are a U.S. person. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Backup
withholding is not an additional tax; rather, the U.S. income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund or credit may generally be obtained from the IRS, provided that the required information is furnished to the IRS in a timely manner. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Additional withholding requirement  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Recently enacted legislation generally will impose a U.S. federal withholding tax of 30% on dividends and the gross proceeds of a
disposition of our common stock paid to a "foreign financial institution" (as specially defined under these rules) unless such institution enters into an agreement with the U.S. government to withhold
on certain payments and to collect and provide to the U.S. tax authorities substantial information regarding U.S. account holders of such institution (which includes certain equity and debt holders of
such institution, as well as certain account holders that are foreign entities with U.S. owners). The legislation also will generally impose a U.S. federal withholding tax of 30% on dividends and the
gross proceeds of a disposition of our common stock paid to a non-financial foreign entity unless such entity provides the withholding agent with a certification identifying the direct and
indirect U.S. owners of the entity. Under certain transition rules, any obligation to withhold under this new legislation with respect to dividends on our common stock will not begin until
January&nbsp;1, 2014 and with respect to gross proceeds on a disposition of our common stock will not begin until January&nbsp;1, 2015. Under certain circumstances, a non-U.S. holder
might be eligible for refunds or credits of such taxes. Prospective investors are encouraged to consult with their own tax advisors regarding the possible implications of this legislation on their
investment in our common stock. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B>THE PRECEDING DISCUSSION OF UNITED STATES FEDERAL TAX CONSIDERATIONS IS FOR GENERAL INFORMATION ONLY. IT IS NOT TAX ADVICE. EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN TAX
ADVISOR REGARDING THE PARTICULAR UNITED STATES FEDERAL, STATE AND LOCAL AND NON-U.S. TAX CONSEQUENCES OF PURCHASING, HOLDING AND DISPOSING OF OUR COMMON STOCK, INCLUDING THE CONSEQUENCES
OF ANY PROPOSED CHANGE IN APPLICABLE LAWS.</B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>140</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg76301a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="em76301_underwriting"> </A>
<A NAME="toc_em76301_1"> </A>
<BR></FONT><FONT SIZE=4><B>  Underwriting  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>J.P. Morgan Securities&nbsp;LLC and Barclays Capital&nbsp;Inc., or the Representatives, are acting as the representatives of the
underwriters and joint book-running managers in connection with this offering. Under the terms of an underwriting agreement, the form of which will be filed as an exhibit to the
registration statement of which this prospectus forms&nbsp;a part, each of the underwriters named below has severally agreed to purchase from us, and have agreed to sell, the respective number of
shares of common stock shown opposite its name below: </FONT></P>
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<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
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<TD COLSPAN=5 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Name</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Number of shares</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=5 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>J.P. Morgan Securities&nbsp;LLC</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Barclays Capital&nbsp;Inc.&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Oppenheimer&nbsp;&amp;&nbsp;Co.&nbsp;Inc.&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Raymond James&nbsp;&amp; Associates,&nbsp;Inc.&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Roth Capital Partners, LLC</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=5 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
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 <P style="font-family:arial;"><FONT SIZE=2>The underwriting agreement provides that the underwriters' obligation to purchase shares of common stock depends on the satisfaction of the conditions contained in the underwriting
agreement, including: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the obligation to purchase all of the shares of common stock offered hereby (other than those shares of common stock
covered by their option to purchase additional shares as described below), if any of the shares are purchased;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the representations and warranties made by us to the underwriters are true;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>there is no material adverse change in our business or in the financial markets; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>we deliver customary closing documents to the underwriters. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=3><B> Commissions and expenses  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following table summarizes the underwriting discounts and commissions we will pay to the underwriters. These amounts are shown
assuming both no exercise and full exercise of the underwriters' option to purchase up
to&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;additional shares from us. The underwriting fee is the difference between the initial
price to
the public and the amount the underwriters pay to us, and we have severally agreed to sell, for the shares. </FONT></P>
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<TD COLSPAN=8 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
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<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Paid by us</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>No exercise</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Full exercise</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
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<TD COLSPAN=8 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
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<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Per Share</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
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<TD COLSPAN=8 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
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 <P style="font-family:arial;"><FONT SIZE=2>The Representatives have advised us that the underwriters propose to offer the shares of common stock directly to the public at the public offering price on the cover of this
prospectus and to selected dealers, which may include the underwriters, at such offering price less a selling concession not in excess of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share. After the offering,
the
Representatives may change the offering price and other selling terms. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>141</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
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<P style="font-family:arial;"><FONT SIZE=2>The
expenses of this offering, which are payable by us, are estimated to be approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million (excluding underwriting discounts and commissions). </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Option to purchase additional shares  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We have granted the underwriters an option exercisable for 30&nbsp;days after the date of this prospectus to purchase, from time to
time, in whole or in part, up to an aggregate of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock at the public
offering price less underwriting discounts and commissions. This option may be exercised by the
underwriters to cover over-allotments, if any, in connection with this offering. To the extent that the
underwriters exercise this option, each underwriter will be committed, so long as the conditions of the underwriting agreement are satisfied, to purchase a number of additional shares of common stock
proportionate to that underwriter's initial commitment as indicated in the table above, and we will be obligated to sell the additional shares of common stock to the underwriters. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Lock-up agreements  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We, all of our directors and executive officers and holders of substantially all of our outstanding stock, have agreed that, subject
to certain exceptions, we and they will not directly or indirectly, without the prior written consent of the Representatives (1)&nbsp;offer, sell, pledge, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise dispose of (or enter into any transaction or device that is designed to, or
could be expected to, result in the disposition by any person at any time in the future of) any shares of our common stock or securities convertible into or exercisable or exchangeable for our common
stock (including, without limitation, shares of common stock that may be deemed to be beneficially owned in accordance with the rules and regulations of the SEC and shares of common stock that may be
issued upon exercise of any stock options), or publicly disclose the intention to make any offer, pledge, sale disposition, (2)&nbsp;enter into any swap or other derivatives transaction that
transfers to another, in whole or in part, any of the economic benefits or risks of ownership of shares of common stock or such securities, whether any such transaction described in clause&nbsp;(1)
or (2)&nbsp;above is to be settled by delivery of common stock or other securities, in cash or otherwise or (3)&nbsp;solely with respect to such directors, executive officers and stockholders,
make any demand for or exercise any right or cause to be filed with respect to the registration of any shares of common stock or securities convertible into or exercisable or exchangeable for common
stock or any other securities for a period of 180&nbsp;days after the date of this prospectus. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
180-day restricted period described in the preceding paragraph will be extended if: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>during
the last 17&nbsp;days of the 180-day restricted period, we issue an earnings release or material news or a material event relating to
us occurs; or
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>prior
to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 16-day period
beginning on the last day of the 180-day period, </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>in
which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or
the announcement of the material news or occurrence of the material event, unless such extension is waived in writing by the Representatives. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>142</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
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<P style="font-family:arial;"><FONT SIZE=2>The
Representatives, in their sole discretion, may release the common stock and other securities subject to the lock-up agreements described above in whole or in part at any time with or
without notice. At least three business days before the effectiveness of any release or waiver of the restrictions described above in connection with any transfer of shares of common stock by an
officer or director, the Representatives will notify us of the impending release or waiver of any restriction and we have agreed to announce the impending release or waiver by press release through a
major news service at least two business days before the effective date of the release or waiver, except where the release or waiver is effected solely to permit a transfer of common stock that is not
for consideration and where the transferee has agreed in writing to be bound by the same terms as the lock-up agreements described above to the extent and for the duration that such terms remain in
effect at the time of transfer. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Offering price determination  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Prior to this offering, there has been no public market for our common stock. The initial public offering price will be negotiated
between the Representatives and us. In determining the initial public offering price of our common stock, the Representatives will consider: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the history and prospects for the industry in which we compete;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>our financial information;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>an assessment of management and our business potential and earning prospects;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the prevailing securities market conditions at the time of this offering; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the recent market prices of, and the demand for, publicly traded shares of generally comparable companies. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=3><B> Indemnification  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act and
liabilities arising from breaches of the representations and warranties contained in the underwriting agreement, and to contribute to payments that the underwriters may be required to make for these
liabilities. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Stabilization, short positions and penalty bids  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The underwriters may engage in stabilizing transactions, short sales and purchases to cover positions created by short sales, and
penalty bids or purchases for the purpose of pegging, fixing or maintaining the price of our common stock, in accordance with Regulation&nbsp;M under the Securities Exchange Act of
1934: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a
specified maximum  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>A short position involves a sale by the underwriters of shares in excess of the number of shares the underwriters are
obligated to purchase in the offering, which creates the syndicate short position. This short position may be either a covered short position or a naked short position. In a covered short position,
the number of shares involved in the sales made by the underwriters in excess of the number of shares they are obligated to purchase </FONT></DD></DL>
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<UL>

<P style="font-family:arial;"><FONT SIZE=2>is
not greater than the number of shares that they may purchase by exercising their option to purchase additional shares. In a naked short position, the number of shares involved is greater than the
number of shares in their option to purchase additional shares. The underwriters may close out any short position by either exercising their option to purchase additional shares and/or purchasing
shares in the open market. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the
open market as compared to the price at which they may purchase shares through their option to purchase additional shares. A naked short position is more likely to be created if the underwriters are
concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering. </FONT></P>

</UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Syndicate covering transactions involve purchases of the common stock in the open market after the distribution has been
completed in order to cover syndicate short positions.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Penalty bids permit the Representatives to reclaim a selling concession from a syndicate member when the common stock
originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>These
stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline
in the market price of the common stock. As a result, the price of the common stock may be higher than the price that may otherwise exist in the open market. These transactions may be effected on
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;or otherwise and, if commenced, may be discontinued at any time. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Neither
we nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of our common
stock. In addition, neither we nor any of the underwriters make representation that the Representatives will engage in these stabilizing transactions or that any transaction, once commenced, will not
be discontinued without notice. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Electronic distribution  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>A prospectus in electronic format may be made available on Internet sites or through other online services maintained by one or more
of the underwriters and/or selling group members participating in this offering, or by their affiliates. In those cases, prospective investors may view offering terms online and, depending upon the
particular underwriter or selling group member, prospective investors may be allowed to place orders online. The underwriters may agree with us to allocate a specific number of shares for sale to
online brokerage account holders. Any such allocation for online distributions will be made by the Representatives on the same basis as other allocations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Other
than the prospectus in electronic format, the information on any underwriter's or selling group member's website and any information contained in any other website maintained by an underwriter
or selling group member is not part of the prospectus or the registration statement of which this prospectus forms&nbsp;a part, has not been approved and/or endorsed by us or any underwriter or
selling group member in its capacity as underwriter or selling group </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>member
and should not be relied upon by investors in deciding whether to purchase any shares of common stock. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Stock exchange  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We intend to apply to have our common stock listed on The NASDAQ Global Select Market under the symbol "CYOP." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Discretionary sales  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The underwriters have informed us that they do not intend to confirm sales to discretionary accounts that exceed 5% of the total
number of shares offered by them. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Stamp taxes  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>If you purchase shares of common stock offered in this prospectus, you may be required to pay stamp taxes and other charges under the
laws and practices of the country of purchase, in addition to the offering price listed on the cover page of this prospectus. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Relationships  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The underwriters and certain of their respective affiliates are financial institutions engaged in various activities, which may
include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities.
Certain of the underwriters and their respective affiliates may in the future perform, investment banking and advisory services for us from time to time, for which they may in the future receive
customary fees and expenses. The underwriters and their respective affiliates may, from time to time, engage in transactions with or perform services for us in the ordinary course of their business. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity
securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities
activities may involve our securities and/or instruments. The underwriters and their respective affiliates may also make investment recommendations and/or publish or express independent research views
in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Selling restrictions  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The common stock is being offered for sale in those jurisdictions in the United States, Europe and elsewhere where it is lawful to
make such offers. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> European economic area  </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>In relation to each member state of the European Economic Area which has implemented the Prospectus Directive (each, a "Relevant
Member State"), including each Relevant Member State that has implemented the 2010 PD Amending Directive with regard to persons to whom an </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>145</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>offer
of securities is addressed and the denomination per unit of the offer of securities (each, an "Early Implementing Member State"), with effect from and including the date on which the Prospectus
Directive is implemented in that Relevant Member State (the "Relevant Implementation Date"), no offer of ordinary shares will be made to the public in that Relevant Member State (other than offers
(the "Permitted Public Offers") where a prospectus will be published in relation to the ordinary shares that has been approved by the competent authority in a Relevant Member State or, where
appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive), except that with effect
from and including that
Relevant Implementation Date, offers of ordinary shares may be made to the public in that Relevant Member State at any time: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>(a)</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>to
"qualified investors" as defined in the Prospectus Directive, including:
<BR><BR></FONT>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>A.</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>(in
the case of Relevant Member States other than Early Implementing Member States), legal entities which are authorized or regulated to operate in the
financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities, or any legal entity which has two or more of (i)&nbsp;an average of at least 250
employees during the last financial year; (ii)&nbsp;a total balance sheet of more than &euro;43.0&nbsp;million and (iii)&nbsp;an annual turnover of more than
&euro;50.0&nbsp;million as shown in its last annual or consolidated accounts; or
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>B.</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>(in
the case of Early Implementing Member States), persons or entities that are described in points (1)&nbsp;to (4)&nbsp;of Section&nbsp;I of
Annex&nbsp;II to Directive 2004/39/EC, and those who are treated on request as professional clients in accordance with Annex&nbsp;II to Directive 2004/39/EC, or recognized as eligible
counterparties in accordance with Article&nbsp;24 of Directive 2004/39/EC unless they have requested that they be treated as non-professional clients; or
<BR><BR></FONT></DD></DL>
</DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>(b)</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>to
fewer than 100 (or, in the case of Early Implementing Member States, 150) natural or legal persons (other than "qualified investors" as defined in the
Prospectus Directive), as permitted in the Prospectus Directive, subject to obtaining the prior consent of the representatives for any such offer; or
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>(c)</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>in
any other circumstances falling within Article&nbsp;3(2) of the Prospectus Directive, </FONT></DD></DL>


<P style="font-family:arial;"><FONT SIZE=2>provided
that no such offer of ordinary shares shall result in a requirement for the publication of a prospectus pursuant to Article&nbsp;3 of the Prospectus Directive or of a supplement to a
prospectus pursuant to Article&nbsp;16 of the Prospectus Directive. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Each
person in a Relevant Member State (other than a Relevant Member State where there is a Permitted Public Offer) who initially acquires any ordinary shares or to whom any offer is made will be
deemed to have represented, acknowledged and agreed that (A)&nbsp;it is a "qualified investor," and (B)&nbsp;in the case of any ordinary shares acquired by it as a financial intermediary, as that
term is used in Article&nbsp;3(2) of the Prospectus Directive, (x)&nbsp;the ordinary shares acquired by it in the offering have not been acquired on behalf of, nor have they been acquired with a
view to their offer or resale to, persons in any Relevant Member State other than "qualified investors" as defined in the Prospectus Directive, or in circumstances in which the prior consent of the
Subscribers has been given to the offer or resale, or (y)&nbsp;where ordinary shares have been acquired by it on behalf of persons in any Relevant Member State other than "qualified </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>146</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>investors"
as defined in the Prospectus Directive, the offer of those ordinary shares to it is not treated under the Prospectus Directive as having been made to such persons. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>For
the purpose of the above provisions, the expression "an offer to the public" in relation to any ordinary shares in any Relevant Member State means the communication in any form and by any means of
sufficient information on the terms of the offer of any ordinary shares to be offered so as to enable an investor to decide to purchase any ordinary shares, as the same may be varied in the Relevant
Member State by any measure implementing the Prospectus Directive in the Relevant Member State and the expression "Prospectus Directive" means Directive 2003/71 EC (including the 2010 PD Amending
Directive, in the case of Early Implementing Member States) and includes any relevant implementing measure in each Relevant Member State and the expression "2010 PD Amending Directive" means Directive
2010/73/EU. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> United Kingdom  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>This document is only being distributed to and is only directed at (i)&nbsp;persons who are outside the United Kingdom or
(ii)&nbsp;investment professionals falling within Article&nbsp;19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (iii)&nbsp;high net worth
entities, and other persons to whom it may lawfully be communicated, falling within Article&nbsp;49(2)(a) to (d)&nbsp;of the Order (all such persons together being referred to as "relevant
persons"). The securities are only available to and any invitation, offer or agreement to subscribe purchase or otherwise acquire such securities will be enjoyed in only with relevant persons. Any
person in the United Kingdom that is not a relevant persons should not act or rely on this document or any of its contents. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Australia  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>This prospectus is not a formal disclosure document and has not been lodged with the Australian Securities and Investments
Commission, or ASIC. It does not purport to contain all information that an investor or their professional advisers would expect to find in a prospectus for the purposes of Chapter&nbsp;6D.2 of the
Australian Corporations Act 2001, or the Act, in relation to the securities or our company. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>This
prospectus is not an offer to retail investors in Australia generally. Any offer of securities in Australia is made on the condition that the recipient is a "sophisticated investor" within the
meaning of section&nbsp;708(8) of the Act or a "professional investor" within the meaning of section&nbsp;708(11) of the Act, or on condition that the offer to that recipient can be brought within
the exemption for 'Small-Scale Offerings' (within the meaning of section&nbsp;708(1) of the Act). If any recipient does not satisfy the criteria for these exemptions, no applications for securities
will be accepted from that recipient. Any offer to a recipient in Australia any agreement arising from acceptance of the offer, is personal and may only he accepted by the recipient. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>If
a recipient on-sells their securities within 12&nbsp;months of their issue, that person will be required to lodge a disclosure document with ASIC unless
either: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the sale is pursuant to an offer received outside Australia or is made to a "sophisticated investor" within the meaning of
708(8) of the Act or a "professional investor" within the meaning of section&nbsp;708(11) of the Act; or </FONT></DD></DL>
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<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>it can be established that our company issued, and the recipient subscribed for, the securities without the purpose of the
recipient on-selling them or granting, issuing or transferring interests in, or options or warrants over them. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=3><B> Hong Kong  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The shares may not be offered or sold by means of any document other than (i)&nbsp;in circumstances which do not constitute an
offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), or (ii)&nbsp;to "professional investors" within the meaning of the Securities and Futures Ordinance
(Cap. 571, Laws of Hong Kong) and any rules made thereunder, or (iii)&nbsp;in other circumstances which do not result in the document being a "prospectus" within the meaning of the Companies
Ordinance (Cap. 32, Laws of Hong Kong) and no advertisement, invitation or document relating to the shares may be issued or may be in the possession of any person for the purpose of the issue (in each
case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of
Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning of the Securities and
Futures Ordinance (Cap. 571, Laws of Hong Kong) or any rules made thereunder. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> India  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>This prospectus has not been and will not be registered as a prospectus with the Registrar of Companies in India. This prospectus or
any other material relating to these securities may not be circulated or distributed, directly or indirectly, to the public or any members of the public in India. Further, persons into whose
possession this prospectus comes are required to inform themselves about and to observe any such restrictions. Each prospective investor is advised to consult its advisors about the particular
consequences to it of an investment in these securities. Each prospective investor is also advised that any investment in these securities by it is subject to the regulations prescribed by the Reserve
Bank of India and the Foreign Exchange Management Act and any regulations framed thereunder. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Japan  </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>No registration has been made under Article&nbsp;4, Paragraph&nbsp;1 of the Financial Instruments and Exchange Law of Japan (Law
No.&nbsp;25 of 1948, as amended), which we refer to as the FIEL, in relation to the offering of the shares. The shares are being offered in a private placement to up to 49 investors under
Article&nbsp;2, Paragraph&nbsp;3, Item&nbsp;2 iii of the FIEL. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Korea  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our securities may not be offered, sold and delivered directly or indirectly, or offered or sold to any person for reoffering or
resale, directly or indirectly, in Korea or to any resident of Korea except pursuant to the applicable laws and regulations of Korea, including the Securities and Exchange Act and the Foreign Exchange
Transaction Law and the decrees and regulations thereunder. Our securities have not been registered with the Financial Supervisory Commission of Korea for public offering in Korea. Furthermore, our
securities may not be resold to Korean residents unless the purchaser of our securities complies with all applicable regulatory </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>148</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>requirements
(including but not limited to government approval requirements under the Foreign Exchange Transaction Law and its subordinate decrees and regulations) in connection with the purchase of
our securities. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Singapore  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and
any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or
sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i)&nbsp;to an institutional investor under
Section&nbsp;274 of the
Securities and Futures Act, Chapter&nbsp;289 of Singapore (the "SFA"), (ii)&nbsp;to a relevant person, or any person pursuant to Section&nbsp;275 (1A), and in accordance with the conditions,
specified in Section&nbsp;275 of the SFA or (iii)&nbsp;otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Where
the shares are subscribed or purchased under Section&nbsp;275 by a relevant person which is: (a)&nbsp;a corporation (which is not an accredited investor) the sole business of which is to
hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b)&nbsp;a trust (where the trustee is not an accredited
investor) whose sole whole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the
beneficiaries' rights and interest in that trust shall not be transferable for six months after that corporation or that trust has acquired the shares under Section&nbsp;275 except: (i)&nbsp;to an
institutional investor under Section&nbsp;274 of the SFA or to a relevant person, or any person pursuant to Section&nbsp;275 (1A), and in accordance with the conditions, specified in
Section&nbsp;275 of the SEA; (ii)&nbsp;where no consideration is given for the transfer; or (iii)&nbsp;by operation of law. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>By
accepting this prospectus, the recipient hereof represents and warrants that he is entitled to receive it in accordance with the restrictions set forth above and agrees to be bound by limitations
contained herein. Any failure to comply with these limitations may constitute a violation of law. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>149</FONT></P>

<HR NOSHADE>
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<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="em76301_legal_matters"> </A>
<A NAME="toc_em76301_2"> </A>
<BR></FONT><FONT SIZE=4><B>  Legal matters  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The validity of the shares of common stock offered hereby will be passed upon for us by Goodwin Procter&nbsp;LLP, Menlo Park,
California. Certain members of, investment partnerships comprised of members of, and persons associated with, Goodwin Procter beneficially holds an aggregate of 186 shares of our common stock, which
represents less than 0.01% of our outstanding shares of common stock. Certain legal matters in connection with the offering will be passed upon for the underwriters by Wilson Sonsini Goodrich&nbsp;&amp;
Rosati, Professional Corporation, Washington, D.C. Certain members of and persons associated with Wilson Sonsini Goodrich &amp; Rosati, Professional Corporation, beneficially hold an
aggregate of 781 shares of our common stock, which represents less than 0.01% of our outstanding shares of common stock. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="em76301_experts"> </A>
<A NAME="toc_em76301_3"> </A>
<BR></FONT><FONT SIZE=4><B>  Experts  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The consolidated financial statements of CyOptics,&nbsp;Inc. as of December&nbsp;31, 2010 and 2009, and for each of the three
years in the period ended December&nbsp;31, 2010, appearing in this prospectus and the related registration statement have been audited by Ernst&nbsp;&amp; Young&nbsp;LLP, independent registered
public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and
auditing. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="em76301_where_you_can_find_more_information"> </A>
<A NAME="toc_em76301_4"> </A>
<BR></FONT><FONT SIZE=4><B>  Where you can find more information  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We have filed with the SEC a registration statement on Form&nbsp;S-1 under the Securities Act with respect to the
shares of common stock we are offering. The registration statement, including the attached exhibits and schedules, contains additional relevant information about us and our common stock. This
prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules thereto. The rules and regulations of the SEC allow us to omit from this
prospectus certain information included in the registration statement. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>For
further information about us and our common stock, you may inspect a copy of the registration statement and the exhibits and schedules to the registration statement without charge at the offices
of the SEC at 100&nbsp;F Street, N.E., Washington, D.C. 20549. You may obtain copies of all or any part of the registration statement from the Public Reference Section of the SEC, 100&nbsp;F
Street, N.E., Washington, D.C. 20549 upon the payment of the prescribed fees. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>You
may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a website at www.sec.gov that
contains reports, proxy and information statements and other information
regarding registrants like us that file electronically with the SEC. You can also inspect our registration statement on this website. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>150</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
NAME="FA76301A_main_toc"></A>
<A NAME="Consolidated_financial_statements"></A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="fa76301_cyoptics,_inc._consoli__fa702263"> </A></FONT> <FONT SIZE=4><B><BR>  CyOptics,&nbsp;Inc.  <BR>    <BR>    Consolidated financial statements  <BR>    <BR>    Contents  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>
<A NAME="FA76301_TOC"></A> </FONT></P>
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<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Page</B></FONT><BR></TH>
</TR>
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<TD COLSPAN=2 VALIGN="TOP" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Consolidated financial statements for the years ended December&nbsp;31, 2010, 2009 and 2008</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#fc76301_report_of_independent___fc702281"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Report of independent registered public accounting firm</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#fc76301_report_of_independent___fc702281"><FONT SIZE=2>F-2</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#fe76301_cyoptics,_inc._consolidated_balance_sheets"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Consolidated balance sheets</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#fe76301_cyoptics,_inc._consolidated_balance_sheets"><FONT SIZE=2><BR>
F-3</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#fg76301_cyoptics,_inc._consolidated_statements_of_operations"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Consolidated statements of
operations</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#fg76301_cyoptics,_inc._consolidated_statements_of_operations"><FONT SIZE=2><BR>
F-4</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#fi76301_cyoptics,_inc._consolidated_st__cyo04001"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Consolidated statements of convertible preferred stock and
stockholders' equity (deficit)</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#fi76301_cyoptics,_inc._consolidated_st__cyo04001"><FONT SIZE=2><BR>
F-5</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#fk76301_cyoptics,_inc._consolidated_statements_of_cash_flows"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Consolidated statements of cash
flows</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#fk76301_cyoptics,_inc._consolidated_statements_of_cash_flows"><FONT SIZE=2><BR>
F-6</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#fm76301_cyoptics,_inc._notes_to_consol__cyo04111"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Notes to consolidated financial statements</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#fm76301_cyoptics,_inc._notes_to_consol__cyo04111"><FONT SIZE=2><BR>
F-7</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:arial;"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Unaudited condensed consolidated financial statements for the three-months ended March&nbsp;31, 2011 and 2010</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#balance"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Condensed consolidated balance sheets</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#balance"><FONT SIZE=2><BR>
F-32</FONT></A></TD>
</TR>
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<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#fu76301_cyoptics,_inc._unaudited_conde__cyo02851"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Condensed consolidated statements of operations</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#fu76301_cyoptics,_inc._unaudited_conde__cyo02851"><FONT SIZE=2><BR>
F-33</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#fw76301_cyoptics,_inc._unaudited_conde__cyo04568"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Condensed consolidated statements of convertible preferred stock
and stockholders' equity (deficit)</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#fw76301_cyoptics,_inc._unaudited_conde__cyo04568"><FONT SIZE=2><BR>
F-34</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#fy76301_cyoptics,_inc._unaudited_conde__cyo02824"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Condensed consolidated statements of cash flows</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#fy76301_cyoptics,_inc._unaudited_conde__cyo02824"><FONT SIZE=2><BR>
F-35</FONT></A></TD>
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<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#ga76301_cyoptics,_inc._notes_to_unaudi__cyo04911"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Notes to condensed consolidated financial
statements</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#ga76301_cyoptics,_inc._notes_to_unaudi__cyo04911"><FONT SIZE=2><BR>
F-36</FONT></A></TD>
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<A HREF="#bg76301a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="fc76301_report_of_independent___fc702281"> </A>
<A NAME="toc_fc76301_1"> </A>
<BR></FONT><FONT SIZE=4><B>  Report of independent registered public accounting firm  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Board of Directors and Stockholders of CyOptics,&nbsp;Inc. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
have audited the accompanying consolidated balance sheets of CyOptics,&nbsp;Inc. as of December&nbsp;31, 2010 and 2009, and the related consolidated statements of operations, convertible
preferred stock and stockholders' equity (deficit), and cash flows for each of the three years in the period ended December&nbsp;31, 2010. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our
audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of CyOptics,&nbsp;Inc. as of December&nbsp;31, 2010 and
2009, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December&nbsp;31, 2010, in conformity with U.S. generally accepted accounting
principles. </FONT></P>
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<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2> /s/ Ernst&nbsp;&amp; Young&nbsp;LLP</FONT></TD>
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 <P style="font-family:arial;"><FONT SIZE=2>Philadelphia,
Pennsylvania<BR>
August&nbsp;12, 2011 </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-2</FONT></P>

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<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="fe76301_cyoptics,_inc._consolidated_balance_sheets"> </A>
<A NAME="toc_fe76301_1"> </A></FONT> <FONT SIZE=4><B><BR>  CyOptics,&nbsp;Inc.<BR>  Consolidated balance sheets  <BR>  </B></FONT></P>
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<TD WIDTH="61pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
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<TD COLSPAN=8 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
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<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>December&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(in thousands, except for share and per share data)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=8 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Assets</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current assets:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash and cash equivalents</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12,397</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,122</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Restricted cash</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>100</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accounts receivable, net of allowance for doubtful accounts of $77 and $87 at December&nbsp;31, 2010 and 2009, respectively</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>26,894</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>17,591</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Inventories, net</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>19,526</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>11,070</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Prepaid expenses and other current assets</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>892</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>995</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total current assets</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>59,809</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>38,778</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Property and equipment, net</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,337</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,245</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Intangible assets, net</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6,165</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,310</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Long-term restricted cash</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>100</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total assets</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>74,311</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>55,433</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Liabilities, convertible preferred stock, and stockholders' equity (deficit)</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current liabilities:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current portion of long-term loans</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>667</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>733</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current portion of related-party loan</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,283</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,217</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accounts payable</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>18,258</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,152</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accrued and other current liabilities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,623</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,044</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total current liabilities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>24,831</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>13,146</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Long-term liabilities:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Long-term loans</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>278</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>944</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Credit line</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10,200</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10,200</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Related-party loan</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>366</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,656</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Preferred stock warrant liability</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>239</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total liabilities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>35,914</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>25,946</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Commitments and contingencies</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Convertible preferred stock:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Convertible preferred stock, $0.001 par value per share, 11,061,237 shares authorized; 10,620,038 issued and outstanding (liquidation preference of
$210,733 at December&nbsp;31, 2010)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>122,958</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>122,958</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Stockholders' equity (deficit):</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Common stock, $0.001 par value per share, 14,807,692 shares authorized; 1,485,178 and 1,521,310 issued and outstanding at December&nbsp;31, 2010 and 2009,
 respectively</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Additional paid-in capital</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>45,114</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>45,092</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accumulated deficit</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(129,676</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(138,565</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total stockholders' equity (deficit)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(84,561</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(93,471</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total liabilities, convertible preferred stock and stockholders' equity (deficit)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>74,311</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>55,433</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=8 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><I> The accompanying notes are an integral part of these consolidated financial statements.  </I></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-3</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=156,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=127923,FOLIO='F-3',FILE='DISK104:[11ZCB1.11ZCB76301]FE76301A.;15',USER='JLAWRENA',CD='12-AUG-2011;12:34' -->
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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg76301a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="fg76301_cyoptics,_inc._consolidated_statements_of_operations"> </A>
<A NAME="toc_fg76301_1"> </A></FONT> <FONT SIZE=4><B><BR>  CyOptics,&nbsp;Inc.  <BR>    <BR>    Consolidated statements of operations  <BR>  </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="74pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=12 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=8 ROWSPAN=2 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Year ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ROWSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(in thousands, except for share and per share data)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2008</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=12 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total revenues</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>108,336</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>65,730</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>67,211</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cost of revenues</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>79,375</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>57,846</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>63,157</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Gross profit</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>28,961</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,884</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,054</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating expenses:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Research and development</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12,010</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>19,540</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>19,031</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sales and marketing</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,671</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,181</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,888</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>General and administrative</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,270</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,372</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,904</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Severance and liquidation expenses</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6,465</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Asset impairment</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6,621</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,841</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total operating expenses</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>17,951</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>43,179</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>38,664</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income (loss) from operations</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>11,010</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(35,295</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(34,610</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other (expense) income:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest expense, net</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(1,328</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(1,617</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(2,148</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other (expense) income, net</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(292</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,574</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,711</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total other income (expense)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(1,620</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(43</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,563</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income (loss) before provision for income taxes</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,390</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(35,338</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(32,047</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Provision for income taxes</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>501</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>128</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>177</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net income (loss)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,889</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(35,466</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(32,224</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net income attributable to common stockholders</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,115</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(35,466</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(32,224</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net income (loss) per common share:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Basic</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>0.73</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(23.74</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(22.68</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Diluted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>0.73</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(23.74</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(22.68</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Weighted average number of common shares:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Basic</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,519,124</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,494,124</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,420,786</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Diluted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,523,183</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,494,124</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,420,786</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=12 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><I> The accompanying notes are an integral part of these consolidated financial statements.  </I></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-4</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=157,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=788404,FOLIO='F-4',FILE='DISK104:[11ZCB1.11ZCB76301]FG76301A.;13',USER='JLAWRENA',CD='12-AUG-2011;12:34' -->
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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg76301a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="fi76301_cyoptics,_inc._consolidated_st__cyo04001"> </A>
<A NAME="toc_fi76301_1"> </A>
<BR></FONT><FONT SIZE=4><B>  CyOptics,&nbsp;Inc.<BR>  Consolidated statements of convertible preferred stock,<BR>  and stockholders' equity (deficit)  <BR>  </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:54%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT  style="font-size:8pt;line-height:9pt;">


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<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="150%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="7pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="4pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="61pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="4pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="61pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="4pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="44pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="4pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="37pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="4pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="47pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="4pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="58pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="4pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="67pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="4pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="39pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=27 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Convertible preferred stock </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=17 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Stockholders' equity (deficit) </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH ROWSPAN=4 style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=4 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Accumulated<BR>
other<BR>
comprehensive<BR>
income<BR>
(loss)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=5 ROWSPAN=2 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Preferred stock </B></FONT></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=5 ROWSPAN=2 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Common stock </B></FONT></TH>
<TH ROWSPAN=3 style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=3 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Additional<BR>
paid-in<BR>
capital</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Accumulated<BR>
deficit</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>(in thousands, except for share data)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Shares</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Amount</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Shares</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Amount</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Total</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=27 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:7pt;text-indent:-7pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Balance at January&nbsp;1, 2008</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">6,085,578</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">49,582</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,005,238</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">82,968</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(113,069</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(30,100</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:7pt;text-indent:-7pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Exercise of stock options</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">5,051</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">3</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">3</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:7pt;text-indent:-7pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Stock-based compensation expense</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">54</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">54</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:7pt;text-indent:-7pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Issuance of preferred stock</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">4,180,931</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">67,228</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:7pt;text-indent:-7pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Issuance of preferred stock as a result of debt conversion to equity</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">833,320</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">10,044</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:7pt;text-indent:-7pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Beneficial conversion feature on issuance of convertible debt</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">330</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">330</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:7pt;text-indent:-7pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Conversion of preferred stock in to common stock</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(479,791</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(3,896</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">479,791</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">3,896</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">3,896</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:7pt;text-indent:-7pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Comprehensive loss:</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:7pt;text-indent:-7pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Foreign currency translation adjustment</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(2,998</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(2,998</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:7pt;text-indent:-7pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Net loss</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(32,224</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(32,224</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:7pt;text-indent:-7pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Total comprehensive loss:</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(35,222</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=23 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:7pt;text-indent:-7pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Balance at December&nbsp;31, 2008</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">10,620,038</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">122,958</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,490,080</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">87,251</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(145,293</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(2,998</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(61,039</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:7pt;text-indent:-7pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Exercise of stock options</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">31,230</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">21</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">22</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:7pt;text-indent:-7pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Stock-based compensation expense</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">25</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">25</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:7pt;text-indent:-7pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Effect of deconsolidation of subsidiary</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(42,205</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">42,194</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">3,036</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">3,025</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:7pt;text-indent:-7pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Comprehensive loss:</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:7pt;text-indent:-7pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Foreign currency translation adjustment</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(38</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(38</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:7pt;text-indent:-7pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Net loss:</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(35,466</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(35,466</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:7pt;text-indent:-7pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Total comprehensive loss:</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(35,504</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=23 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:7pt;text-indent:-7pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Balance at December&nbsp;31, 2009</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">10,620,038</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">122,958</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,521,310</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">45,092</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(138,565</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(93,471</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:7pt;text-indent:-7pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Exercise of stock options</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">953</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:7pt;text-indent:-7pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Stock-based compensation expense</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">20</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">20</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:7pt;text-indent:-7pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Repurchase of common stock</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(37,085</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(1</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:7pt;text-indent:-7pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Net income and comprehensive income</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">8,889</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">8,889</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=23 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:7pt;text-indent:-7pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Balance at December&nbsp;31, 2010</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">10,620,038</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">122,958</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,485,178</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">45,114</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(129,676</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(84,561</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=27 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
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 <P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><I> The accompanying notes are an integral part of these consolidated financial statements.  </I></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-5</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg76301a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="fk76301_cyoptics,_inc._consolidated_statements_of_cash_flows"> </A>
<A NAME="toc_fk76301_1"> </A></FONT> <FONT SIZE=4><B><BR>  CyOptics,&nbsp;Inc.  <BR>    <BR>    Consolidated statements of cash flows  <BR>  </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="54pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="54pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=12 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Year ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(in thousands)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2008</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=12 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Cash flows from operating activities</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net income (loss)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,889</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(35,466</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(32,224</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Depreciation and amortization</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,976</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,554</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6,971</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Acquired in-process research and development</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>510</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Stock based compensation expense</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>20</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>25</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>54</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other non-cash expense</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>42</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Preferred stock warrant expense</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>239</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>(Gain) loss on disposal of property and equipment</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(68</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>37</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(8</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Non-cash interest on long term loans</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>149</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>149</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>149</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Asset impairment charges</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6,621</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,841</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>(Recovery) provision for excess and obsolete inventory</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(150</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>923</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,048</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Changes in assets and liabilities:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>(Increase) in accounts receivable, net</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(9,303</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(5,588</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(2,638</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>(Increase) decrease in inventory</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(8,306</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,625</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(3,537</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Decrease (increase) in other current assets</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>103</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,281</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(3,302</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Increase (decrease) in accounts payable</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>11,106</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(1,846</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(352</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Increase (decrease) in accrued and other current liabilities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>578</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,919</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(730</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash provided by (used in) operating activities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,233</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(14,766</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(23,176</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Cash flows from investing activities</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Proceeds from sale of property and equipment</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>73</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>114</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Purchase of property and equipment</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(2,927</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(3,451</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(1,839</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash acquired in PGT Photonics acquisition</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>28,111</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash used in dissolution of PGT Photonics</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(6,906</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Change in restricted cash</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,502</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash (used in) provided by investing activities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(2,854</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(10,338</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>27,888</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Cash flows from financing activities</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Proceeds from long-term debt and credit line</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>16,673</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Payments on revolving credit facility and long-term debt</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(2,105</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(1,685</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(8,339</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Proceeds from exercise of stock options</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>21</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Proceeds from issuance of preferred stock</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>20,037</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash (used in) provided by financing activities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(2,104</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(1,664</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>28,374</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Effect of exchange rates on cash</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(39</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(3,190</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net increase (decrease) in cash and cash equivalents</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,275</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(26,807</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>29,896</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash and cash equivalents at beginning of year</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,122</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>35,929</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6,033</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash and cash equivalents at end of year</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12,397</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,122</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>35,929</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Supplemental cash flow information</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash paid for interest</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,223</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,580</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,251</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash paid for income taxes</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>173</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>128</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>177</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=12 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><I> The accompanying notes are an integral part of these consolidated financial statements.  </I></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-6</FONT></P>

<HR NOSHADE>
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NAME="page_fm76301_1_7"> </A>


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</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg76301a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="fm76301_cyoptics,_inc._notes_to_consol__cyo04111"> </A>
<A NAME="toc_fm76301_1"> </A>
<BR></FONT><FONT SIZE=4><B>  CyOptics,&nbsp;Inc.<BR>  Notes to consolidated financial statements<BR>  (in thousands, except for share and per share data)  <BR>  </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=3><B>(1)&nbsp;&nbsp;&nbsp;Description of business  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>CyOptics&nbsp;Inc. (the Company) was incorporated in January 1999 under the laws of the State of Delaware. The Company is a platform-based provider of core
optical technologies enabling
bandwith for high-speed networks. The Company serves customers on a global basis. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
Company has expanded its operations through a number of acquisitions in recent years. PGT Photonics&nbsp;S.p.A. (PGT) was acquired on July&nbsp;24, 2008. This operation was based in Italy and
supported the design, manufacture and sale of optical components, modules and systems. CyOptics International Holding&nbsp;Co. and CyOptics International Holding&nbsp;LLC were formed in 2005 to
acquire the entire equity interest in the Company's operations in Matamoros, Mexico, CyOptics de Mexico. This operation supports the Company's assembly and test manufacturing operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
board of directors of PGT approved the dissolution of PGT effective September&nbsp;22, 2009. For further discussion of the PGT dissolution, see Note&nbsp;3 of these consolidated financial
statements. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B>(2)&nbsp;&nbsp;&nbsp;Significant accounting policies  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Basis of presentation  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All material intercompany
balances and transactions have been eliminated. Due to dissolution proceedings commenced on September&nbsp;22, 2009, PGT was deconsolidated from the Company's consolidated financial statements
effective September&nbsp;22, 2009. As such, the consolidated balance sheets as of December&nbsp;31, 2010 and 2009, and the consolidated statements of operations, statements of convertible
preferred stock and stockholders' equity (deficit), and cash flows for the years ended December&nbsp;31, 2010 and 2009, do not consolidate the financial statements of PGT after commencement of
dissolution. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Use of estimates  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>On
an ongoing basis, the Company evaluates its estimates, including those related to the accounts receivable allowance, the reserve for excess and obsolete inventory, the warranty reserve, the useful
lives of long-lived assets and other intangible assets, the value of common stock and assumptions used for the purpose of determining stock-based compensation, the value of Preferred stock
warrants, and income taxes, among others. The Company bases its </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-7</FONT></P>

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<P style='font-family:arial;page-break-before:always'></p>
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<A NAME="page_fm76301_1_8"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:arial;"><FONT SIZE=2>estimates
on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying value of assets and
liabilities as well as reported revenue and expenses during the periods presented. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Foreign currency translation  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>For operations in Mexico, the functional currency is the U.S. dollar. Assets and liabilities of those operations are translated into U.S. dollars
using year-end exchange rates; income and expenses are translated using the average exchange rates for the reporting period. Translation adjustments for the operations in Mexico are
included in other (expense) income and were immaterial for all years presented. Realized foreign currency transaction gains and losses are included in other (expense) income and were immaterial for
all years presented. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>For
PGT operations in Italy, the functional currency was the euro. Income and expenses were translated using the average exchange rates for the year ended December&nbsp;31, 2008 and for the
period ended September&nbsp;22, 2009. Translation adjustments were included in stockholders' equity (deficit) as other comprehensive income (loss). </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> Cash and cash equivalents  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Company considers all highly liquid investments having an original maturity of three months or less when purchased to be cash equivalents. The
Company maintains deposits with financial institutions, the balances of which from time to time exceed the federally insured amount. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Fair value of financial instruments  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The estimated fair value of financial instruments has been determined by the Company using available market information and valuation methodologies.
Considerable judgment is required in estimating fair values. Accordingly, the estimates may not be indicative of the amounts the Company could realize in a current market exchange. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>The
carrying amounts of cash and cash equivalents, accounts receivable, other current assets, accounts payable, and accrued expenses approximate their fair values due to the short-term
maturity of these instruments. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
carrying amounts of the Company's long-term liabilities approximate their fair value because the interest rate is reflective of rates that the Company could currently obtain on debt
with similar terms and conditions. The carrying value of the Preferred stock warrant liability is the estimated fair value of the liability (Note&nbsp;7). </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Accounts receivable  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Company makes estimates regarding the collectability of accounts receivable. When the Company evaluates the adequacy of its allowance for
doubtful accounts, it considers multiple factors, including historical write-off experience, the need for specific customer reserves, the aging of receivables, customer creditworthiness
and changes in customer payment cycles. Historically, the allowance for doubtful accounts has been adequate based on actual results. If any of the factors used to calculate the allowance for doubtful
accounts change or if the allowance does not reflect the Company's future ability to collect outstanding receivables, additional provisions for doubtful accounts may be needed, and future results of
operations could be materially affected. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-8</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
following table summarizes the changes in the Company's allowance for doubtful accounts for the period indicated: </FONT></P>
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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="30pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="30pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="30pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Year ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2008</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Balance at the beginning of the period</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>87</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>86</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>70</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Amounts to expense</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>10</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>41</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accounts written off</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(10</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(9</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(25</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Balance at the end of the period</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>77</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>87</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>86</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
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 <P style="font-family:arial;"><FONT SIZE=2><B> Inventory  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method. Inventory
reserves are provided to cover risks arising from slow-moving items, technological obsolescence, and excess inventories according to revenue forecasts. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> Concentration of credit risk  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, and
trade receivables. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Cash
and cash equivalents are invested in major financial institutions in the United States and Mexico. Such deposits in the United States may be in excess of insured limits and are not insured in
other jurisdictions. Management believes that the financial institutions that hold the Company's investments are financially sound and, accordingly, minimal credit risk exists with respect to these
investments. Concentration of credit risk with respect to trade accounts receivable exists due to the significance of several large telecommunication industry customers. Five customers make up 60% and
57% of trade receivables as of December&nbsp;31, 2010 and 2009, respectively. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
Company has no foreign exchange contracts, option contracts, or other hedging arrangements. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
Company's operations in Matamoros, Mexico, CyOptics de Mexico, currently operate under a collective bargaining agreement, with an effective date of January&nbsp;10 of each year. 65% of the labor
force is covered by this collective bargaining agreement, which will expire within one year. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Customer, product and supplier concentration</I></FONT><FONT SIZE=2>&#151;The Company primarily sells its products directly to module manufacturers and systems providers, including original
equipment manufacturers (OEMs). During the years ended December&nbsp;31, 2010, and 2009, there was one customer who accounted for 15.3% and 16.6% of the Company's total revenues, respectively.
During the year ended December&nbsp;31, 2008, there were two customers who, combined, represented 22.6% of total revenues. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-9</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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<A NAME="page_fm76301_1_10"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
Company derives a majority of its total revenues from a limited number of products. Products that accounted for 10% or more of our total revenues during the years ended December&nbsp;31 were as
follows: </FONT></P>
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<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="36pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="36pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="36pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2008</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Devices</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>35%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>38%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>41%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Small Form Factor Components</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>28%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>22%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>18%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Large Form Factor Components</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>19%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>27%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>41%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Components on Board</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>11%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>11%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>The Company obtains a number of components from single source suppliers due to technology, availability, price, quality or other considerations. The loss of a
single source supplier, the deterioration of its relationship with a single source supplier, or any unilateral modification to
the contractual terms under which the Company is supplied components by a single source supplier could adversely affect the Company's total revenues and gross margins. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> Property and equipment  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Property and equipment are stated at cost, net of accumulated depreciation. Maintenance and repairs are expensed as incurred. Depreciation is
calculated using the straight-line method over the estimated useful lives of the assets at the following annual rates: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


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<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="48%" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="48%" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Computers and related equipment</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>3&nbsp;years</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Office and lab furniture</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>5 to 10&nbsp;years</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equipment and machinery</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>5 to 10&nbsp;years</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Vehicles</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>4 to 5&nbsp;years</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Leasehold improvements</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Over the shorter of term of the lease or the life of the assets</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>Upon retirement or other disposition of property and equipment, the applicable cost and accumulated depreciation are removed from the accounts and any resulting
gains or losses are included in the results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Impairment of long-lived assets  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Company's long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be
generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of
the assets. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
September 2009, prior to dissolution of PGT, an asset impairment charge of $6,621 was recognized for the impairment of PGT property and equipment, inventory, and receivables. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
Company recognized an impairment charge of $2,320 related to certain of the acquired assets of PGT. This amount includes a $530 impairment charge related to property and
equipment, and a $1,790 impairment charge related to intangible assets associated with the Company's 2008 acquisition of PGT. Refer to Footnote 3 for further details. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-10</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Intangible assets  </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>The Company amortizes intangible assets on a straight line basis over their estimated useful lives, generally as follows: four to nine years for
technology, six to ten years for customer relationships, and one to five years for other intangible assets. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Revenue recognition  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Company generates revenues principally from the sale of hardware products to customers. Revenues from product sales are recognized when delivery
has occurred, persuasive evidence of an agreement exists, the vendor's fee is fixed or determinable, no further obligation exists, and collectability is reasonably assured. Delivery is generally
considered to have occurred upon shipment of products. Contracts and/or customer purchase orders are used to determine the existence of an arrangement. The Company assesses whether the price is fixed
or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. The Company generally does not grant a right of return to its
customers. In transactions where a customer's contractual terms include a provision for customer acceptance, revenues are recognized either when such acceptance has been obtained or the acceptance
provision has lapsed. The Company assesses collectability based primarily on the creditworthiness of the customer as determined by credit checks and the customer's payment history. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
Company bears all costs and risks of loss or damage to the goods up to the point that revenue is recognized. Our terms of sale generally provide that title passes to the buyer upon shipment by us.
Amounts billed to clients for shipping and handling of products are classified as total revenues in the consolidated statements of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Product warranties  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>For the majority of the Company's products, a product warranty is provided for one year or less from date of shipment. The Company estimates the
costs of its warranty obligations based on its historical experience and expectations and expected future conditions. To the extent the Company experiences increased warranty claim activity or
increased costs associated with servicing those claims, the Company's warranty costs will increase resulting in decreases to gross profit. The Company periodically assesses the adequacy of its
recorded warranty liabilities and adjusts the amounts as necessary. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
following table summarizes the changes in the Company's warranty reserves for the period indicated: </FONT></P>
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<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="36pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="32pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="32pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Year ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2008</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Balance at the beginning of the period</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>310</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>171</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>72</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Warranty accruals</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>139</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>99</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Settlements and adjustments</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(161</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Balance at the end of the period</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>149</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>310</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>171</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2><B> Research and development  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Research and development activities are generally charged to operations as incurred. Property and equipment that are acquired or constructed for
research and development activities and </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-11</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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<A NAME="page_fm76301_1_12"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:arial;"><FONT SIZE=2>that
have alternate future uses are capitalized and depreciated over their estimated useful lives on a straight-line basis. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
September 2007, the Company entered into a three-year cooperative agreement with the U.S. Department of Commerce as part of its Advanced Technology Program ("ATP"). The ATP award
provided three years of partial funding to jointly develop with another supplier next generation technology. Funding amounts received from ATP were $706, $1,326 and $1,062 for the years ended
December&nbsp;31, 2010, 2009 and 2008, respectively, and were treated as research and development cost recovery (contra-expense) by the Company. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> Advertising  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Advertising costs are expensed as incurred and, to date, have not been significant. Advertising costs include direct marketing, events, public
relations, sales collateral materials and partner programs. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Income taxes  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting bases and the tax bases of assets
and liabilities. Deferred tax assets are also recognized for tax net operating loss carryforwards. These deferred tax assets and liabilities are measured using the enacted tax rates and laws that will
be in effect when such amounts are expected to reverse or be utilized. The realization of
total deferred tax assets is contingent upon the generation of future taxable income. Valuation allowances are provided to reduce such deferred tax assets to amounts more likely than not to be
ultimately realized. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
Company uses a more-likely-than-not recognition threshold based on the technical merits of tax positions taken. Tax positions that meet the
more-likely-than-not recognition threshold are measured as the largest amount of the tax benefits, determined on a cumulative probability basis, which is more
likely than not to be realized upon ultimate settlement. The Company recognizes interest and penalties related to income tax matters in income tax expense. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> Stock-based compensation  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Company recognizes the cost of stock-based compensation to employees, including grants of employee stock options, in the consolidated statement
of operations based on fair value of those awards at the date of grant over the requisite service period. The Company uses the Black-Scholes option pricing model to determine the fair value of the
stock-based compensation awards. The estimated fair value of stock-based compensation awards on the date of grant is amortized on a straight-line basis over the requisite service period.
Stock-based compensation expense totaled $20, $25 and $54 for the years ended December&nbsp;31, 2010, 2009 and 2008, respectively. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> Net income (loss) per common share  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Company uses the two-class method to compute net income (loss) per common share because the Company has issued securities, other than
common stock, that contractually entitle the holders to participate in dividends and earnings of the Company. The two class method requires earnings for the period to be allocated between common and
participating securities based upon their respective rights to receive distributed and undistributed earnings. The Company's Series&nbsp;A, Series&nbsp;B, Series&nbsp;B-1,
Series&nbsp;B-2, Series&nbsp;B-3, Series&nbsp;C, Series&nbsp;C-1, Series&nbsp;E, Series&nbsp;F, Series&nbsp;F-1 and
Series&nbsp;F-2 preferred stock (hereinafter referred to as "Preferred Stock") </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-12</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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<A NAME="page_fm76301_1_13"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:arial;"><FONT SIZE=2>are
each entitled to participate in distributions that are made to common stock shareholders on an as converted basis, when and if declared by the Board of Directors. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>For
periods with net income, net income per common share information is computed using the two-class method. Under the two-class method, basic net income per common share is
computed by dividing the net income attributable to common stockholders by the weighted average number of shares of Common stock outstanding during the period. Basic net income attributable to common
stockholders is computed by subtracting from net income the portion of current year earnings that the Preferred shareholders would have been entitled to receive pursuant to their dividend rights had
all of the year's earnings been distributed. No such adjustment to earnings is made during periods with a net loss, as the holders of the convertible Preferred shares have no obligation to fund
losses. Diluted net income (loss) per common share is computed under the two class method by using the weighted-average number of shares of Common stock outstanding, plus, for periods with net income
attributable to common stock, the potential dilutive effects of stock options and warrants. In addition, the Company analyzes the potential dilutive effect of the outstanding Preferred stock under the
"if-converted" method when calculating diluted earnings per share, in which it is assumed that the outstanding Preferred stock converts into Common stock at the beginning of the period.
The Company reports the more dilutive of the approaches (two class or "if-converted") as their diluted net income per share during the period. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-13</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
following table sets forth the computation of basic and diluted net income (loss) per share for the periods indicated: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:73%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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<DIV ALIGN="CENTER"><TABLE width="110%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="74pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="74pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=13 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Year ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2008</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010<BR>
(Pro forma)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="BOTTOM">
<TH COLSPAN=13 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TH>
<TH style="font-family:arial;">&nbsp;</TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>(unaudited)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B><I>Basic net income (loss) per common share calculation:</I></B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net income (loss)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,889</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(35,466</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(32,224</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,889</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Less: Undistributed earnings allocated to participating securities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(7,774</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Plus: Charges related to preferred stock warrant liability</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>239</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=11 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net income (loss) attributable to common shareholders&#151;basic</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,115</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(35,466</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(32,224</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,128</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Basic weighted average common shares</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,519,124</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,494,124</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,420,786</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12,370,295</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=11 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Basic net income (loss) per share</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>0.73</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(23.74</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(22.68</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>0.74</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=11 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B><I>Diluted net income (loss) per common share calculation:</I></B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net income (loss)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,889</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(35,466</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(32,224</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,889</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Less: Undistributed earnings allocated to participating securities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(7,774</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Plus: Charges related to preferred stock warrant liability</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>239</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=11 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net income (loss) attributable to common shareholders&#151;diluted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,115</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(35,466</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(32,224</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,128</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Weighted average shares used to compute basic net income (loss) per share</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,519,124</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,494,124</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,420,786</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12,370,295</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Effect of potentially dilutive securities:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Employee stock options</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,059</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,059</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Weighted average shares used to compute diluted net income per share</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,523,183</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,494,124</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,420,786</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12,374,354</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=11 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Diluted net income (loss) per share</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>0.73</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(23.74</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(22.68</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>0.74</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=13 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>For the year ended December&nbsp;31, 2010, the Company presented diluted net income per common share using the two-class method, which results in the same diluted net
income per share value as calculated using the "if-converted" method. For the years ended December&nbsp;31, 2009 and 2008 in which we reported net losses, there is no dilutive effect
under either the two-class or "if-converted" method. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Diluted
net (loss) income per share for the years presented do not reflect the following potential common shares, as the effect would be antidilutive: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="60pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="78pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=13 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>December&nbsp;31, </B></FONT></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Pro forma<BR>
December&nbsp;31,<BR>
2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2008</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="BOTTOM">
<TH COLSPAN=13 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TH>
<TH style="font-family:arial;">&nbsp;</TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>(unaudited)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Stock options and warrants</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>410,302</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>442,351</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>486,731</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>410,302</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Convertible preferred stock</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>10,620,038</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>7,882,879</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=11 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>410,302</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>11,062,389</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>8,369,610</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>410,302</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=13 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-14</FONT></P>

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<A HREF="#bg76301a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The unaudited pro forma net income per share is computed using the weighted-average number of shares of Common stock outstanding and assumes the conversion of all outstanding
shares of Preferred stock into an aggregate of 10,851,171 shares of Common stock upon completion of the Company's planned initial public offering (IPO), as if such conversion had occurred at the
beginning of the period. The pro forma effect of the conversion of the Preferred shares is higher than the Preferred shares outstanding during the period, as the Series&nbsp;B-1 Preferred shares
convert into Common shares at a ratio of one to 1.16 upon an IPO. In addition, pro forma net income per share assumes that the Preferred stock warrants have been automatically converted to Common
stock warrants at the beginning of the period. Accordingly, the amounts recorded to mark the Preferred stock warrants to market have been added back to net income to arrive at net income attributable
to common shares&#151;pro forma. The Company believes the unaudited pro forma net income per share provides material information to investors, as the conversion of the Company's Preferred stock
to Common stock is expected to occur upon the closing of an IPO and the Preferred stock warrants will be converted to Common stock warrants upon the closing of an IPO, and therefore the disclosure of
pro forma net income per share thus provides a measure of net income per share that is comparable to what will be reported by the Company as a public company. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> Reverse stock split  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>During the quarter ended March&nbsp;31, 2011, the Company effected a 1:52 reverse stock split of its Common stock and Preferred stock. All shares,
stock options, warrants to purchase common stock and per share information presented in the consolidated financial statements have been adjusted to reflect the reverse stock split on a retroactive
basis for all periods presented. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Recent Accounting Pronouncements  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In January 2010, the Financial Accounting Standards Board ("FASB") issued updated guidance related to fair value measurements and
disclosures, which requires a reporting entity to disclose separately the amounts of significant transfers in and out of Level&nbsp;1 and Level&nbsp;2 fair value measurements and to describe the
reasons for the transfers. In addition, in the reconciliation for fair value measurements using significant unobservable inputs, or Level&nbsp;3, a reporting entity should disclose separately
information about purchases, sales, issuances, and settlements (that is, on a gross basis rather than on a net basis). The updated guidance also requires that an entity should provide fair value
measurement disclosures for each class of assets and liabilities and disclosures about the valuation techniques and inputs used to measure fair value for both recurring and non-recurring
fair value measurements for Level&nbsp;2 and Level&nbsp;3 fair value measurements. The updated guidance is effective for interim or annual financial reporting periods beginning after
December&nbsp;15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll-forward activity in Level&nbsp;3 fair value measurements, which are
effective for fiscal years beginning after December&nbsp;15, 2010 and for interim periods within those fiscal years. The Company adopted the updated guidance in the first quarter of 2010, and the
impact on the consolidated financial statements was not material. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B>(3)&nbsp;&nbsp;&nbsp;Acquisition and dissolution of PGT Photonics,&nbsp;S.p.A.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>On July&nbsp;24, 2008, the Company purchased PGT for an aggregate purchase price of $47,729. The acquisition was accounted for using the purchase method of
accounting and accordingly, the </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-15</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
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<BR>

<P style="font-family:arial;"><FONT SIZE=2>purchase
price has been allocated to the assets acquired and the liabilities assumed, based on their estimated fair values at the date of acquisition. Based upon the valuation of the tangible and
intangible acquired assets and assumed liabilities, the Company allocated the total cost of the acquisition as of July&nbsp;24, 2008 as follows: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=6 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Assets acquired</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current assets (including cash of $28,111)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>38,670</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Property and equipment</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>15,200</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Intangible assets:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>In-process research and development</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>510</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Customer relationships</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4,980</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current technology</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4,300</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Trade name</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>200</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Goodwill</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>7,356</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total assets acquired</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>71,217</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current liabilities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>23,488</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net assets acquired</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>47,729</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=6 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>As of December&nbsp;31, 2008, due to the deterioration and continued uncertainty of the overall economic and industry conditions, the Company's annual
impairment test for goodwill determined that the fair value of the Company was less than its carrying value, and the Company concluded that goodwill was impaired, resulting in a goodwill impairment
charge of $7,521 during 2008. In addition, the Company recognized an impairment charge of $2,320 during 2008 related to certain property and equipment and intangible assets associated with PGT. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>In
September 2009, the Company commenced dissolution of PGT. The Company synergized certain products, technology development and manufacturing infrastructure into its ongoing operations. A liquidator
was assigned to settle PGT claims with the remaining PGT assets. The assignment of the liquidator effectively marked the Company's loss of control of PGT. As a result of this loss of control, the
Company was required to deconsolidate the subsidiary. Due to the Italian liquidation of PGT, the Company retained no interest with value in PGT. While the Company believes it has satisfied all
outstanding PGT-related liabilities and has no material continuing obligations or commitments to PGT, it is possible that the Company may be subject to liabilities which, if substantial, could harm
operating results. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>During
the third quarter of 2009, an asset impairment charge of $6,621 was recorded related to the impairment of certain property and equipment, inventory and receivables of PGT. Also in 2009, prior
to deconsolidation, PGT incurred expenses totaling $6,465 related to severance and liquidation expenses incurred related to the down-sizing and dissolution of PGT. There were no assets and liabilities
of PGT presented in the consolidated balance sheet as of December&nbsp;31, 2010 or 2009. Included in the Company's consolidated statement of operations for 2009 and 2008 were revenues of $3,384 and
$3,487 and a net loss of $(24,747) and $(17,447), respectively, for PGT, including impairment charges. The Company's consolidated statement of cash flows for 2009 reflects the use of cash in the
amount of $14,855 related to PGT, including $6,906 in support of severance and liquidation activities. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-16</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=2,SEQ=169,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=1038620,FOLIO='F-16',FILE='DISK104:[11ZCB1.11ZCB76301]FO76301A.;43',USER='OALBERT',CD='12-AUG-2011;12:01' -->
<A NAME="page_fo76301_1_17"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>PGT
has not been classified as a discontinued operation within the consolidated financial statements due to the migration of significant cash flows to the Company's ongoing operations. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=3><B>(4)&nbsp;&nbsp;&nbsp;Inventories  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following is a summary of inventories, net: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>December&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Raw materials</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>9,359</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>6,621</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Work in progress</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>9,707</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>5,644</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Finished products</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,972</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3,457</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Reserve for excess and obsolete inventory</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(2,512</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(4,652</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>19,526</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>11,070</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>The following table summarizes the changes in the Company's inventory reserves for excess and obsolete inventory for the period indicated: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="46pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="42pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="46pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Year ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2008</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Balance at the beginning of the period</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4,652</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4,111</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4,664</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Amounts to recover (expense)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(150</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>923</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,048</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Amounts written off</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(1,990</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(382</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(2,601</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Balance at the end of the period</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,512</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4,652</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4,111</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=3><B>(5)&nbsp;&nbsp;&nbsp;Property and equipment  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following is a summary of property and equipment, net: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="54pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="54pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>December&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Computers and related equipment</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>903</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>736</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Office and lab furniture</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>893</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>893</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equipment and machinery</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>21,809</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>18,970</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Vehicles</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>20</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>20</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Leasehold improvements</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>724</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>718</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Construction in progress</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,176</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,323</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>26,525</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>23,660</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Less accumulated depreciation</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(18,188</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(15,415</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>8,337</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>8,245</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>Depreciation expense totaled $2,831, $6,034 and $4,980 for the years ended December&nbsp;31, 2010, 2009 and 2008, respectively. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-17</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>

<!-- ZEQ.=3,SEQ=170,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=133066,FOLIO='F-17',FILE='DISK104:[11ZCB1.11ZCB76301]FO76301A.;43',USER='OALBERT',CD='12-AUG-2011;12:01' -->
<A NAME="page_fo76301_1_18"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B>(6)&nbsp;&nbsp;&nbsp;Intangible assets  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Intangible assets consist of the following: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:54%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"150%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="150%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="73pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="46pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="73pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="46pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=19 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>December&nbsp;31, 2010 </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>December&nbsp;31, 2009 </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Gross<BR>
amount</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Accumulated<BR>
amortization</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Net<BR>
amount</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Gross<BR>
amount</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Accumulated<BR>
amortization</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Net<BR>
amount</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=19 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Technology</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B> $</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B>8,829</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B>$</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B>(5,675</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B>)</B></FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B>$</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B>3,154</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>8,829</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(4,153</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4,676</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Customer relationships</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B> 4,826</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B>(1,815</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B>)</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B>3,011</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4,826</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(1,192</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3,634</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B> 944</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B>(944</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B>)</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B>&#151;</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>944</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(944</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=17 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B> $</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B>14,599</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B>$</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B>(8,434</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B>)</B></FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B>$</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B>6,165</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>14,599</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(6,289</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>8,310</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=19 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>Amortization expense amounted to $2,145, $2,520 and $1,991 for the years ended December&nbsp;31, 2010, 2009 and 2008, respectively. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
following represents the Company's expected amortization expense for the years ending December&nbsp;31: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="42pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=4 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2011</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,233</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2012</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,079</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2013</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,079</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2014</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,079</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2015</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>844</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Thereafter</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>851</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>6,165</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=4 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P style="font-family:arial;"><FONT SIZE=3><B>(7)&nbsp;&nbsp;&nbsp;Fair value measurements  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or
most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. The Company evaluates the fair value of certain
assets and liabilities using the following fair value hierarchy which ranks the quality and reliability of inputs, or assumptions, used in the determination of fair value: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Level&nbsp;1&#151;quoted prices in active markets for identical assets and liabilities </FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Level&nbsp;2&#151;inputs other than
Level&nbsp;1 quoted prices that are directly or indirectly observable </FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Level&nbsp;3&#151;unobservable inputs that are not corroborated by market data
 </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>The
Company evaluates assets and liabilities subject to fair value measurements on a recurring and nonrecurring basis to determine the appropriate level to classify them for each reporting period.
This determination requires significant judgments to be made by the Company. The </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-18</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=4,SEQ=171,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=608815,FOLIO='F-18',FILE='DISK104:[11ZCB1.11ZCB76301]FO76301A.;43',USER='OALBERT',CD='12-AUG-2011;12:01' -->
<A NAME="page_fo76301_1_19"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:arial;"><FONT SIZE=2>following
table sets forth the Company's assets and liabilities that were measured at fair value on a recurring basis as of December&nbsp;31, 2010 and 2009, by level within the fair value hierarchy: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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 </FONT></P>

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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="42pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="42pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="42pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=13 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=8 ROWSPAN=2 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Fair value<BR>
measurement<BR>
using </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Amounts at<BR>
fair value</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Level&nbsp;1</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Level&nbsp;2</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Level&nbsp;3</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=13 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>As of December&nbsp;31, 2010</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Assets</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Money market funds</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,047</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,047</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Liabilities</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Preferred stock warrant liability</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>239</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>239</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>As of December&nbsp;31, 2009</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Assets</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Money market funds</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4,048</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4,048</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Liabilities</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Preferred stock warrant liability</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=13 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>The carrying amounts of the Company's long-term liabilities approximate their fair value because the interest rate is reflective of rates that the
Company could currently obtain on debt with similar terms and conditions. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
Preferred stock warrants are classified as liabilities in the accompanying balance sheets as the warrant entitles the holder to purchase Preferred stock which is considered contingently
redeemable. The fair value of the Preferred stock warrant liability is based on Level&nbsp;3 inputs. The Company's estimate of the fair value of its Preferred stock warrant liability was determined
by utilizing a Black-Scholes based option pricing model, which considered the estimated fair value of these preferred stock warrants in both an IPO scenario, in which the warrants have attributes of
Common stock warrants and a merger and acquisitions scenario, in which the warrants have attributes of Preferred stock warrants. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As
of December&nbsp;31, 2010, the fair value of the Preferred stock warrants was $239. At December&nbsp;31, 2009, the fair value of the Preferred stock warrants was de minimis. For the year ended
December&nbsp;31, 2010, the Company recorded a charge for $239 in other expenses to recognize the change in the fair value of the Preferred stock warrants. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=3><B>(8)&nbsp;&nbsp;&nbsp;Accrued and other current liabilities  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Accrued and other current liabilities consist of the following: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="42pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="42pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>December&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Employee related</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,939</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,602</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deferred revenue</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>583</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,722</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other accrued liabilities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,101</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>720</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4,623</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4,044</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-19</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=5,SEQ=172,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=293589,FOLIO='F-19',FILE='DISK104:[11ZCB1.11ZCB76301]FO76301A.;43',USER='OALBERT',CD='12-AUG-2011;12:01' -->
<A NAME="page_fo76301_1_20"> </A>


<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=3><B>(9)&nbsp;&nbsp;&nbsp;Borrowings  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Company's borrowings consist of the following: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:57%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="140%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="139pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="139pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=11 style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=3 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Interest rate % </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>December&nbsp;31 </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=11 style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Credit line</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2> Greater of Bank Prime&nbsp;+&nbsp;1.5% or 6.5%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2> Greater of Bank Prime&nbsp;+&nbsp;1.5% or 6.5%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><B> $</B></FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>10,200</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2> $</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10,200</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Long-term loan</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2> Greater of Bank Prime&nbsp;+&nbsp;1.5% or 7.5%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2> Greater of Bank Prime&nbsp;+&nbsp;1.5% or 7.5%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B> 945</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> 1,611</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Long-term loan</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2> 6%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2> 6%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B> &#151;</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> 66</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Related-party long-term loan</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2> Lesser of 1&nbsp;year LIBOR&nbsp;+&nbsp;3% or 8.5%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2> Lesser of 1&nbsp;year LIBOR&nbsp;+&nbsp;3% or 8.5%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B> 1,798</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> 3,170</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD style="font-family:arial;">&nbsp;</TD>
<TD style="font-family:arial;">&nbsp;</TD>
<TD style="font-family:arial;">&nbsp;</TD>
<TD style="font-family:arial;">&nbsp;</TD>
<TD style="font-family:arial;">&nbsp;</TD>
<TD style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total borrowings</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B> 12,943</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> 15,047</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Less current portion</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B> (1,950</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><B>)</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> (1,950</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Less unaccreted discounts</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B> (149</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><B>)</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> (297</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD style="font-family:arial;">&nbsp;</TD>
<TD style="font-family:arial;">&nbsp;</TD>
<TD style="font-family:arial;">&nbsp;</TD>
<TD style="font-family:arial;">&nbsp;</TD>
<TD style="font-family:arial;">&nbsp;</TD>
<TD style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Noncurrent portion</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><B> $</B></FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>10,844</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2> $</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12,800</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=11 style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>In May 2008, the Company entered into a loan and security agreement with Silicon Valley Bank that includes a revolving credit facility in the aggregate amount
of up to $14,000 and a term loan commitment of up to $2,000. All of the Company's property, including all cash accounts, outstanding trade receivables, inventory, fixed assets, and any intellectual
property serve as collateral. The credit facility restricts the Company's ability to declare or pay cash dividends on capital stock. The term loan shall be repaid by monthly installment payments of
interest only in the first year, and thereafter by monthly installments of principal and interest payments for a period of 36&nbsp;months. Interest is payable monthly during the term. Interest
expense on this bank debt amounted to $1,096, $1,356 and $849 for the years ended December&nbsp;31, 2010, 2009 and 2008, respectively. In December 2009, the Company amended the existing loan and
security agreement with the bank. The amendment extended the maturity date on the revolving credit facility to December&nbsp;29, 2011, and reduced the interest rate on this facility by 1%. The
amendment did not change the existing terms or rate of interest and expiration date on the term loan. On June&nbsp;20, 2011, the Company amended its existing loan and security agreement with Silicon
Valley Bank. The amendment increased the amount of the credit facility to the aggregate amount of up to $20,000. The amendment extended the maturity date on the revolving credit facility to
December&nbsp;26, 2013, and reduced the interest rate on this facility to Prime Rate plus three-quarters of one percent (4% currently). The Company has classified the outstanding credit line amount
of $10,200 under the loan and security agreement as long-term on its balance sheet as of December&nbsp;31, 2010 as the Company had the intent and ability to refinance such borrowings on
a long-term basis. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As
part of a previous acquisition in 2005, the Company received a loan from a related party in the amount of $5,633. Interest accrued for the initial 23-month period, with total accrued
interest as of April&nbsp;1, 2006 and 2007 added to the principal balance of the loan. Principal and interest payments commenced on April&nbsp;1, 2007, and are payable over 60 equal monthly
installments, through March&nbsp;1, 2012. The loan was recorded based on its estimated fair value at the date of acquisition, in the amount of $4,640, which represented a discount of $993. This
discount is being accreted to interest expense over the term of the loan. Interest expense on </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-20</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=6,SEQ=173,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=348303,FOLIO='F-20',FILE='DISK104:[11ZCB1.11ZCB76301]FO76301A.;43',USER='OALBERT',CD='12-AUG-2011;12:01' -->
<A NAME="page_fo76301_1_21"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:arial;"><FONT SIZE=2>this
debt amounted to $249, $339 and $450 for the years ended December&nbsp;31, 2010, 2009 and 2008, respectively. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
following summarizes the Company's required debt payments subsequent to December&nbsp;31, 2010: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=4 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2011</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,099</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2012</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>644</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2013</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>10,200</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>12,943</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=4 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=3><B>(10)&nbsp;Income taxes  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The effective tax rates for the years ended December&nbsp;31, 2010, 2009 and 2008 were 5.3%, (0.4)%, and (0.6)%, respectively. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Income
(loss) before provision for income taxes is allocated as follows for the years ended December&nbsp;31: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="42pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="54pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="54pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2008</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>U.S. operations</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>8,836</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(11,061</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(14,335</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Foreign operations</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>554</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(24,277</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(17,712</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>9,390</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(35,338</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(32,047</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>Provision for income taxes is comprised of the following: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="46pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="32pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="32pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=11 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Year ended<BR>
December&nbsp;31 </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2008</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=11 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Federal:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B> $</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B>2,039</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> $</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> $</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deferred</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B> (2,039</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B>)</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> &#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> &#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total federal</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B> &#151;</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> &#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> &#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>State:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B> 490</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> &#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> &#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deferred</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B> (123</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B>)</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> &#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> &#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total state</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B> 367</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> &#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> &#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Foreign:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B> 134</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> 128</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> 177</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total foreign</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B> 134</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> 128</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> 177</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Provision for income taxes</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B> $</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B>501</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> $</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>128</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> $</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>177</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=11 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-21</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=7,SEQ=174,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=112458,FOLIO='F-21',FILE='DISK104:[11ZCB1.11ZCB76301]FO76301A.;43',USER='OALBERT',CD='12-AUG-2011;12:01' -->
<A NAME="page_fo76301_1_22"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>
 </DIV>

<P style="font-family:arial;"><FONT SIZE=2>The provision for income taxes differs from the amount of taxes determined by applying the U.S. federal statutory rate (34%) to income (loss) before provision
for income taxes as a result of the following for the years ended December&nbsp;31: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="46pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="54pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="54pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=11 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2008</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=11 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Statutory federal income tax</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,193</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(12,015</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(10,956</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Increase (reduction) in income taxes resulting from:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Foreign income taxes</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>88</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>84</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>117</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Change in the valuation allowance</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(2,742</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6,603</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6,736</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>State and local income taxes, net of federal income tax benefit</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>242</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Permanent differences&#151;other</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>61</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other, including loss from PGT operations in 2009 and 2008</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(341</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,449</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,273</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>501</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>128</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>177</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=11 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>Deferred tax assets and liabilities reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows as of December&nbsp;31: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


</FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="54pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="54pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deferred tax assets:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Inventories</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,383</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,204</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Property and equipment</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,742</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Intangible assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>386</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>61</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accrued expense</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>171</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>154</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>General business credit</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3,166</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,724</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>226</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>123</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net operating loss carryforwards</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>22,663</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>24,967</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total gross deferred tax assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>27,995</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>31,975</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Less: valuation allowance</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(27,387</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(31,975</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net deferred tax assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>608</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deferred tax liabilities:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Property and equipment</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(608</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net deferred tax liabilities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(608</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total net deferred tax assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>Valuation allowances are established when necessary to reduce deferred tax assets to amounts expected to be realized. As of December&nbsp;31, 2010 and 2009,
the Company has recorded a full valuation allowance for all net deferred tax assets as management does not believe they have sufficient positive evidence to recognize such deferred tax assets at this
time. However, if the Company demonstrates a more consistent history of profitability going forward, the Company may release some or all of its valuation allowance. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-22</FONT></P>

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<A HREF="#bg76301a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As of December&nbsp;31, 2010, the Company has U.S. federal net operating loss carryforwards of $186,920 and state net operating loss carryforwards of $64,763 which expire in
2022 through 2029. The Tax Reform Act of 1986 ("the Act") provides for a limitation of the annual use of net operating loss and research and development tax credit carryforwards following certain
ownership changes (as defined by the Act) that limit the Company's ability to utilize carryforwards. As such, the Company is in the process of completing a study to assess ownership changes that have
occurred since its formation and their impact on the value of the NOLs. As a result, we expect that the federal and state net operating loss carryforwards will be limited, and the Company has
disclosed its deferred tax asset related to net operating losses carryforwards based on its best estimate of useable net operating loss carryforwards of approximately $48&nbsp;million for federal
purposes and $46&nbsp;million for state purposes. Subsequent to December&nbsp;31, 2010, as a consequence of equity transactions in January 2011, the Company anticipates further limitation on the
use of its net operating loss carryforwards. The Company's current estimate is that the total available net operating loss carryforwards are approximately $19&nbsp;million for federal purposes and
approximately $18&nbsp;million for state purposes. The limitations could change upon completion of the study. In addition, the Company has concluded that there are sufficient net operating loss
carryforwards from a federal tax perspective to offset the 2010 federal tax liability. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
Company has made no provision for United States taxes on cumulative earnings of $1,796 of foreign subsidiaries as those earnings are intended to be reinvested for an indefinite period of time.
Upon distribution of these earnings in the form of dividends or otherwise, the Company may be subject to United States income taxes and foreign withholding taxes. It is not practical, however, to
estimate the amount of taxes that may be payable on the eventual repatriation of these earnings. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As
of December&nbsp;31, 2010 and 2009, the Company has analyzed its tax positions in all jurisdictions where it is required to file an income tax return and has concluded that the Company does not
have any material unrecognized tax benefits. The Company has filed a U.S. income tax return as well as returns for various state jurisdictions. The Company's policy is to recognize interest and
penalties accrued on any unrecognized tax benefit within the provision for income taxes on the consolidated statement of operations. As of December&nbsp;31, 2010 and 2009, the Company did not have
interest or penalties accrued for any unrecognized tax benefits, and there was no interest expense recognized during 2010, 2009 or 2008. The tax years that remain open to examination for significant
jurisdictions include 2007-2009. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B>(11)&nbsp;Commitments and contingencies  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Litigation  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>From time to time, the Company is involved in disputes or legal actions arising in the ordinary course of business. Management does not believe the
outcome of such legal actions will have a material adverse effect on the Company's financial position, results of operations or cash flows. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Leases  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Company rents their facilities and certain related infrastructure under various operating lease agreements, which expire on various dates, the
latest of which is
in 2017. Total rent expense for the years ended December&nbsp;31, 2010, 2009 and 2008 was $2,196, $3,253 and $5,470, respectively. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-23</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
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<P style="font-family:arial;"><FONT SIZE=2>The
future minimum lease payments under noncancelable operating leases are as follows: </FONT></P>
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<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=5 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Year ending December&nbsp;31:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2011</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,330</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2012</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,847</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2013</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,838</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2014</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,687</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2015 and thereafter</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3,536</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total future minimum lease payments</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>11,238</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=5 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>The Breinigsville, Pennsylvania facility has renewal options for two additional five-year periods effective November 2017. The Matamoros, Mexico
facility has renewal options for two five-year periods effective December 2011. The South Plainfield, New Jersey facility has a renewal option for one two-year period effective
July 2014. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B>(12)&nbsp;Capital structure  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Composition of share capital: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=14 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Authorized </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Issued and outstanding </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>December&nbsp;31 </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>December&nbsp;31 </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=14 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Shares of $0.001 par value per share:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Common stock</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>14,807,692</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>14,807,692</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,485,178</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,521,310</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=11 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Series A Preferred stock</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,144,520</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,144,520</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,144,520</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,144,520</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Series B Preferred stock</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,752,408</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,752,408</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,733,717</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,733,717</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Series B-1 Preferred stock</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,450,879</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,450,879</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,444,578</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,444,578</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Series B-2 Preferred stock</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>282,972</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>282,972</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>282,972</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>282,972</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Series B-3 Preferred stock</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,785,585</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,785,585</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,785,585</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,785,585</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Series C Preferred stock</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,644,873</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,644,873</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,228,666</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,228,666</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=11 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total Convertible Preferred stock</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>11,061,237</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>11,061,237</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10,620,038</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10,620,038</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=11 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>25,868,929</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>25,868,929</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12,105,216</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12,141,348</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=14 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2><B> Common stock  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Common stock confers upon its holders voting rights, the right to receive cash and stock dividends, if declared, and the right to share in excess
assets upon liquidation of the Company. The holders of Common stock are entitled to one vote per share. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Convertible preferred stock  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Each share of Preferred stock is convertible into Common stock at each holder's option, or automatically, at any time after the date of issuance
until the earlier of an initial public offering, which yields a minimum of $30,000 in net proceeds to the Company, or upon the affirmative vote of at least two-thirds of the holders of the
Preferred stock. The conversion ratio is stipulated in the Company's certificate of incorporation. As of December&nbsp;31, 2010, the Preferred stock was convertible to Common stock on a one for one
basis. In addition, upon the occurrence of an IPO the Series&nbsp;B-1 Preferred shares convert into Common shares at a ratio of </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-24</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=2,SEQ=177,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=896414,FOLIO='F-24',FILE='DISK104:[11ZCB1.11ZCB76301]FQ76301A.;53',USER='NLUCCA',CD='12-AUG-2011;10:07' -->
<A NAME="page_fq76301_1_25"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:arial;"><FONT SIZE=2>one
to 1.16. Each share of Preferred stock shall have the right to one vote for each share of Common stock into which such share of Preferred stock could then be converted. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
holders of the Preferred stock shall be entitled to receive, on an as-converted basis, when and as declared by the Company's board of directors (the "Board of Directors"), out of any
assets of the Company legally available therefore, such dividends as may be declared from time to time by the Board of Directors; provided, however, that the Board of Directors may not declare
dividends on the Series&nbsp;A Preferred stock in amounts per share greater than dividends declared per share in respect of the Series&nbsp;B Preferred stock. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
following is the activity of the Company's convertible Preferred stock for the years ended December&nbsp;31, 2010, 2009 and 2008: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:54%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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 </FONT></P>

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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="9pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="58pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="58pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="82pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="77pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="77pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="108pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=20 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>January&nbsp;1, 2008</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Issuance of<BR>
Preferred stock</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Issuance of<BR>
Preferred stock<BR>
as a result of<BR>
debt conversion<BR>
to equity</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Conversion of<BR>
Preferred stock<BR>
into Common<BR>
stock</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Conversion of<BR>
Preferred stock<BR>
into Preferred<BR>
stock</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;31, 2008(1)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=20 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Series&nbsp;A</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Shares</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,144,520</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,144,520</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Amount</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>9,185</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>9,185</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Series&nbsp;B</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Shares</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,733,717</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,733,717</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Amount</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>21,496</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>21,496</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Series&nbsp;B-1</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Shares</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,444,578</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,444,578</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Amount</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>12,552</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>12,552</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Series&nbsp;B-2</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Shares</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>282,972</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>282,972</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Amount</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,453</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,453</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Series&nbsp;B-3</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Shares</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,785,585</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,785,585</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Amount</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>34,778</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>34,778</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Series&nbsp;C</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Shares</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,395,346</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>833,320</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,228,666</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Amount</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>32,450</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>10,044</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>42,494</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Series&nbsp;E</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Shares</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,262,882</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(118,362</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(1,144,520</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Amount</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>10,135</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(950</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(9,185</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Series&nbsp;F</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Shares</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3,014,097</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(280,380</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(2,733,717</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Amount</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>23,740</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(2,244</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(21,496</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Series&nbsp;F-1</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Shares</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,444,578</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(1,444,578</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Amount</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>12,552</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(12,552</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Series&nbsp;F-2</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Shares</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>364,021</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(81,049</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(282,972</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Amount</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3,155</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(702</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(2,453</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=17 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Total</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Shares</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>6,085,578</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4,180,931</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>833,320</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(479,791</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>10,620,038</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=17 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Amount</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>49,582</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>67,228</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>10,044</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(3,896</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>122,958</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=20 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
<DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
 <DL compact>
<DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;">(1)</FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">There
was no activity in the Company's Convertible Preferred stock during the years ended December&nbsp;31, 2010 and 2009. Therefore, those tables have
been omitted. </FONT></DD></DL>
 </DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-25</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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<P style="font-family:arial;"><FONT SIZE=2><A
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 <DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
<p style="font-family:arial;"></FONT></P>
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2><B> Liquidation preference  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In the event of any liquidation or winding up of the Company, either voluntary or involuntary, the holders of the Series&nbsp;C Preferred stock
shall be entitled to receive, prior and in preference to the distribution of any assets of the Company to holders of any other capital stock of the Company, an amount equal to one and
one-half times the $14.36 original Series&nbsp;C Preferred per share purchase price, plus any declared but unpaid dividends thereon. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>After
full payment of the foregoing Series&nbsp;C Preferred stock liquidation preference, the holders of the Series&nbsp;B, B-1, B-2 and B-3 Preferred stock
shall be
entitled to receive, prior and in preference to the distribution of any assets of the Company to holders of the Series&nbsp;A Preferred stock and Common stock, an amount equal to a range of one and
one-tenth to three times either the $14.36 original Series&nbsp;B-3 Preferred or the $8.02 original Series&nbsp;B Preferred per share purchase price, plus any declared but
unpaid dividends thereon. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>After
full payment of the foregoing Series&nbsp;C Preferred stock and Series&nbsp;B-1, B-2 and B-3 Preferred stock liquidation preferences, the holders of the
Series&nbsp;A Preferred stock shall be entitled to receive, prior and in preference to the distribution of any assets of the Company to holders of Common stock, an amount equal to two and
one-half times the $8.02 original Series&nbsp;A Preferred per share purchase price, plus any declared but unpaid dividends thereon. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>After
full payment of each of the foregoing liquidation preferences, the remaining assets of the Company will be distributed among the holders of Preferred stock and Common stock on an
as-converted to Common stock basis. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Redemption rights  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The convertible Preferred stock is subject to redemption under certain "deemed liquidation" events, as defined, and as such, the Preferred stock is
considered contingently redeemable for accounting purposes. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Preferred stock warrants  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Company has outstanding a warrant to purchase 18,691 shares of Series&nbsp;B Preferred stock of the Company at an exercise price of $8.02 per
share. The warrant expires on April&nbsp;29, 2012, at which point the warrant is automatically exercised. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>The
Company also has outstanding warrants to purchase 6,301&nbsp;shares of Series&nbsp;B-1 Preferred stock of the Company at an exercise price of $16.00 per share. The warrants expire
in 2013 and 2014. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
Preferred stock warrants are classified as liabilities in the accompanying balance sheets as the warrant entitles the holder to purchase Preferred Stock which is considered contingently
redeemable. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Repurchase of Common stock  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In December 2010, the Company repurchased 37,085 shares of outstanding Common stock from a single shareholder for a de minimis amount. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> Commercial agreement  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As a condition to the Series&nbsp;B Preferred stock purchase agreement, the Company signed a commercial agreement with a certain investor (the
"Investor") which provides the Investor the right of first refusal with respect to any proposed offer from a non-affiliated third party that </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-26</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:arial;"><FONT SIZE=2>would
result in a change of control. The Investor will have 10&nbsp;days following receipt of a third-party offer notice to submit to the Company a written offer to acquire the Company in a sale
transaction on terms and conditions at least as favorable to the Company and its stockholders as those proposed by the third-party offer. In addition, the Investor has a right of first offer in the
event the Company seeks to initiate a sale process with one or more non-affiliated prospective third party purchasers. The Investor will have 7&nbsp;days following receipt of a notice
from the Company to determine whether it wants to enter into a 37-day exclusive negotiation period to discuss acquiring the Company in a sale transaction. The parties would need to
negotiate in good faith. If no deal is reached, any sale transaction by a third party would remain subject to the Investor's right of first refusal. Both the right of first refusal and right of first
offer shall terminate and cease to be of further force and effect immediately upon the earliest to occur of (i)&nbsp;a change of control or (ii)&nbsp;an initial public offering. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>In
addition, under the agreement, the Investor has a right of first negotiation in the event the Company seeks to solicit, encourage, pursue or negotiate an offer from one
non-affiliated third-party purchaser to effect a sale of the Company (a "Targeted Solicitation"). In the event the Company's board of directors has resolved to pursue a Targeted
Solicitation, the Company must deliver to the Investor a notice describing the material terms and conditions of the solicited sale transaction. The Investor then has five days to deliver a negotiation
notice if it desires to initiate a process to make an offer to acquire the Company. If the Investor fails to deliver the notice, the Company may freely proceed towards consummating a Targeted
Solicitation. If the Investor delivers the notice, the Company may not enter into an exclusive negotiating or standstill agreement with any third party and is required to negotiate with the Investor
in good faith towards effecting a sale transaction for 25&nbsp;days. If the Company is unable to come to an agreement with the Investor during this period, the Company may enter into a sale
transaction in respect of the Targeted Solicitation within the next 12&nbsp;months, subject to certain extensions. In the event the Company enters into a letter of intent with the Investor regarding
a sale transaction, the agreement must include a reasonable break up fee and reasonable exclusive negotiating or standstill period. For the sake of clarity, the Investor's right of first negotiation
does not compel the Company to accept and offer a sale transaction with the Investor. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Management bonus plan  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As part of the stock purchase agreement, the Company adopted a management bonus plan according to which members of the Company's management team, as
designated by the Board of Directors, shall be entitled to receive an amount equal to between 5% and 10% of the consideration above $10,000 from the proceeds eligible for distribution to the Company's
stockholders upon a change in control. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B>(13)&nbsp;Business and geographic segment information  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Company currently operates in one business segment, namely, the design, fabrication and/or packaging of a broad portfolio of optical components for the
Access, Enterprise/Data Center and Long Haul/Metro segments of the communications network and for other emerging end market, applications, such as defense and avionics, high performance computing,
medical and security. The Company is managed and operated as one business. A single management team that reports to the chief operating decision maker comprehensively manages the entire business. The
Company does not operate any material separate lines of business or separate </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-27</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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<P style="font-family:arial;"><FONT SIZE=2><A
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<BR>

<P style="font-family:arial;"><FONT SIZE=2>business
entities with respect to its products or product development. Accordingly, the Company views its business and manages its operations as one reportable segment. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>The
Company's revenues, based on shipped to location, were generated in the following geographic regions: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="56pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Year ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2008</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Asia Pacific</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>82,653</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>46,497</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>41,733</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>North America</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>18,060</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>12,723</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>20,358</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Europe, Middle East and rest of world</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>7,623</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>6,510</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>5,120</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Consolidated total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>108,336</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>65,730</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>67,211</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>Revenues generated in North America were principally from customers in the United States. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>During
the years ended December&nbsp;31, 2010, 2009 and 2008, sales to customers in China (including Hong Kong) were $45,600, $25,497 and $24,469, respectively. During the years ended
December&nbsp;31, 2010, 2009 and 2008, sales to customers in Taiwan were $15,425, $6,828 and $6,260, respectively. During the years ended December&nbsp;31, 2010, 2009 and 2008, sales to customers
in Malaysia were $16,101, $8,370 and $5,865, respectively. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Long-lived
assets by geographic area consist of property and equipment and are as follows: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="42pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="42pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>As of December&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>United States</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>6,116</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4,495</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Mexico</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,752</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,483</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>469</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,267</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Consolidated total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>8,337</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>8,245</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=3><B>(14)&nbsp;Stock-based compensation  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Company's 1999 Incentive Stock Option Plan (the "1999 Plan") was established for the granting of options to officers, management, other key employees, and
consultants of up to 897,760 shares of Common stock. In January 2011, the 1999 Plan was amended to increase the number of shares available for grant to 2,243,913 shares. The options granted generally
vest over four years and will expire ten years subsequent to the date of grant. Any options that are
canceled or forfeited before expiration become available for future grant. As of December&nbsp;31, 2010, an aggregate of 399,364 shares of the Company are still available for future grant. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
Company's 2007 Stock Plan (the "2007 Plan") was established for the granting of options to transitional employees associated with an April 2007 acquisition of up to 93,339 shares of the Company's
Common stock. The options generally vest over one year and will expire ten years subsequent to the date of grant. Any options that are canceled or forfeited before expiration are not available for
future distribution under the 2007 Plan. Through December&nbsp;31, 2010, 92,291 of these options were forfeited and all but 1% of the remainder were forfeited prior to </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-28</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=6,SEQ=181,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=938672,FOLIO='F-28',FILE='DISK104:[11ZCB1.11ZCB76301]FQ76301A.;53',USER='NLUCCA',CD='12-AUG-2011;10:07' -->
<A NAME="page_fq76301_1_29"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:arial;"><FONT SIZE=2>2009.
As a result, the actual forfeiture rate for these options is 99% and the compensation expense related to these options is immaterial. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
Company offers both nonqualified options and incentive stock options and they both have a ten-year term. Employee awards typically vest 25% a year. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
Company has recognized compensation expense of $20, $25, and $54 during the years ended December&nbsp;31, 2010, 2009 and 2008, respectively, based on the estimated grant-date fair
value using the Black-Scholes valuation model. For these awards, the Company has recognized compensation expense using a straight-line amortization method. The Company calculates
stock-based compensation expense based on awards that are ultimately expected to vest. Stock-based compensation for the years ended December&nbsp;31, 2010 and 2009 has been reduced for estimated
forfeitures. When estimating forfeitures, the Company considers voluntary termination behaviors as well as trends of actual option forfeitures. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Valuation assumptions  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Company calculated the fair value of each option award on the date of grant using the Black-Scholes option-pricing model. The weighted-average
fair value of a common stock option granted during the years ended December&nbsp;31, 2010, 2009 and 2008 was $ 0.05, $0.03 and $1.84, respectively. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
following assumptions were used for valuing grants made during the years ended December&nbsp;31, 2010 and 2009: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="41pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="41pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="83pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2008</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Risk-free interest rates</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B> 1.14%</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> 1.52%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> 2.27%-2.77%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Expected life (in years)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B> 7.00</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> 7.00</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> 7.00</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Dividend yield</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B> 0%</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> 0%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> 0%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Expected volatility</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B> 75%</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> 75%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> 51%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>Due to the lack of trading history, the Company's computation of stock-price volatility is based on the volatility rates of comparable publicly held companies
over a period equal to the estimated useful life of the options granted by the Company. The Company's computation of expected life was determined using the "simplified" method whereby the vesting
period plus the original contractual term is divided by two. The Company has paid no dividends to stockholders. The interest rate for periods within the contractual life of the award is based on the
U.S. Treasury yield curve in effect at the time of the grant. The fair value used for shares of Common stock was based upon management's estimates. If the Company had made different assumptions about
the stock-price volatility rates, expected life, estimated forfeitures or other assumption, the related compensation expense and its net income could have been significantly different. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-29</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=7,SEQ=182,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=543492,FOLIO='F-29',FILE='DISK104:[11ZCB1.11ZCB76301]FQ76301A.;53',USER='NLUCCA',CD='12-AUG-2011;10:07' -->
<A NAME="page_fq76301_1_30"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Stock-based payment award activity  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following table summarizes activity under the 1999 Plan for the year ended December&nbsp;31, 2010: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="65pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="60pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="70pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=11 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Number<BR>
of shares</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Weighted-<BR>
average<BR>
exercise<BR>
price</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Weighted-<BR>
average<BR>
remaining<BR>
contractual<BR>
term (years)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=11 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Outstanding at January&nbsp;1, 2008</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>453,534</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5.72</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6.85</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Granted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,250</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4.16</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Exercised</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(5,051</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>0.42</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Expired/forfeited/cancelled</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(14,255</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3.28</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Outstanding at December&nbsp;31, 2008</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>442,478</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5.82</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5.96</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Granted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>16,326</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>0.52</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Exercised</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(31,230</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>0.36</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Expired/forfeited/cancelled</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(29,466</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3.90</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Outstanding at December&nbsp;31, 2009</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>398,108</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6.19</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5.26</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Granted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>30,417</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>0.52</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Exercised</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(953</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>0.88</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Expired/forfeited/cancelled</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(23,571</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10.30</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Outstanding at December&nbsp;31, 2010</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>404,001</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5.51</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4.73</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Unvested at December&nbsp;31, 2010</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>32,518</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1.30</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8.18</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Vested and exercisable</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>372,163</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5.88</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4.41</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Vested and expected to vest at December&nbsp;31, 2010</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>402,193</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5.56</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4.71</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=11 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>As of December&nbsp;31, 2010 there was approximately $18 of total unrecognized compensation expense related to unvested stock options issued under the
Company's stock option plans which is expected to be recognized over a remaining weighted-average period of three years. Cash received from option exercises under all share-based payment arrangements
for the year ended December&nbsp;31, 2010 was not material. The total fair value of stock options vested during the years ended December&nbsp;31, 2010, 2009 and 2008 was not significant. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B>(15)&nbsp;Retirement plan  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Substantially all domestic employees are eligible to participate in the Company's 401(k) Plan. Under this Plan, the Company may elect to make matching
contributions, at the discretion of the Board of Directors. There were no employer contributions made to the 401(k) Plan for the years ended December&nbsp;31, 2010, 2009 or 2008. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-30</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=8,SEQ=183,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=924670,FOLIO='F-30',FILE='DISK104:[11ZCB1.11ZCB76301]FQ76301A.;53',USER='NLUCCA',CD='12-AUG-2011;10:07' -->
<A NAME="page_fq76301_1_31"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B>(16)&nbsp;Related-party balances and transactions  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Company sold to and purchased from two businesses who are investors of the Company. Amounts were as follows: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="42pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=11 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Year ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2008</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=11 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Related-party transactions:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sales to related parties</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><B> $</B></FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>16,544</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2> $</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>11,092</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2> $</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,048</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Purchases from related parties included in cost of revenues</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B> 5,394</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> 1,341</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> 1,350</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Purchases from related parties included in operating expenses</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B> 21</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> 98</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> &#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Receivables from related parties</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B> 3,447</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> 1,911</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> 1,136</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Payables to related parties</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B> 408</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> 124</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> 15</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=11 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
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 </DIV>
 <P style="font-family:arial;"><FONT SIZE=3><B>(17)&nbsp;Subsequent events  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In January and February 2011, the Company raised approximately $50,000 through an internal round of financing (Series&nbsp;C-1 Preferred stock).
Approximately $30,100 of the proceeds was used to repurchase Common and Preferred stock from investors and to cover the cost associated with the financing. The remaining proceeds will be used for
general corporate and working capital purposes. As a direct result of the stock repurchase, the Company's aggregate liquidation preference on Preferred stock has been reduced to $123,737. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
connection with the sale of the Series&nbsp;C-1 Preferred stock, the Company effected a 1:52 reverse stock split of its Common stock and Preferred stock. The effect of the split has
been applied retrospectively to all share and per share amounts in the financial statements. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>On
April&nbsp;26, 2011, the Company issued approximately 1.3&nbsp;million stock options to directors, officers and employees of the Company at an exercise price of $2.37 per share. These options
were issued out of the 1999 Plan and primarily vest over a four-year term. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-31</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=9,SEQ=184,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=765775,FOLIO='F-31',FILE='DISK104:[11ZCB1.11ZCB76301]FQ76301A.;53',USER='NLUCCA',CD='12-AUG-2011;10:07' -->
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</FONT> <FONT SIZE=2>
<A HREF="#bg76301a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=4><B> <A NAME="balance"></A>CyOptics,&nbsp;Inc.<BR>
Condensed consolidated balance sheets  </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="67pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="78pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="67pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=11 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(in thousands, except for share and per share data)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>March&nbsp;31,<BR>
2011</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>December&nbsp;31,<BR>
2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Proforma<BR>
March&nbsp;31,<BR>
2011</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=11 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><B> </B>&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2><B> </B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>(unaudited)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>(unaudited)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Assets</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current assets:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>



<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Cash and cash equivalents</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>31,059</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12,397</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>31,059</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Restricted cash</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>100</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Accounts receivable, net of allowance for doubtful accounts of $63 and $77, respectively</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>26,457</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>26,894</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>26,457</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Inventories, net</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>23,829</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>19,526</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>23,829</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Prepaid expenses and other current assets</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>650</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>892</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>650</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total current assets</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>81,995</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>59,809</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>81,995</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Property and equipment, net</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,931</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,337</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,931</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Intangible assets, net</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,780</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6,165</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,780</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>



<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Long-term restricted cash</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>50</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>50</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total assets</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>97,756</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>74,311</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>97,756</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-top:10pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Liabilities, convertible preferred stock, and stockholders' equity (deficit)</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current liabilities:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Current portion of long-term loans and credit line</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>667</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>667</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>667</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current portion of related-party loan</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,334</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,283</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,334</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Accounts payable</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>19,279</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>18,258</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>19,279</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accrued and other current liabilities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,297</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,623</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,297</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Total current liabilities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>26,577</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>24,831</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>26,577</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Long-term liabilities:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Long-term loans</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>111</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>278</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>111</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Credit line</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10,200</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10,200</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10,200</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Related-party loan</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>366</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Preferred stock warrant liability</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>239</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>239</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>



<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Total liabilities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>37,127</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>35,914</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>36,888</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Commitments and contingencies</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Convertible preferred stock:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Preferred stock, $0.001 par value per share, 18,337,337 shares authorized; 12,972,547 issued and outstanding at March&nbsp;31, 2011; 11,061,237 shares
authorized; 10,620,038 issued and outstanding at December&nbsp;31, 2010; no shares issued and outstanding, pro forma</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>95,404</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>122,958</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Stockholders' equity (deficit):</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Common stock, $0.001 par value per share, 22,084,428 shares authorized; 1,294,539 shares issued and outstanding at March&nbsp;31, 2011; 14,807,692 shares
authorized; 1,485,178 shares issued and outstanding at December&nbsp;31, 2010; 14,359,377 shares issued and outstanding at March&nbsp;31, 2011, pro forma</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>14</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Additional paid-in capital</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>45,140</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>45,114</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>140,770</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accumulated deficit</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(79,916</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(129,676</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(79,916</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Total stockholders' equity (deficit)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(34,775</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(84,561</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>60,868</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total liabilities, convertible preferred stock and stockholders' equity (deficit)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>97,756</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>74,311</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>97,756</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=11 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><I> The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.  </I></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-32</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=185,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=649378,FOLIO='F-32',FILE='DISK104:[11ZCB1.11ZCB76301]FS76301A.;25',USER='MTITUSS',CD='11-AUG-2011;12:41' -->
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<A HREF="#bg76301a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="fu76301_cyoptics,_inc._unaudited_conde__cyo02851"> </A>
<A NAME="toc_fu76301_1"> </A>
<BR></FONT><FONT SIZE=4><B>  CyOptics,&nbsp;Inc.<BR>  Unaudited condensed consolidated statements of operations  <BR>  </B></FONT></P>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=9 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Three months ended<BR>
March&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(in thousands, except for share and per share data)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2011</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=9 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total revenues</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>34,028</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>23,633</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cost of revenues</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>24,759</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>17,742</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Gross profit</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>9,269</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>5,891</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating expenses:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Research and development</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3,518</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,860</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sales and marketing</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>801</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>629</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>General and administrative</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>863</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>682</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total operating expenses</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>5,182</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4,171</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income from operations</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4,087</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,720</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other (expense) income:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest expense, net</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(276</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(349</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other (expense) income, net</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(145</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>52</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total other income (expense), net</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(421</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(297</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income before provision for income taxes</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3,666</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,423</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Provision for income taxes</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,384</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>78</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net income</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,282</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,345</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net income attributable to common stockholders</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>47,678</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>169</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net income per common share:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Basic</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>36.35</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0.11</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Diluted</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0.15</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0.11</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Weighted average number of common shares:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Basic</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,311,760</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,521,308</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Diluted</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>15,692,812</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,521,308</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=9 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><I> The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.  </I></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-33</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=186,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=136315,FOLIO='F-33',FILE='DISK104:[11ZCB1.11ZCB76301]FU76301A.;14',USER='NLUCCA',CD='11-AUG-2011;12:32' -->
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NAME="page_fw76301_1_34"> </A>


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 </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg76301a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="fw76301_cyoptics,_inc._unaudited_conde__cyo04568"> </A>
<A NAME="toc_fw76301_1"> </A>
<BR></FONT><FONT SIZE=4><B>  CyOptics,&nbsp;Inc.<BR>  Unaudited condensed consolidated statements of<BR>  convertible preferred stock and stockholders' equity  <BR>  </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:54%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="150%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="9pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="61pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="51pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="55pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="47pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="60pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="73pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="49pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=23 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Convertible<BR>
preferred stock </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Stockholders' equity (deficit) </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ROWSPAN=2 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Preferred stock </B></FONT></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ROWSPAN=2 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Common stock </B></FONT></TH>
<TH ROWSPAN=3 style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=3 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Additional<BR>
paid-in<BR>
capital</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ROWSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(in thousands, except for<BR>
share and per share data)</B></FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Accumulated<BR>
deficit</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Shares</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Amount</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Shares</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Amount</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Total</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=23 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Balance at December&nbsp;31, 2010</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10,620,038</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>122,958</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,485,178</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>45,114</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(129,676</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(84,561</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Issuance of preferred stock, net</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,692,307</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>49,562</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Redemption of preferred stock at a discount to carrying value</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(5,339,798</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(77,116</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>47,478</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>47,478</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Repurchase and retirement of common stock</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(204,100</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(10</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(10</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Exercise of stock options</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>13,461</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>32</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>32</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Stock-based compensation expense</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net income and comprehensive income</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,282</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,282</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=20 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Balance at March&nbsp;31, 2011</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12,972,547</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>95,404</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,294,539</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>45,140</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(79,916</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(34,775</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=23 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><I> The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.  </I></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-34</FONT></P>

<HR NOSHADE>
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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg76301a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="fy76301_cyoptics,_inc._unaudited_conde__cyo02824"> </A>
<A NAME="toc_fy76301_1"> </A>
<BR></FONT><FONT SIZE=4><B>  CyOptics,&nbsp;Inc.<BR>  Unaudited condensed consolidated statements of cash flows  <BR>  </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="54pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=9 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Three months ended<BR>
March&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(in thousands)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2011</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=9 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Cash flows from operating activities</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net income</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,282</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,345</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjustments to reconcile net income to net cash provided by operating activities:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Depreciation and amortization</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,015</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,513</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Stock-based compensation expense</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Gain on disposal of property and equipment</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(3</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(7</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Non-cash interest on long term loans</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>37</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>37</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Changes in assets and liabilities:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Decrease (increase) in accounts receivable, net</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>437</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(2,064</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>(Increase) in inventory</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(4,303</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(546</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Decrease in other current assets</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>292</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>107</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Increase in accounts payable</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,021</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,896</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Increase (decrease) in accrued and other current liabilities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>674</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(803</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash provided by operating activities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,456</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,483</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Cash flows from investing activities</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Proceeds from sale of property and equipment</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>19</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Purchase of property and equipment</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(2,240</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(257</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash used in investing activities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(2,221</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(249</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Cash flows from financing activities</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Payments on revolving credit facility and long-term debt</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(519</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(502</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Proceeds from exercise of stock options</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>32</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Proceeds from issuance of preferred stock, net</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>49,562</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Repurchase of stock</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(29,648</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash provided by (used in) financing activities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>19,427</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(502</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net increase in cash and cash equivalents</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>18,662</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,732</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash and cash equivalents, beginning of period</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12,397</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,122</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash and cash equivalents, end of period</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>31,059</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10,854</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Supplemental cash flow information:</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash paid during the period for interest</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>263</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>323</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash paid during the period for income taxes</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>39</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>35</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=9 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><I> The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.  </I></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-35</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg76301a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="ga76301_cyoptics,_inc._notes_to_unaudi__cyo04911"> </A>
<A NAME="toc_ga76301_1"> </A>
<BR></FONT><FONT SIZE=4><B>  CyOptics,&nbsp;Inc.<BR>  Notes to unaudited condensed consolidated financial statements<BR>  (in thousands, except for share and per share data)  <BR>  </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=3><B>(1)&nbsp;&nbsp;&nbsp;Description of business  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>CyOptics,&nbsp;Inc. (the Company) was incorporated in January 1999 under the laws of the State of Delaware. The Company is a platform-based provider of core
optical technologies enabling
bandwith for high-speed networks. The Company serves customers on a global basis. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
Company has expanded its operations through acquisitions in recent years. PGT Photonics&nbsp;S.p.A. (PGT) was acquired on July&nbsp;24, 2008. This operation was based in Italy and supported
the design, manufacture and sale of optical components, modules and systems. CyOptics International Holding&nbsp;Co. and CyOptics International Holding&nbsp;LLC were formed in 2005 to acquire the
entire equity interest in the Company's operations in Matamoros, Mexico, CyOptics de Mexico. This operation supports the Company's assembly and test manufacturing operations. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>The
board of PGT approved the dissolution of PGT effective September&nbsp;22, 2009. For further discussion of the PGT dissolution, see Note&nbsp;3 of these consolidated financial statements. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B>(2)&nbsp;&nbsp;&nbsp;Basis of presentation  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Basis of presentation and consolidation  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All
material intercompany balances and transactions have been eliminated. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Reverse stock split  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In January and February 2011, the Company raised $50,000 through an internal round of financing (Series&nbsp;C-1 Preferred stock).
Approximately $30,100 of the proceeds was used to repurchase Common and Preferred stock from investors and to cover the cost associated with the financing. The existing Preferred stock was redeemed
for $47,478 below its carrying value and, accordingly, this discount was recorded within
stockholder's equity and is reflected as a component of earnings attributable to common stockholders. In connection with the sale of the Series&nbsp;C-1 Preferred stock, the Company
effected a 1:52 reverse stock split of its Common stock and Preferred stock. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>All
shares, stock options, warrants to purchase Common stock and per share information presented in the unaudited condensed consolidated financial statements have been adjusted to reflect the reverse
stock split on a retroactive basis for all periods presented. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Foreign currency translation  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>For operations in Mexico, the functional currency is the U.S. Dollar. Assets and liabilities of those operations are translated into U.S. dollars
using period-end exchange rates; income and expenses are translated using the average exchange rates for the reporting period. Translation adjustments for the operations in Mexico are
included in other (expense) income and were </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-36</FONT></P>

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<BR>

<P style="font-family:arial;"><FONT SIZE=2>immaterial
for both periods. Realized foreign currency transaction gains and losses are included in other (expense) income and were immaterial for both periods. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Interim financial statements  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The accompanying interim unaudited condensed consolidated financial statements and related disclosures are unaudited and have been prepared in
accordance with U.S. generally accepted accounting principles (GAAP) on the same basis as the audited consolidated financial statements for the year ended December&nbsp;31, 2010 included elsewhere
in this prospectus and, in the opinion of management, include all adjustments of a normal recurring nature considered necessary to present fairly the Company's financial position, results of its
operations, and cash flows for the three months ended March&nbsp;31, 2011 and 2010. The results of operations for the three months ended March&nbsp;31, 2011 are not necessarily indicative of the
results that may be expected for the year ending December&nbsp;31, 2011 or any other future periods. Certain information and note disclosures normally included in the financial statements prepared
in accordance with GAAP have been condensed or omitted under the SEC's rules and regulations. These unaudited interim condensed consolidated financial
statements should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended December&nbsp;31, 2010. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Significant accounting policies  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Company's significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December&nbsp;31,
2010 included elsewhere in this prospectus. Since the date of those financial statements, there have been no changes to the Company's significant accounting policies. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> Unaudited pro forma balance sheet presentation  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The unaudited pro forma balance sheet as of March&nbsp;31, 2011, reflects the conversion of 12,972,547 shares of Convertible Preferred stock into
13,064,838 shares of Common stock as though the completion of the initial public offering ("IPO") contemplated by the filing of the Company's prospectus had occurred on March&nbsp;31, 2011. The pro
forma effect of the conversion of the Preferred shares is higher than the Preferred shares outstanding during the period as the Series&nbsp;B-1 Preferred shares convert into Common shares at a ratio
of one to 1.16 upon an IPO. The shares of common stock issued in the IPO and any related estimated net proceeds are excluded from such pro forma information. In addition, the Company has outstanding
warrants to purchase 18,691 shares of Series&nbsp;B Preferred stock and 7,316 shares of the Company's Series&nbsp;B-1 Preferred stock, which will automatically convert into warrants to
purchase 26,007 shares of common stock. The liability related to these warrants of $239 has been reclassified to additional paid in capital as these warrants will no longer be exercisable for
Preferred shares which are contingently redeemable. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Use of estimates  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-37</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>On
an ongoing basis, the Company evaluates its estimates, including those related to the accounts receivable allowance, the reserve for excess and obsolete inventory, the warranty reserve, the useful
lives of long-lived assets, the recoverability of intangible assets, the value of common stock and assumptions used for the purpose of determining stock-based compensation, the value of
Preferred stock warrants, and income taxes, among others. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of
which form the basis for making judgments about the carrying value of assets and liabilities as well as reported revenue and expenses during the periods presented. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Concentration of credit risk  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, and
trade receivables. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Cash
and cash equivalents are invested in major financial institutions in the United States and Mexico. Such deposits in the United States may be in excess of insured limits and are not insured in
other jurisdictions. Management believes that the financial institutions that hold the Company's investments are financially sound and, accordingly, minimal credit risk exists with respect to these
investments. Concentration of credit risk with respect to trade accounts receivable exists due to the significance of several large telecommunication industry customers. Five customers make up 64% and
60% of accounts receivable as of March&nbsp;31, 2011 and December&nbsp;31, 2010, respectively. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
Company has no foreign exchange contracts, option contracts, or other hedging arrangements. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Product warranties  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In general, the Company provides a product warranty for one year from date of shipment, except where some products have a shorter warranty life. The
Company estimates the costs of its warranty obligations based on its historical experience and expectations and expected future conditions. To the extent the Company experiences increased warranty
claim activity or increased costs associated with servicing those claims, the Company's warranty costs will increase resulting in decreases to gross profit. The Company periodically assesses the
adequacy of its recorded warranty liabilities and adjusts the amounts as necessary. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Fair value of financial instruments  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The carrying amount of cash and cash equivalents, restricted cash, accounts receivable, other current assets, accounts payable and accrued and other
current liabilities approximate fair value, due to their short-term nature. The carrying value of the Preferred stock warrant liability is the estimated fair value of the liability. (See
Note&nbsp;6 to these unaudited consolidated financial statements). </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
carrying amounts of the Company's long-term liabilities approximate their fair value because the interest rate is reflective of rates that the Company could currently obtain on debt
with similar terms and conditions. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Stock-based compensation  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Company recognizes the cost of stock-based compensation to employees, including grants of employee stock options, in the consolidated statement
of operations based on fair value of </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-38</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=3,SEQ=191,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=586089,FOLIO='F-38',FILE='DISK104:[11ZCB1.11ZCB76301]GA76301A.;47',USER='NLUCCA',CD='12-AUG-2011;10:08' -->
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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:arial;"><FONT SIZE=2>those
awards at the date of grant over the requisite service period. The Company uses the Black-Scholes-Merton ("Black-Scholes") option pricing model to determine the fair value of the stock-based
compensation awards. The estimated fair value of stock-based compensation awards on the date of grant is amortized on a straight-line basis over the requisite service period. Stock-based
compensation expense totaled $4 and $5 for the three months ended March&nbsp;31, 2011 and 2010, respectively. Stock-based compensation plans, related expenses and assumptions used in the
Black-Scholes option pricing are more fully described in Note&nbsp;10 to these unaudited consolidated financial statements. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Net income attributable to common shares  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following table sets forth the computation of basic and diluted net income per share for the periods indicated: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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 </FONT></P>

<!-- User-specified TAGGED TABLE -->
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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="74pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="74pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="74pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=11 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Three months ended ended March&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2011</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Pro forma<BR>
2011</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=11 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B><I>Basic net income per common share calculation:</I></B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net income</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,282</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,345</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,282</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Plus: Redemption of preferred stock at a discount to carrying value</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>47,478</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Less: Undistributed earnings allocated to participating securities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(2,082</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(1,176</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net income attributable to common shareholders&#151;basic</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>47,678</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>169</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,282</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Basic weighted average common shares</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,311,760</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,521,308</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>14,376,598</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Basic net income per share</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>36.35</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>0.11</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>0.16</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B><I>Diluted net income per common share calculation:</I></B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net income</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,282</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,345</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,282</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Less: Undistributed earnings allocated to participating securities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(1,176</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net income attributable to common shareholders&#151;diluted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,282</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>169</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,282</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Weighted average shares used to compute basic net income per share</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,311,760</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,521,308</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>14,376,598</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Effect of potentially dilutive securities:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Employee stock options</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>131,179</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>131,179</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Conversion of Preferred stock</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>14,249,873</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Weighted average shares used to compute diluted net income per share</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>15,692,812</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,521,308</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>15,819,537</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Diluted net income per share</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>0.15</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>0.11</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>0.14</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=11 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>The Redemption of Preferred stock at a discount to carrying value of $47,478 relates to the repurchase by the Company of 5,339,798 shares of Preferred stock
during the first quarter of 2011 (Note&nbsp;9). </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-39</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=4,SEQ=192,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=922077,FOLIO='F-39',FILE='DISK104:[11ZCB1.11ZCB76301]GA76301A.;47',USER='NLUCCA',CD='12-AUG-2011;10:08' -->
<A NAME="page_ga76301_1_40"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>For
the three months ended March&nbsp;31, 2011, the Company presented diluted net income per common share using the "if-converted method", which results in a more dilutive effect than
using the two-class method, due primarily to the redemption of Preferred stock at a discount described above. For the three months ended March&nbsp;31, 2010, the Company presented
diluted net income per common share using the two-class method, which results in the same diluted net income per share amount as calculated using the "if-converted" method
during this period. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Diluted
net income per share for the periods presented do not reflect the following potential common shares, as the effect would be antidilutive: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="65pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=9 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=7 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Three months ended March&nbsp;31, </B></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2011</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2011<BR>
(Pro forma)</B></FONT><BR></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=9 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Stock options and warrants</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>175,758</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>441,129</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>175,758</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=9 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>The pro forma net income per share is computed using the weighted-average number of shares of Common stock outstanding and assumes the conversion of all
outstanding shares of Preferred stock into an aggregate of 13,064,838 shares of Common stock upon completion of the Company's planned IPO, as if such conversion had occurred at the beginning of the
period. In addition, pro forma net income per share assumes that the Preferred stock warrants have been automatically converted to Common stock warrants at the beginning of the period. The pro forma
effect of the conversion of the Preferred shares is higher than the Preferred shares outstanding during the period as the Series&nbsp;B-1 Preferred shares convert into Common shares at a ratio of
one to 1.16 upon an IPO. The Company believes the unaudited pro forma net income per share provides material information to investors, as the conversion of the Company's Preferred stock to common
stock is expected to occur upon the closing of an IPO and the Preferred stock warrants will be converted to Common stock warrants upon the closing of an IPO, and therefore the disclosure of pro forma
net income per share thus provides an indication of net income per share that is comparable to what will be reported by the Company as a public company. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B>(3)&nbsp;&nbsp;&nbsp;Inventories  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following is a summary of inventories, net: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="56pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="78pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>March&nbsp;31,<BR>
2011</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>December&nbsp;31,<BR>
2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Raw materials</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>11,869</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>9,359</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Work in progress</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>10,675</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>9,707</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Finished products</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3,853</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,972</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Reserve for excess and obsolete inventory</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(2,568</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(2,512</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>23,829</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>19,526</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-40</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=5,SEQ=193,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=329651,FOLIO='F-40',FILE='DISK104:[11ZCB1.11ZCB76301]GA76301A.;47',USER='NLUCCA',CD='12-AUG-2011;10:08' -->
<A NAME="page_ga76301_1_41"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=3><B>(4)&nbsp;&nbsp;&nbsp;Intangible assets  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following table provides information regarding the Company's intangible assets subject to amortization: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:54%;margin-left:10%;">
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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="73pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="73pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=19 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>March&nbsp;31, 2011 </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>December&nbsp;31, 2010 </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Gross<BR>
amount</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Accumulated<BR>
amortization</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Net<BR>
amount</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Gross<BR>
amount</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Accumulated<BR>
amortization</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Net<BR>
amount</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=19 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Technology</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>8,829</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(5,905</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,924</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>8,829</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(5,675</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3,154</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Customer relationships</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4,826</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(1,970</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,856</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4,826</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(1,815</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3,011</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>944</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(944</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>944</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(944</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=17 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>14,599</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(8,819</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>5,780</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>14,599</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(8,434</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>6,165</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=19 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>Amortization expense amounted to $386 and $601 for the three months ended March&nbsp;31, 2011 and 2010, respectively. The estimated aggregate amortization
expense for each of the succeeding years is $848 for the remainder of 2011, $1,079 for 2012, 2013 and 2014; $844 for 2015; and $851 thereafter. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B>(5)&nbsp;&nbsp;&nbsp;Fair value measurements  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or
most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. The Company evaluates the fair value of certain
assets and liabilities using the following fair value hierarchy which ranks the quality and reliability of inputs, or assumptions, used in the determination of fair value: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Level&nbsp;1&#151;quoted prices in active markets for identical assets and liabilities </FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Level&nbsp;2&#151;inputs other than
Level&nbsp;1 quoted prices that are directly or indirectly observable </FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Level&nbsp;3&#151;unobservable inputs that are not corroborated by market data </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>The
Company evaluates assets and liabilities subject to fair value measurements on a recurring and nonrecurring basis to determine the appropriate level to classify them for each reporting period.
This determination requires significant judgments to be made by the Company. The </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-41</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=6,SEQ=194,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=285557,FOLIO='F-41',FILE='DISK104:[11ZCB1.11ZCB76301]GA76301A.;47',USER='NLUCCA',CD='12-AUG-2011;10:08' -->
<A NAME="page_ga76301_1_42"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:arial;"><FONT SIZE=2>following
table sets forth the Company's assets and liabilities that were measured at fair value as of March&nbsp;31, 2011 and December&nbsp;31, 2010, by level within the fair value hierarchy: </FONT></P>
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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="42pt" style="font-family:arial;"></TD>
<TD WIDTH="18pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="42pt" style="font-family:arial;"></TD>
<TD WIDTH="18pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="42pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=13 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=8 ROWSPAN=2 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Fair value<BR>
measurement using </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Amounts at<BR>
fair value</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Level&nbsp;1</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Level&nbsp;2</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Level&nbsp;3</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=13 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>As of March&nbsp;31, 2011</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Assets</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Money market funds</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,047</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,047</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Liabilities</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Preferred stock warrant liability</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>239</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>239</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>As of December&nbsp;31, 2010</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Assets</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Money market funds</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,047</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,047</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Liabilities</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Preferred stock warrant liability</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>239</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>239</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=13 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>The Preferred stock warrants are classified as liabilities in the accompanying balance sheets as the warrant entitles the holder to purchase Preferred stock
which is contingently redeemable. The fair value of the Preferred stock warrant liability is based on Level&nbsp;3 inputs. The Company's estimate of the fair value of its Preferred stock warrant
liability was determined by utilizing a Black-Scholes based option pricing model, which considered the estimated fair value of these Preferred stock warrants in both an IPO scenario, in which the
warrants have attributes of Common stock warrants and a merger and acquisitions scenario, in which the warrants have attributes of Preferred stock warrants. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As
of March&nbsp;31, 2011 and December&nbsp;31, 2010, the fair value of the Preferred stock warrants was $239. For the three-month periods March&nbsp;31, 2011 and 2010, no charges were recorded
in the unaudited condensed consolidated statements of operations related to the Preferred stock warrants as any change in fair value was de minimis. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=3><B>(6)&nbsp;&nbsp;&nbsp;Borrowings  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Company's borrowings consist of the following: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


</FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="56pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="78pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>March&nbsp;31,<BR>
2011</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>December&nbsp;31,<BR>
2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Credit line</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B> $</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B>10,200</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B> $</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B>10,200</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Long-term loan</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B> 778</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B> 945</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Related-party long-term loan</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B> 1,446</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B> 1,798</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total borrowings</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B> 12,424</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B> 12,943</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Less current portion</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B> (2,001</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B>)</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B> (1,950</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B>)</B></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Less unaccreted discounts</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B> (112</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B>)</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B> (149</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B>)</B></FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Noncurrent portion</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B> $</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B>10,311</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B> $</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><B>10,844</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>In May 2008, the Company entered into a loan and security agreement with Silicon Valley Bank that includes a revolving credit facility in the aggregate amount
of up to $14,000 and a term </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-42</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=7,SEQ=195,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=383113,FOLIO='F-42',FILE='DISK104:[11ZCB1.11ZCB76301]GA76301A.;47',USER='NLUCCA',CD='12-AUG-2011;10:08' -->
<A NAME="page_ga76301_1_43"> </A>


<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:arial;"><FONT SIZE=2>loan
commitment of up to $2,000. All of the Company's property, including all cash accounts, outstanding trade receivables, inventory, fixed assets, and any intellectual property serve as collateral.
The credit facility restricts the Company's ability to declare or pay cash dividends on capital stock. The term loan shall be repaid by monthly installment payments of interest only in the first year,
and thereafter by monthly installments of principal and interest payments for a period of 36&nbsp;months. Interest is payable monthly during the term. In December 2009, the Company amended the
existing loan and security agreement with the bank. The amendment extended the maturity date on the revolving credit facility to December&nbsp;29, 2011, and reduced the interest rate on this
facility by 1%. The amendment did not change the existing terms or rate of interest and expiration date on the term loan. On June&nbsp;20, 2011, the Company amended its existing loan and security
agreement with Silicon Valley Bank. The amendment increased the amount of the credit facility to the aggregate amount of up to $20,000. The amendment extended the maturity date on the revolving credit
facility to December&nbsp;26, 2013, and reduced the interest rate on this facility to Prime Rate plus three-quarters of one percent (4% currently). The Company has classified the outstanding credit
line amount of $10,200 under the loan and security agreement as long-term on its balance sheet as of March&nbsp;31,
2011 and December&nbsp;31, 2010 as the Company had the intent and ability to refinance such facility on a long-term basis. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>As
part of a previous acquisition in 2005, the Company received a loan from a related party in the amount of $5,633. Interest accrued for the initial 23-month period, with total accrued
interest as of April&nbsp;1, 2006 and 2007 added to the principal balance of the loan. Principal and interest payments commenced on April&nbsp;1, 2007, and are payable over 60 equal monthly
installments, through March&nbsp;1, 2012. The loan was recorded based on its estimated fair value at the date of acquisition, in the amount of $4,640, which represented a discount of $993. This
discount is being accreted to interest expense over the term of the loan. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B>(7)&nbsp;&nbsp;&nbsp;Income taxes  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The provision for income taxes for the three month periods ended March&nbsp;31, 2011 and 2010 includes amounts recorded for federal, state and foreign income
taxes. The effective tax rates for the three month periods ended March&nbsp;31, 2011 and 2010 reflect the Company's estimated annual tax rate on reported income before income tax. The Company
operates in an international environment with operations in locations outside of the United States. Accordingly, the consolidated income tax rate is a composite rate reflecting the Company's income
(losses) and the applicable tax rates in the various locations where the Company operates. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As
a consequence of equity transactions in January 2011, the Company anticipates further limitation on the use of its net operating loss carryforwards. The Company's current estimate is that the total
available net operating loss carryforwards are approximately $19&nbsp;million for federal purposes and approximately $18&nbsp;million for state purposes. The limitations could increase upon
completion of an ongoing Section&nbsp;382 study. As a consequence of these additional limitations on net operating loss carryforwards, the Company does not anticipate having sufficient net operating
loss carryforwards to offset 2011 taxable income, and accordingly, the effective tax rate increased from the prior periods. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-43</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=8,SEQ=196,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=1039086,FOLIO='F-43',FILE='DISK104:[11ZCB1.11ZCB76301]GA76301A.;47',USER='NLUCCA',CD='12-AUG-2011;10:08' -->
<A NAME="page_ga76301_1_44"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>


<P style="font-family:arial;"><FONT SIZE=3><B>(8)&nbsp;&nbsp;&nbsp;Business and geographic segment information  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Company currently operates in one business segment, namely, the design, development, and marketing of a full line of optical chips and components for
integration into access, metro, and long haul communication systems. The Company is managed and operated as one business. A single management team that reports to the chief operating decision maker
comprehensively manages the entire business. The Company does not operate any material separate lines of business or separate business entities with respect to its products or product development.
Accordingly, the Company views its business and manages its operations as one reportable segment. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>For
the three months end March&nbsp;31, 2011 and 2010, the Company's revenues, based on shipped to location, were generated in the following geographic regions: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2011</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Asia Pacific</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>27,500</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>18,677</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>North America</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4,568</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3,067</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Europe, Middle East and Rest of World</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,960</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,889</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Consolidated total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>34,028</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>23,633</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>Revenues generated in North America were principally from customers in the United States. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>During
the three months ended March&nbsp;31, 2011 and 2010, sales from customers in China (including Hong Kong) were $17,751 and $11,522, respectively. During the three months ended March&nbsp;31,
2011 and 2010, sales from customers in Taiwan were $2,061 and $3,670, respectively. During the three months ended March&nbsp;31, 2011 and 2010, sales from customers in Malaysia were $5,620 and
$2,069, respectively. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Long-lived
assets by geographic area consist of property and equipment and are as follows: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="56pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="78pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>March&nbsp;31,<BR>
2011</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>December&nbsp;31,<BR>
2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>United States</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>8,200</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>6,116</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Mexico</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,716</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,752</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>15</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>469</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Consolidated total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>9,931</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>8,337</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-44</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=9,SEQ=197,EFW="2205179",CP="CYOPTICS INC",DN="1",CHK=11787,FOLIO='F-44',FILE='DISK104:[11ZCB1.11ZCB76301]GA76301A.;47',USER='NLUCCA',CD='12-AUG-2011;10:08' -->
<A NAME="page_ga76301_1_45"> </A>


<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=3><B>(9)&nbsp;&nbsp;&nbsp;Capital structure  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Composition of share capital: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:73%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"110%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="110%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="78pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="78pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=14 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Authorized </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Issued and outstanding </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>March&nbsp;31<BR>
2011</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>December&nbsp;31<BR>
2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>March&nbsp;31<BR>
2011</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>December&nbsp;31<BR>
2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=14 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Shares of $0.001 par value per share:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Common stock</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>22,084,428</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>14,807,692</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,294,539</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,485,178</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=11 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Series&nbsp;A Preferred stock</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,144,520</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,144,520</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,083,833</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,144,520</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Series&nbsp;B Preferred stock</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,752,408</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,752,408</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,733,237</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,733,717</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Series&nbsp;B-1 Preferred stock</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,450,879</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,450,879</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>572,722</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,444,578</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Series&nbsp;B-2 Preferred stock</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>282,972</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>282,972</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>201,927</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>282,972</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Series&nbsp;B-3 Preferred stock</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,785,585</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,785,585</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,785,585</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Series&nbsp;C Preferred stock</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,228,666</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,644,873</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>688,521</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,228,666</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Series&nbsp;C-1 Preferred stock</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,692,307</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,692,307</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=11 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total convertible preferred stock</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>18,337,337</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>11,061,237</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12,972,547</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10,620,038</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=11 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>40,421,765</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>25,868,929</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>14,267,086</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12,105,216</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=14 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2><B> Convertible Preferred stock  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>On January&nbsp;13, 2011, the Company authorized the issuance of up to 7,692,307 shares of Series&nbsp;C-1 Preferred stock
(Series&nbsp;C-1), par value $0.001 per share. During January and February 2011, the Company completed four closings of sales of shares of its Series&nbsp;C-1 Preferred
stock, issuing a total of 7,692,307 shares of Series&nbsp;C-1 Preferred stock at a price of $6.50 per share for total gross proceeds of $50,000. These gross proceeds were offset by $438
in issuance costs. The Company used $29,648 of these proceeds to repurchase 5,339,798 shares of the Company's existing Preferred stock and 204,100 shares of Common stock via a formal offer to
repurchase that was extended to all existing holders of Preferred stock. The existing Preferred stock was redeemed for an amount below its carrying value and accordingly, this discount of $47,478 was
recorded as a deemed dividend within stockholders' equity (deficit) and is reflected as a component of net income attributable to common stockholders. In connection with the issuance of the
Series&nbsp;C-1 Preferred stock, certain terms of the Company's Preferred stock were amended as discussed below. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Each
share of Preferred stock is convertible into Common stock, on a one-for-one basis, at each holder's option, or automatically, at any time after the date of issuance until
the earlier of an initial public offering, which yields a minimum of $40,000 in net proceeds to the Company, or upon the affirmative vote of at least a majority of the holders of the Preferred stock.
As of March&nbsp;31, 2011, all Preferred stock is convertible into Common stock on a one for one basis. In addition, upon the occurrence of an IPO, the Series&nbsp;B-1 Preferred shares convert
into Common shares at a ratio of one to 1.16. The initial conversion price for each series of Preferred stock is stipulated in the Company's certificate of incorporation. Each share of Preferred stock
shall have the right to one vote for each share of Common stock into which such share of Preferred stock could then be converted. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>The
holders of the Preferred stock shall be entitled to receive, on an as-converted basis, when and as declared by the Company's board of directors (the "Board of Directors"), out of any </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-45</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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<A NAME="page_ga76301_1_46"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:arial;"><FONT SIZE=2>assets
of the Company legally available therefore, such dividends as may be declared from time to time by the Board of Directors; provided, however, that the Board of Directors may not declare
dividends on the Series&nbsp;A Preferred stock in amounts per share greater than dividends declared per share in respect of the Series&nbsp;B Preferred stock. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>In
the event of any liquidation or winding up of the Company, either voluntary or involuntary, the holders of the Series&nbsp;C and C-1 Preferred stock shall be entitled to receive,
prior and in preference to the distribution of any assets of the Company to holders of any other capital stock of the Company, an amount equal to one and two hundred seventy-five one
thousandths times either the $14.36 original Series&nbsp;C Preferred or the $6.50 original Series&nbsp;C-1 Preferred per share purchase price, plus any declared but unpaid dividends
thereon. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>After
full payment of the foregoing Series&nbsp;C and C-1 Preferred stock liquidation preference, the holders of the Series&nbsp;B, B-1, B-2 and B-3
Preferred stock shall be entitled to receive, prior and in preference to the distribution of any assets of the Company to holders of the Series&nbsp;A Preferred stock and Common stock, an amount
equal to a range of one and six one hundredths to one and one half times either the $8.02 original Series&nbsp;B, B-1 and B-2 Preferred or the $14.36 original
Series&nbsp;B-3 Preferred per share purchase price, plus any declared but unpaid dividends thereon. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>After
full payment of the foregoing Series&nbsp;C and C-1 Preferred stock and Series&nbsp;B, B-1, B-2 and B-3 Preferred stock liquidation
preferences, the holders of the Series&nbsp;A Preferred stock shall be entitled to receive, prior and in preference to the distribution of any assets of the Company to holders of Common stock, an
amount equal to eight hundred seventy-five one thousandths times the $8.02 original Series&nbsp;A Preferred per share purchase price, plus any declared but unpaid dividends thereon. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>After
full payment of each of the foregoing liquidation preferences, the remaining assets of the Company will be distributed among the holders of Preferred stock and Common stock on an
as-converted to Common stock basis. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
Preferred Stock is subject to redemption under certain "deemed liquidation" events, as defined, and as such, the Preferred Stock is considered contingently redeemable for financial accounting
purposes. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B>(10)&nbsp;Stock-based compensation  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Company's 1999 Incentive Stock Option Plan was established for the granting of options to officers, management, other key employees, and consultants of up
to 2,243,913 shares of the Company's Common stock. The options granted generally vest over four years and will expire ten years subsequent to the date of grant. Any options that are canceled or
forfeited before expiration become available for future grant. As of March&nbsp;31, 2011, an aggregate of 1,756,625 shares of the Company are still available for future grant. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
Company offers both nonqualified options and incentive stock options and they both have a ten-year term. Employee awards typically vest 25% a year. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
Company has recognized compensation expense of $4 and $5 during the three months ended March&nbsp;31, 2011 and 2010, respectively, based on the estimated grant-date fair value using
the Black-Scholes valuation model. For these awards, the Company has recognized </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-46</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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<A NAME="page_ga76301_1_47"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:arial;"><FONT SIZE=2>compensation
expense using a straight-line amortization method. The Company calculates stock-based compensation expense based on awards that are ultimately expected to vest. Stock-based
compensation for three months ended March&nbsp;31, 2011 and 2010 has been reduced for estimated forfeitures. When estimating forfeitures, the Company considers voluntary termination behaviors as
well as trends of actual option forfeitures. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Valuation assumptions  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Company did not grant any options for the three months ended March&nbsp;31, 2011. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
following table summarizes activity under the 1999 Plan for the three months ended March&nbsp;31, 2011: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="63pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="60pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="70pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=11 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Number of<BR>
shares</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Weighted-<BR>
average<BR>
exercise<BR>
price</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Weighted-<BR>
average<BR>
remaining<BR>
contractual<BR>
term (years)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=11 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Outstanding as of December&nbsp;31, 2010</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>404,001</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4.73</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Granted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Exercised</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(13,461</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2.38</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Forfeited</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(10,907</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>34.55</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Outstanding as of March&nbsp;31, 2011</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>379,633</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4.80</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4.75</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Exercisable at March&nbsp;31, 2011</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>352,739</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5.07</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4.46</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Vested and expected to vest at March&nbsp;31, 2011</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>352,739</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5.07</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4.46</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=11 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=3><B>(11)&nbsp;Subsequent events  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>On April&nbsp;26, 2011, the Company issued approximately 1.3&nbsp;million stock options to directors, officers and employees of the Company at an exercise
price of $2.37 per share. These options were issued out of the 1999 Plan and primarily vest over a four-year term. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-47</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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 </FONT> <FONT SIZE=2>
<A HREF="#bg76301a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=4><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=4><B>
<IMG SRC="g991679.jpg" ALT="GRAPHIC" WIDTH="282" HEIGHT="120">
  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=4><B>Common Stock  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=4><B> Prospectus  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><I>Joint Book-Running Managers  </I></FONT></P>
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<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=4><B>J.P. Morgan</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=4>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=4>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=4>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=4><B>Barclays Capital</B></FONT></TD>
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<TD VALIGN="BOTTOM" style="font-family:arial;"><BR><FONT SIZE=3><B> Oppenheimer&nbsp;&amp;&nbsp;Co.</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=3><B><BR>&nbsp;</B></FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:arial;"><BR><FONT SIZE=3><B>Raymond James</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=3><B><BR>&nbsp;</B></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><BR><FONT SIZE=3><B>Roth Capital Partners</B></FONT></TD>
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2011 </FONT></P>

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<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="ja76301_part_ii_information_not_required_in_the_prospectus"> </A>
<A NAME="toc_ja76301_1"> </A>
<BR></FONT><FONT SIZE=4><B>  Part&nbsp;II<BR>  Information not required in the prospectus  <BR>  </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=3><B> Item&nbsp;13.&nbsp;&nbsp;&nbsp;&nbsp;Other expenses of issuance and distribution.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Estimated expenses, other than underwriting discounts and commissions, payable by the Registrant in connection with the sale of the
common stock being registered under this registration statement are as follows: </FONT></P>
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<TD COLSPAN=4 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>SEC registration fee</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$11,610</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>FINRA filing fee</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$10,500</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>NASDAQ Global Select Market initial listing fee</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$25,000</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Listing fee</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Printing and engraving expenses</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Legal fees and expenses</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accounting fees and expenses</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Blue Sky fees and expenses (including legal fees)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
</TR>
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<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Transfer agent and registrar fees and expenses</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Miscellaneous</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
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<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
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<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT  style="font-size:8pt;line-height:9pt;">
*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To be filed by amendment. </FONT></P>
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=3><B> Item&nbsp;14.&nbsp;&nbsp;&nbsp;&nbsp;Indemnification of directors and officers.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>On completion of this offering, the Registrant's amended and restated certificate of incorporation will contain provisions that
eliminate, to the maximum extent permitted by the General Corporation Law of the State of Delaware, the personal liability of the Registrant's directors and executive officers for monetary damages for
breach of their fiduciary duties as directors or officers. The Registrant's amended and restated certificate of incorporation and bylaws will provide that the Registrant must indemnify its directors
and executive officers and may indemnify its employees and other agents to the fullest extent permitted by the General Corporation Law of the State of Delaware. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Sections&nbsp;145
and 102(b)(7) of the General Corporation Law of the State of Delaware provide that a corporation may indemnify any person made a party to an action by reason of the fact that he or
she was a director, executive officer, employee or agent of the corporation or is or was serving at the request of a corporation against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her in connection with such action if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not
opposed to, the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful, except that, in the case
of an action by or in right of the corporation, no indemnification may generally be made in respect of any claim as to which such person is adjudged to be liable to the corporation. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
Registrant has entered into indemnification agreements with its directors and executive officers, in addition to the indemnification provided for in its amended and restated certificate </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>II-1</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>of
incorporation and bylaws, and intends to enter into indemnification agreements with any new directors and executive officers in the future. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
Registrant has purchased and intend to maintain insurance on behalf of each and any person who is or was a director or officer of the Registrant against any loss arising from any claim asserted
against him or her and incurred by him or her in any such capacity, subject to certain exclusions. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
Underwriting Agreement (Exhibit&nbsp;1.1 hereto) provides for indemnification by the underwriters of the Registrant and its executive officers and directors, and by the Registrant of the
underwriters, for certain liabilities, including liabilities arising under the Securities Act. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>See
also the undertakings set out in response to Item&nbsp;17 herein. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Item&nbsp;15.&nbsp;&nbsp;&nbsp;&nbsp;Recent sales of unregistered securities.  </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>During the last three years, we sold the following unregistered securities: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>From
January&nbsp;1, 2008 through December&nbsp;31, 2010, we sold and issued to our employees, consultants or former service providers an aggregate of
37,234 shares of common stock pursuant to option exercises under the 1999 Stock Option Plan, as amended, at prices ranging from $0.052 to $4.16 per share for an aggregate purchase price of $25,928.06.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>From
January&nbsp;1, 2008 through December&nbsp;31, 2010, we sold and issued to our employees, consultants or former service providers an aggregate of
46 shares of common stock pursuant to option exercises under the 2007 Stock Plan at $4.16 per share for an aggregate purchase price of $194.88.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>On
July&nbsp;24, 2008 and September&nbsp;22, 2008, we sold and issued 2,228,666 shares of Series&nbsp;C Preferred Stock to 37 accredited investors, at
$14.36 per share, for a total consideration of $32,003,074. 1,540,145 of such Series&nbsp;C Preferred Stock was repurchased from certain investors who elected to participate in our Offer to
Repurchase which closed on January&nbsp;13, 2011.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>From
January 13, 2011 through February&nbsp;10, 2011, we sold and issued 7,692,307 shares of Series&nbsp;C-1 Preferred Stock to nine accredited
investors, at $6.50 per share, for a total consideration of $49,999,996. </FONT></DD></DL>


<P style="font-family:arial;"><FONT SIZE=2>None
of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering, and the registrant believes that each transaction was exempt from the
registration requirements of the Securities Act in reliance on the following exemptions: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>with respect to the transactions described in paragraphs&nbsp;(1) and (2), Rule&nbsp;701 promulgated under the
Securities Act as transactions pursuant to a compensatory benefit plan approved by the registrant's Board of Directors; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>with respect to the transactions described in paragraphs&nbsp;(3), Section&nbsp;4(2) of the Securities Act, or
Rule&nbsp;506 of Regulation&nbsp;D promulgated thereunder, as transactions by an issuer not involving a public offering. Each recipient of the securities in these transactions represented his or
her intention to acquire the securities for investment only and not with a view to, or </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>II-2</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>for
resale in connection with, any distribution thereof, and appropriate legends were affixed to the share certificates issued in each such transaction. In each case, the recipient received adequate
information about the registrant or had adequate access, through his or her relationship with the registrant, to information about the registrant. </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>There
were no underwriters employed in connection with any of the transactions set forth in Item&nbsp;15. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Item&nbsp;16.&nbsp;&nbsp;&nbsp;&nbsp;Exhibits and financial statement schedules.  </B></FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>(a)</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Exhibits.
</FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>The
exhibits to the registration statement are listed in the Exhibit Index to this registration statement and are incorporated herein by reference.  </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>(b)</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Financial
Statement Schedule. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>All
financial statement schedules have been omitted because they are not applicable or the required information is included in the consolidated financial statements or notes thereto. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Item&nbsp;17.&nbsp;&nbsp;&nbsp;&nbsp;Undertakings.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is, therefore, unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted
by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933, as amended, and will be
governed by the final adjudication of such issue. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
hereby undertake that: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>(a)</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>We
will provide to the underwriters at the closing as specified in the underwriting agreement certificates in such denominations and registered in such
names as required by the underwriters to permit prompt delivery to each purchaser.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>(b)</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>For
purposes of determining any liability under the Securities Act of 1933, as amended, the information omitted from a form of prospectus filed as part of
this registration statement in reliance upon Rule&nbsp;430A and contained in the form of prospectus filed by the Registrant pursuant to Rule&nbsp;424(b)(1) or (4)&nbsp;or 497(h) under the
Securities Act of 1933, as amended, shall be deemed to be part of this registration statement as of the time it was declared effective.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>(c)</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>For
the purpose of determining any liability under the Securities Act of 1933, as amended, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide
offering thereof. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>II-3</FONT></P>

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<A NAME="toc_jc76301_1"> </A>
<BR></FONT><FONT SIZE=4><B>  Signatures  <BR>  </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of Breinigsville, State of Pennsylvania, on August&nbsp;12, 2011. </FONT></P>
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<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:arial;"><FONT SIZE=2><B>CYOPTICS,&nbsp;INC.</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><B><BR>
&nbsp;</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><B><BR>&nbsp;</B></FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>  By:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><BR><FONT SIZE=2>/s/&nbsp;ETTORE J. CORINGRATO, JR.<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> Ettore J. Coringrato, Jr.<BR></FONT> <FONT SIZE=2><I>President and Chief Executive Officer<BR> </I></FONT></TD>
</TR>
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 <P ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><A
NAME="jc76301_power_of_attorney"> </A>
<A NAME="toc_jc76301_2"> </A>
<BR></FONT><FONT SIZE=4><B>  Power of attorney  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Ettore J. Coringrato, Jr. and
Matthew C. Riley, jointly and severally, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign the Registration Statement on Form&nbsp;S-1 of CyOptics,&nbsp;Inc. and any or all amendments (including post-effective
amendments) thereto and any new registration statement with respect to the offering contemplated thereby filed pursuant to Rule&nbsp;462(b) of the Securities Act, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises hereby ratifying and confirming all that said
attorneys-in-fact and agents, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Pursuant
to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated below: </FONT></P>
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<TD WIDTH="122pt" style="font-family:arial;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Signature </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Title </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Date </B></FONT></TH>
</TR>
<TR VALIGN="TOP">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>/s/&nbsp;ETTORE J. CORINGRATO, JR.<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> Ettore J. Coringrato, Jr.</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>Director, President and Chief Executive Officer</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>August&nbsp;12, 2011</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>/s/&nbsp;MATTHEW C. RILEY<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> Matthew C. Riley</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>Chief Financial Officer</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>August&nbsp;12, 2011</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>/s/&nbsp;EREL N. MARGALIT<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> Erel N. Margalit</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>Chairman of the board of directors</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>August&nbsp;9, 2011</FONT></TD>
</TR>
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 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>II-4</FONT></P>

<HR NOSHADE>
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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg76301a_main_toc">Table of Contents</A></FONT></P>
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<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Signature </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Title </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Date </B></FONT></TH>
</TR>
<TR VALIGN="TOP">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>/s/&nbsp;MARK DENINO<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> Mark DeNino</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>Director</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>August&nbsp;12, 2011</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>/s/&nbsp;ROBERT FINZI<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> Robert Finzi</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>Director</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>August&nbsp;12, 2011</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>/s/&nbsp;JOHN PILITSIS<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> John Pilitsis</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>Director</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>August&nbsp;12, 2011</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>/s/&nbsp;SEAN SEBASTIAN<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> Sean Sebastian</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>Director</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>August&nbsp;12, 2011</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>/s/&nbsp;NOAH D. YAGO<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> Noah D. Yago</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>Director</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>August&nbsp;12, 2011</FONT></TD>
</TR>
</TABLE></DIV>
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 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>II-5</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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NAME="page_ka76301_1_6"> </A>


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</FONT></P>

<!-- TOC_END -->

<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg76301a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="ka76301_exhibit_index"> </A>
<A NAME="toc_ka76301_1"> </A>
<BR></FONT><FONT SIZE=4><B>  Exhibit index  <BR>  </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="47pt" style="font-family:arial;"></TD>
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<TD WIDTH="" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=4 style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Exhibit number</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Exhibit title</B></FONT><BR></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=4 style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>1.1*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Form of Underwriting Agreement.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>3.1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Amended and Restated Certificate of Incorporation of the Registrant, to be effective on the date this Registration Statement is declared effective by the Securities and Exchange Commission.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>3.2*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Form of Amended and Restated Certificate of Incorporation of the Registrant, to be effective upon the completion of this offering.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>3.3*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Form of Amended and Restated Bylaws of the Registrant to be effective upon the completion of this offering.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>4.1*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Form of Common Stock certificate of the Registrant.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>4.2</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>2011 Amended and Restated Investor Rights Agreement dated as of January&nbsp;13, 2011 by and between the Registrant and certain stockholders, and amendments thereto.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>5.1*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Opinion of Goodwin Procter&nbsp;LLP</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>10.1+*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Form of Indemnification Agreement between the Registrant and each of its directors and executive officers.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>10.2+</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>1999 Stock Option Plan and forms of agreements thereunder.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>10.3+</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>2007 Stock Plan and form of agreement thereunder.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>10.4+*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>2011 Equity Incentive Plan and forms of agreements thereunder.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>10.5+</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Employment Agreement dated as of January&nbsp;1, 2005 by and between the Registrant and Ettore J. Coringrato, Jr.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>10.6</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Loan and Security Agreement dated as of May&nbsp;21, 2008 by and between the Registrant and Silicon Valley Bank, as amended.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>10.7</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Export-Import Bank Loan and Security Agreement dated as of May&nbsp;21, 2008 by and between the Registrant and Silicon Valley Bank, as amended.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>10.8</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Growth Capital Facility Loan and Security Agreement dated as of May&nbsp;21, 2008 by and between the Registrant and Silicon Valley Bank.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>10.9</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Promissory Note dated as of May&nbsp;21, 2008 issued by Silicon Valley Bank to the Registrant.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>10.10</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Intellectual Property Security Agreement dated as of May&nbsp;21, 2008 by and between the Registrant and Silicon Valley Bank, as amended.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>10.11</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Borrower Agreement under the Export-Import Bank of the United States Working Capital Guarantee Program dated as of May&nbsp;21, 2008 by and between the Registrant and Silicon Valley Bank.</FONT></TD>
</TR>
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 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>II-6</FONT></P>

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<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Exhibit number</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Exhibit title</B></FONT><BR></TH>
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<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>10.12</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Lease Agreement dated as of April&nbsp;29, 2005 by and between TriQuint Optoelectronics,&nbsp;Inc. and the Registrant and related amendments and renewals.</FONT></TD>
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<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>10.13</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Lease Agreement dated as of May&nbsp;26, 2001 by and between the Registrant and 47.07 Associates&nbsp;L.P. and related modifications.</FONT></TD>
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<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>21.1*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Subsidiaries of the Registrant.</FONT></TD>
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<TD style="font-family:arial;"><BR><FONT SIZE=2>23.1</FONT></TD>
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<TD style="font-family:arial;"><BR><FONT SIZE=2>Consent of Ernst&nbsp;&amp; Young&nbsp;LLP, Independent Registered Public Accounting Firm.</FONT></TD>
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<TD style="font-family:arial;"><BR><FONT SIZE=2>23.2*</FONT></TD>
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<TD style="font-family:arial;"><BR><FONT SIZE=2>Consent of Goodwin Procter&nbsp;LLP (contained in Exhibit&nbsp;5.1)</FONT></TD>
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<TD style="font-family:arial;"><BR><FONT SIZE=2>24.1</FONT></TD>
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<TD style="font-family:arial;"><BR><FONT SIZE=2>Power of Attorney (contained in the signature page to this registration statement.)</FONT></TD>
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<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">+&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicates
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Table of contents
CyOptics, Inc. Consolidated financial statements Contents
Table of Contents
As filed with the Securities and Exchange Commission on August 12, 2011
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933
CyOptics, Inc.
(Exact name of Registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
3674
(Primary Standard Industrial
Classification Code Number)
95-4745030
(I.R.S. Employer
Identification Number)
9999 Hamilton Blvd.
Breinigsville, PA 18031
Tel: (484) 391-2061
Fax: (484) 397-2014
(Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices)
Ettore J. Coringrato, Jr.
President and Chief Executive Officer
9999 Hamilton Blvd.
Breinigsville, PA 18031
Tel: (484) 391-2061
Fax: (484) 397-2014
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Caine Moss
Richard A. Kline
Goodwin Procter LLP
135 Commonwealth Drive
Menlo Park, CA 94025
Tel: (650) 752-3100
Fax: (650) 853-1038
Jeffrey D. Saper
Robert D. Sanchez
Daniel S. Peale
Wilson Sonsini Goodrich & Rosati
Professional Corporation
1700 K Street, NW, Fifth Floor
Washington, D.C. 20006
Tel: (202) 973-8800
Fax: (202) 973-8899
Approximate date of commencement of proposed sale to the public:
As soon as practicable after this registration statement becomes effective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the
following box:
o
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering.
o
If this Form is a post effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering.
o
If this Form is a post effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering.
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the
definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
ý
(Do not check if a
smaller reporting company)
Smaller reporting company
o
CALCULATION OF REGISTRATION FEE
Title of each class of securities
to be registered
Proposed maximum
aggregate offering
price(1)
Amount of
registration fee(2)
Common Stock, par value $0.001 per share
$100,000,000
$11,610
(1)
Estimated
solely for the purpose of calculating the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended.
Includes offering price of shares that the underwriters have the option to purchase to cover over-allotments, if any.
(2)
Calculated
pursuant to Rule 457(o) under the Securities Act based on an estimate of the proposed maximum offering price.
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further
amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration
statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
Table of Contents
The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any
jurisdiction where the offer or sale is not permitted.
Prospectus
SUBJECT TO COMPLETION, DATED August 12, 2011
Shares
Common Stock
This is the initial public offering of common stock of CyOptics, Inc. We are
offering                        shares of common stock. The estimated initial
public offering price is between $            and $            per share.
We
intend to apply to have our common stock listed on The NASDAQ Global Select Market under the symbol "CYOP."
Investing in our common stock involves risks. See "Risk factors" beginning on page 11 of this prospectus.
Per share
Total
Initial public offering price
Underwriting discounts and commissions
Proceeds to CyOptics (before expenses)
We
have granted the underwriters a 30-day option to purchase up to                        additional shares of common stock from us
on the same terms and conditions set forth above to cover
over-allotments, if any.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The
underwriters expect to deliver the shares on or about                        , 2011.
J.P. Morgan
Barclays Capital
Oppenheimer & Co.
Raymond James
Roth Capital Partners
Prospectus
dated                        , 2011
Table of Contents
Table of contents
Page
Prospectus summary
1
Summary consolidated financial data
8
Risk factors
11
Special note regarding forward-looking statements and industry
data
33
Use of proceeds
34
Dividend policy
34
Capitalization
35
Dilution
37
Selected consolidated financial data
39
Management's discussion and analysis of financial condition and results of
operations
42
Business
71
Management
95
Compensation discussion and analysis
103
Certain relationships and related party transactions
124
Principal stockholders
127
Description of capital stock
131
Shares eligible for future sale
134
Material United States federal income tax consequences to non-U.S.
holders
137
Underwriting
141
Legal matters
150
Experts
150
Where you can find more information
150
Consolidated financial statements
F-1
You should rely only on the information contained in this prospectus and in any free writing prospectus prepared by or on behalf of us. We have not, and the
underwriters have not, authorized anyone to provide you with information different from, or in addition to, that
contained in this prospectus or any related free writing prospectus. This prospectus is an offer to sell only the shares offered hereby but only under circumstances and in jurisdictions where it is
lawful to do so. The information contained in this prospectus is current only as of its date.
Through and including,                           , 2011 (the 25th day after the date of
this prospectus), all dealers effecting transactions in these securities, whether or not
participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to an
unsold allotment or subscription
.
For
investors outside the United States: neither we nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction
where action for that purpose is required, other than the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of
this prospectus.
i
Table of Contents
Prospectus summary
This summary highlights information contained elsewhere in this prospectus and does not contain all of the
information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our consolidated financial
statements and the related notes thereto and the information set forth under the sections "Risk factors" and "Management's discussion and analysis of financial condition and results of operations," in
each case appearing elsewhere in this prospectus.
Company overview
We are a leading platform-based provider of core optical technologies enabling bandwidth for high-speed networks. Our
solutions provide the fundamental building blocks—the creation, modulation, routing and detection of light—that enable high-performance and
cost-effective optical networking. We produce active components that create and detect light, passive components that guide and combine light, and packaging solutions that integrate active
and passive components into high-performance, power-efficient, cost-effective, compact products. Through our vertically integrated technology and manufacturing platforms, we
design, fabricate and package a broad portfolio of optical components—lasers, detectors, transmitters, receivers and modulators—for module manufacturers and systems providers,
including original equipment manufacturers, or OEMs, who sell to communication service providers and enterprises in the Access, Enterprise/Data Center and Long Haul/Metro segments of the
communications network, and for other emerging end market applications, such as defense and avionics, high performance computing, medical and security.
Network
traffic continues to increase rapidly in volume, volatility and complexity, driven by unprecedented demand for bandwidth-intensive, rich content such as streaming and real-time
video, the growth of online social networking and cloud-based computing services, and the proliferation of mobile devices. Optical networking is becoming the de facto transport technology with its
attractive bandwidth capacity, reach, reliability, low power consumption and network intelligence capabilities. Within the optical networking value chain, innovation at the optical component level is
driving increased functionality, performance and cost savings, and gradually capturing an increasing percentage of optical networking spending.
We
are one of the few companies in our industry with vertically integrated technology and manufacturing platforms that span from Indium Phosphide and Silica-on-Silicon
fabrication to proprietary, highly automated assembly and test facilities. Our in-house capabilities allow us to offer a dependable supply of quality optical components and modules. Our
photonic integrated circuits, or PICs, and components on board, or COB, solutions incorporate greater functionality and intelligence at the component level, which enables us to serve
next-generation, higher speed networks. We continue to leverage and expand upon more than 25 years of research, development and investments, including by the former optoelectronics
divisions of Lucent Technologies and Bell Labs, which we obtained through our acquisition of a division of TriQuint Semiconductor, Inc. in 2005, and our broad portfolio of proprietary
technologies, which form the foundation of our technical expertise and extensive know-how.
We
sell our products to a global, diversified customer base that includes module manufacturers and OEMs, who in turn sell to communication service providers and enterprises, and to defense
1
Table of Contents
and
avionics contractors. Our customers include Cambridge Industries Group, Ltd., Ciena Corporation, Finisar Corporation, Huawei Technologies Co., Ltd., Lockheed Martin Corporation,
Source Photonics, Inc. and Superxon Technology, Ltd. We believe that greater than 70% of our revenue was sole-sourced in 2010, which we believe demonstrates the
differentiation of our products and gives us significant insight into our customers' product and technology roadmaps.
We
believe we have an attractive financial profile, with superior top-line performance and strong quarter over quarter revenue visibility. We have grown our revenue at a 31.3% compound
annual growth rate, or CAGR, from 2005 to 2010 and 44.0% quarter over quarter from March 31, 2010 to March 31, 2011. We have also experienced significant margin expansion, as our income
(loss) from operations margin increased from 7.3% in the three months ended March 31, 2010 to 12.0% in the three months ended March 31, 2011. In addition, our non-GAAP adjusted income
(loss) from operations margin increased from 9.8% in the three months ended March 31, 2010 to 13.2% in the three months ended March 31, 2011. Adjusted income (loss) from operations
margin is not calculated in accordance with generally accepted accounting principles in the United States, or GAAP, and should not be considered as an alternative to income (loss) from operations
margin calculated and presented in accordance with GAAP. A reconciliation of this non-GAAP measure to income (loss) from operations margin calculated and presented in accordance with GAAP
is included in this prospectus in "Management's discussion and analysis of financial condition and results of operations—Key business metrics—Use of non-GAAP financial
measures."
Industry
Network traffic continues to increase rapidly in volume, volatility and complexity. To address this trend, communication service
providers and enterprises are expanding and upgrading their existing network infrastructures.
Optical
networking is becoming the de facto transport technology due to its attractive bandwidth capacity, reach, reliability, low power consumption and network intelligence capabilities. Optical
components and modules provide the fundamental building blocks—the creation, modulation, routing and detection of light—of the optical network ecosystem, from Long Haul/Metro,
Access to the Digital Home through fiber-to-the-home, or FTTH, to Enterprise/Data Center. Ovum, a third-party industry analyst, estimates the market for optical components and modules was
$5.6 billion in 2010 and is forecasted to grow to $10.5 billion in 2015, representing a 13.4% CAGR. However, we believe there are specific market segments and geographies we address that
are expected to meaningfully exceed that growth rate. These include:
•
Access network segment.
Access networks increasingly use
high-speed optical fiber in new deployments and as a replacement for copper lines in legacy networks. Passive optical networks, or PONs, are currently the fastest-growing broadband Access
technology. Gigabit PON, or GPON, is expected to continue to gain market share over prior PON technologies. According to Ovum, GPON transceiver sales are projected to grow from
$288.5 million in 2010 to $576.7 million in 2015, representing a 14.9% CAGR. However, with China's aggressive FTTH rollout, Dell'Oro, a third-party industry analyst, expects GPON
revenue in China to grow by as much as 40% year-over-year in 2011.
2
Table of Contents
•
Enterprise/Data Center network segments.
Fueled primarily by
server virtualization and cloud computing, server-to-switch connection rates are moving rapidly from 1 gigabit Ethernet, or GbE, to 10GbE. The adoption of 10GbE is accelerating
the migration of copper to optical fiber and the need for 40GbE and 100GbE on data center core uplinks. Traditional architectures are no longer adequate for 40GbE and 100GbE, which require
multi-channel architectures to meet the requirements of next-generation switches. According to Ovum, 100GbE transceiver sales will increase from $51.6 million in 2010 to
$712.6 million in 2015, representing a 69.1% CAGR.
•
Long Haul/Metro network segments.
Communication service
providers are accelerating deployments of next-generation 40 gigabits per second, or Gbps, and 100Gbps networks. A key emerging technology for next-generation 40Gbps and
100Gbps networks is coherent detection. According to Ovum, revenue from 100Gbps coherent modules will increase from $35.3 million in 2010 to $786.5 million in 2015, representing an 86.0%
CAGR, while revenue from 40Gbps and 100Gbps Long Haul/Metro receivers is forecasted to grow from $66.0 million in 2010 to $494.8 million in 2015, representing a 49.6% CAGR.
•
Other emerging end market applications.
Optical components
and modules are increasingly being used in emerging end market applications, such as defense and avionics, high performance computing, medical and security, which require high-speed,
high-bandwidth data transmission, higher levels of integration and/or high performance laser/receiver solutions.
Demand
for increased bandwidth capacity and lower costs is driving higher levels of integration at the module and system level to achieve increased faceplate density, lower power dissipation and
greater system functionality. This trend is creating an opportunity for optical component manufacturers to deliver next-generation optical modules and optical COB solutions directly to
OEMs. We believe that innovation at the optical component level is driving increased functionality, higher performance and cost savings in optical networking solutions. Innovative optical
component solutions, many of which are based on PICs, such as multi-channel coherent components and tunable lasers, are expected to comprise an increasing percentage of total optical system capital
expenditures. For example, according to Cisco Systems, while optical components represent approximately 19% of capital expenditures for 10Gbps systems, they represent approximately 68% for 100Gbps
systems.
We
believe optical module manufacturers and OEMs face many challenges, such as meeting demand for high-performance, high-speed optical solutions, increasing system
complexity, decreasing time to market, and reducing capital investment and operating expenses for service providers. We believe these challenges present opportunities that our solutions can address.
Our solutions
We design, fabricate and package a broad portfolio of optical components, including lasers, detectors, transmitters, receivers and
modulators. The key benefits of our solutions include:
•
High levels of photonic integration.
Our in-house
Indium Phosphide and Silica-on-Silicon technology platforms and diverse toolbox of device elements enable the efficient design and scalable, high volume fabrication of a broad
variety of highly integrated PICs that allow us to produce small, reliable and power-efficient solutions.
3
Table of Contents
•
High bit rate products.
Our high bit rate, bidirectional
optical subassembly, or BOSA, products are used in next-generation Access networks (10Gbps or higher), while our PIC-based components and next-generation modules
are used for communication switches in high capacity Enterprise/Data Center (40Gbps or higher) and coherent Long Haul/Metro (40Gbps or higher) networks.
•
Cost-effective solutions.
Our industry-leading
levels of automation in chip fabrication and packaging operations enable us to manufacture our products at high yields and low labor cost, while the re-usability,
re-configurability and scalability of our assembly and test equipment reduces our on-going capital needs.
•
Tailored solutions.
We leverage our in-house
hybrid and monolithic photonic integration techniques, highly-automated assembly and test manufacturing, cooled and uncooled Indium Phosphide laser fabrication capabilities, and our array of device
and packaging technologies, to tailor our products to each communications network segment.
•
Superior quality.
Our automated manufacturing and control
systems that we have built into our device fabrication, packaging and testing processes enable us to deliver products with stable performance, high quality and a high level of reliability.
Competitive strengths
We believe our key competitive strengths include the following:
•
Strong institutional knowledge base and track record of technology
innovation.
We develop industry-leading optical components, including PIC-based components and next-generation modules, by leveraging and
expanding upon more than 25 years of investments including those made by the former optoelectronics divisions of Lucent Technologies and Bell Labs, which we obtained through our acquisition of
a division of TriQuint Semiconductor, Inc. in 2005, and our broad portfolio of proprietary technologies, which form the foundation of our extensive technical expertise and know-how.
•
Greater intelligence at the component level.
As the industry
migrates to higher speed networks, increased system-level consolidation and integration is expected to increase optical components' share of capital expenditures and enhance opportunities for
differentiation. Our PICs and COB solutions, which provide significant performance and cost advantages, are well positioned to capture a larger share of the optical value chain bill of materials at
higher network speeds.
•
Vertical integration.
We are one of the few companies in our
industry with vertically integrated technology and manufacturing platforms that span from Indium Phosphide and Silica-on-Silicon fabrication to proprietary, highly automated
assembly and test facilities. Our comprehensive in-house capabilities allow us to offer our customers a dependable supply of quality optical components and modules, giving us significant
time-to-market, time-to-volume and cost advantages and the ability to respond more quickly to changing market and customer requirements.
•
Industry-leading market position.
We are a leader in several
of our served market segments and are positioned to be a leader in next-generation COB and PIC solutions. For example, we believe that our FTTH BOSA, TO-cans and devices were
deployed in 49.5% of all GPON and
4
Table of Contents
Ethernet
PON, or EPON, Optical Line Terminals, or OLTs, and 47.3% of all GPON Optical Network Units, or ONUs, sold worldwide in 2010.
•
Diversity across network segments, products and
customers.
Our revenues are diversified across network segments, allowing us to capitalize on growth in investment cycles in the communications network, and across
products, with more than 2,500 products across six product families. We also have a large, global and diversified customer base.
•
Experienced management team with strong execution
track-record.
Each of our executive officers has more than 15 years of relevant industry experience, with the substantial majority having more than
25 years of relevant experience. Members of our management team and board of directors also played integral roles in leading Lucent Technologies' optoelectronic components business in 2000,
when the division's revenues exceeded $1 billion. We have acquired and successfully integrated five businesses since 2003, and have grown sales from $27.8 million in 2005 to
$108.3 million in 2010, representing a 31.3% CAGR.
Our strategy
Our goal is to become the leading provider of high-performance optical technologies that enable the rapid growth in
high-speed optical networking communications. Key elements of our strategy are as follows:
•
Extend leadership in FTTH.
We intend to maintain our strong
position in our core GPON FTTH markets and extend GPON market share by winning new customers and introducing next generation products. We plan to take advantage of market disruption and
product cycle transitions by providing an alternative to traditional transceiver vendors through our BOSA offerings and by addressing emerging FTTH applications.
•
Capture an increasing share of the Enterprise/Data Center and Long-Haul/Metro market
segments.
We intend to leverage our technology leadership, Indium Phosphide and Silica-on-Silicon integration and
high-performance packaging to establish leadership in 40Gbps and 100Gbps Ethernet multi-channel PICs, receivers and miniaturized tunable lasers for coherent applications and tunable 10Gbps
TOSA for both module manufacturers and OEM customers. Our goal is to become the market leader in these segments through a combination of high performance, on-time delivery and low manufacturing cost.
•
Continue to grow our defense and avionics business and other emerging end market
applications.
We intend to continue to leverage our differentiated technologies and U.S.-based design and manufacturing to address the growing demand
for optical components and modules in defense and avionics and other emerging end market applications.
•
Continue our gross margin expansion.
We intend to continue
our gross margin improvement through increased scale, manufacturing efficiencies and continued introduction of higher performance products with greater component-level intelligence and integrated
functionality to module manufactures and OEMs.
•
Selectively pursue complementary acquisitions.
We intend to
continue to selectively pursue acquisitions that accelerate our revenue growth, complement our strengths, help us execute our strategies and grow our addressable markets.
5
Table of Contents
Risk factors
Our business is subject to numerous risks and uncertainties, such as those highlighted in "Risk factors" immediately following this
prospectus summary, including:
•
We are subject to the cyclical nature of the markets in which we compete and any future downturn may reduce demand for our
products and revenue;
•
If spending for optical communications networks does not continue to grow as expected, our business may suffer;
•
Given the high fixed cost associated with our vertically integrated business, a reduction in demand for our products may
adversely impact our gross profits and our results of operations;
•
We are dependent on our key customers for a significant portion of our revenue and the loss of, or a significant reduction
in orders from, any of our key customers may reduce our revenue and adversely impact our results of operations;
•
We face intense competition and continuous pricing pressure in our industry, which could negatively impact our results of
operations and market share; and
•
We must continually achieve new design wins and enhance existing products or our business may be harmed.
Corporate information
We were incorporated in the State of Delaware in 1999. Our principal executive offices are located at 9999 Hamilton Boulevard,
Breinigsville, Pennsylvania 18031, and our telephone number is (484) 391-2061. Our website address is www.cyoptics.com. Information contained on our website is not incorporated by
reference into this prospectus, and you should not consider information contained on our website as part of this prospectus or in deciding whether to purchase shares of our common stock.
Our
name is a trademark of CyOptics, Inc. for which we are seeking registration in the United States and selected international jurisdictions. This prospectus contains additional trade names
and trademarks of ours and of other companies.
This summary highlights selected information appearing elsewhere in this prospectus and does not contain all the information you should consider before investing in our common
stock. You should carefully read this prospectus in its entirety before investing in our common stock, including "Risk factors," and our consolidated financial statements and related notes included
elsewhere in this prospectus.
6
Table of Contents
The offering
Common stock offered by us:                           Shares
Common stock to be outstanding after this offering:                           Shares
Use of proceeds
We intend to use the net proceeds from this offering for working capital and general corporate purposes, including capital
expenditures. We also may use a portion of the net proceeds to selectively pursue acquisitions that complement our strengths and help us execute our strategies or to repay some or all of the
outstanding amounts under our credit facilities. However, we have no understandings or agreements with respect to any such acquisition or investment or debt repayment. See "Use of proceeds."
Proposed
NASDAQ Global Select Market symbol: "CYOP"
The
number of shares of our common stock to be outstanding following this offering is based on 14,359,377 shares of our common stock outstanding as of March 31, 2011 on a pro forma basis and
excludes:
•
399,570 shares of common stock issuable upon the exercise of options outstanding as of March 31, 2011, with a
weighted average exercise price of $8.57 per share;
•
26,038 shares of common issuable upon the exercise of outstanding warrants, with a weighted average exercise price of
$10.03 per share; and
•
shares of our common stock reserved for future issuance under our stock-based compensation plans,
including                                        sh
ares of common stock reserved for issuance under our 2011 Equity Incentive Plan, which will become effective in connection with this offering, and any future increase in
shares reserved for issuance under such plan.
Unless
otherwise noted, the information in this prospectus reflects and assumes the following:
•
the conversion of all outstanding shares of our convertible preferred stock into an aggregate of 13,064,838 shares of
common stock upon the closing of this offering;
•
the filing of our amended and restated certificate of incorporation immediately prior to the effectiveness of this
offering; and
•
no exercise by the underwriters of their over-allotment option.
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Summary consolidated financial data
The tables below summarize our consolidated financial data. The following summary financial data should be read together with our
consolidated financial statements and related notes and "Management's discussion and analysis of financial condition and results of operations" included elsewhere in this prospectus. The data for each
of the three years ended December 31, 2010, 2009 and 2008 have been derived from our audited consolidated financial statements appearing elsewhere in this prospectus. The data for the three
months ended March 31, 2011 and 2010 have been derived from our unaudited condensed consolidated financial statements appearing elsewhere in this prospectus. The
historical results presented below are not necessarily indicative of financial results to be achieved in future periods.
Three months ended March 31,
Year ended December 31,
(in thousands, except for share and per share amounts)
2010
2009
2008
2011
2010
(unaudited)
Consolidated Statement of Operations Data:
Total revenues
$
108,336
$
65,730
$
67,211
$
34,028
$
23,633
Cost of revenues
79,375
57,846
63,157
24,759
17,742
Gross profit
28,961
7,884
4,054
9,269
5,891
Gross margin
26.7%
12.0%
6.0%
27.2%
24.9%
Operating expenses:
Research and development
12,010
19,540
19,031
3,518
2,860
Sales and marketing
2,671
3,181
3,888
801
629
General and administrative
3,270
7,372
5,904
863
682
Severance and liquidation expenses
—
6,465
—
—
—
Asset impairment
—
6,621
9,841
—
—
Total operating expenses
17,951
43,179
38,664
5,182
4,171
Operating income (loss)
11,010
(35,295
)
(34,610
)
4,087
1,720
Interest expense, net
(1,328
)
(1,617
)
(2,148
)
(276
)
(349
)
Other (expense) income, net
(292
)
1,574
4,711
(145
)
52
Income (loss) before income taxes
9,390
(35,338
)
(32,047
)
3,666
1,423
Provision for income taxes
501
128
177
1,384
78
Net income (loss)
$
8,889
$
(35,466
)
$
(32,224
)
$
2,282
$
1,345
Net income (loss) attributable to common stockholders
$
1,115
$
(35,466
)
$
(32,224
)
$
47,678
$
169
Net income (loss) per common share(1):
Basic
$
0.73
$
(23.74
)
$
(22.68
)
$
36.35
$
0.11
Diluted
$
0.73
$
(23.74
)
$
(22.68
)
$
0.15
$
0.11
Weighted average number of shares outstanding:
Basic
1,519,124
1,494,124
1,420,786
1,311,760
1,521,308
Diluted
1,523,183
1,494,124
1,420,786
15,692,812
1,521,308
Pro forma net income per common share (unaudited)(2):
Basic
Diluted
Weighted average number of shares used in pro forma computation (unaudited)(2) :
Basic
Diluted
Pro forma as adjusted net income per common share (unaudited)(3):
Basic
Diluted
Weighted average number of shares used in pro forma as adjusted computation (unaudited)(3):
Basic
Diluted
(1)   We
applied the two-class method to compute net income (loss) per common share which requires that earnings for the period be allocated between common and participating
securities based upon their respective contractual rights to receive distributed and undistributed earnings. See Note 2 of the notes to each of our consolidated financial statements and our
unaudited condensed consolidated financial statements included elsewhere in this prospectus.
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(2)   The
pro forma basic and diluted net income per share have been calculated assuming (i) the conversion of all outstanding shares of convertible preferred stock into an aggregate
of                           shares of our common stock as of the beginning of the applicable period and
(ii) the reclassification of outstanding preferred stock warrants from long term liabilities to
additional paid-in capital as of the beginning of the applicable period. The numerator of the pro forma net income per share calculation is derived by adding $             for the year
ended December 31, 2010 related to the preferred stock warrant liability and by excluding the impact of $             for the three months ended March 31, 2011 related to the
redemption of preferred stock below carrying value to arrive at net income attributable to common shares of approximately $             and
$             for the year ended December 31,
2010 and the three months ended March 31, 2011, respectively.
(3)   The
pro forma as adjusted basic and diluted net income per share have been calculated assuming (i) the conversion of all outstanding shares of convertible preferred stock into
an aggregate of                           shares of our common stock as of the beginning of the applicable period
and (ii) the reclassification of outstanding preferred stock warrants from long term
liabilities to additional paid-in capital as of the beginning of the applicable period, (iii) the sale by us of the                shares of common stock in our
initial public
offering as of the beginning of the applicable period, and (iv) the filing of our amended and restated certificate of incorporation which will occur immediately prior to the closing of the
offering. The numerator of the pro forma net income per share calculation is derived by adding         for the year ended December 31, 2010 related to the preferred stock warrant
liability, and subtracting           for the three months ended March 31, 2011 related to the redemption of preferred stock below carrying value to net income as reported to arrive at net
income attributable to common shares of approximately $                and
$                for the year ended December 31, 2010 and the three months ended March 31, 2011, respectively.
The following table presents our summary consolidated balance sheet data as of March 31, 2011:
•
on an actual basis;
•
on a pro forma basis to give effect to (i) the conversion of all outstanding shares of preferred stock into shares
of our common stock and all outstanding warrants to purchase preferred stock into warrants to purchase common stock; and (ii) the reclassification of our outstanding preferred stock warrants
from long-term liabilities to additional paid-in capital; and
•
on a pro forma as adjusted basis to give effect to the conversion and reclassification described in the prior bullet and
(i) the sale by us of the shares of common stock offered by this prospectus at an initial public offering price of $         per share, the midpoint of the price range on the cover of
this prospectus, and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us; and (ii) the filing of our amended and restated certificate of
incorporation, which will occur immediately prior to the closing of this offering.
March 31, 2011
(in thousands)
Actual
Pro forma
Pro forma
as adjusted
Consolidated Balance Sheet Data:
Cash and cash equivalents
$
31,059
$
Working capital(1)
55,418
Total assets
97,756
Long-term obligations, including current portion
12,551
Convertible preferred stock
95,404
Total stockholders' equity (deficit)
(34,775
)
(1)   Working
capital is defined as total current assets less total current liabilities.
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Key business metrics
Years ended December 31,
Three months
ended March 31,
(in thousands, except percentages)
2010
2009
2008
2011
2010
GAAP metrics:
Total revenues
$
108,336
$
65,730
$
67,211
$
34,028
$
23,633
Gross profit
$
28,961
$
7,884
$
4,054
$
9,269
$
5,891
Gross margin
26.7%
12.0%
6.0%
27.2%
24.9%
Income (loss) from operations
$
11,010
$
(35,295
)
$
(34,610
)
$
4,087
$
1,720
Income (loss) from operations margin
10.2%
(53.7)%
(51.5)%
12.0%
7.3%
Net income (loss)
$
8,889
$
(35,466
)
$
(32,224
)
$
2,282
$
1,345
Net cash provided by (used in) operating activities
$
8,233
$
(14,766
)
$
(23,176
)
$
1,456
$
2,483
Non-GAAP metrics:
Adjusted gross profit*
$
30,483
$
9,198
$
5,028
$
9,499
$
6,336
Adjusted gross margin*
28.1%
14.0%
7.5%
27.9%
26.8%
Adjusted income (loss) from operations*
$
13,175
$
(19,664
)
$
(22,214
)
$
4,477
$
2,326
Adjusted income (loss) from operations margin*
12.2%
(29.9)%
(33.1)%
13.2%
9.8%
Adjusted net income (loss)*
$
11,216
$
(19,835
)
$
(19,828
)
$
2,510
$
1,932
EBITDA*
15,694
(25,167
)
(22,928
)
4,957
3,285
EBITDA margin*
14.5%
(38.3)%
(34.1)%
14.6%
13.9%
Adjusted EBITDA*
$
15,953
$
(12,056
)
$
(12,523
)
$
4,961
$
3,290
Adjusted EBITDA margin*
14.7%
(18.3)%
(18.6)%
14.6%
13.9%
Free cash flow*
$
5,306
$
(18,217
)
$
(25,015
)
$
(784
)
$
2,226
*      These performance measures are not calculated in accordance with GAAP. A reconciliation of these non-GAAP measures to the most directly comparable measure calculated and
presented in accordance with GAAP is included in this prospectus in "Management's discussion and analysis of financial condition and results of operations—Key business
metrics—Use of non-GAAP financial measures." These non-GAAP measures should not be considered as an alternative to any measure of financial performance calculated and presented
in accordance with GAAP. In addition, our non-GAAP measures may not be comparable to similarly titled measures of other companies because other companies may not calculate such similarly
titled measures in the same manner as we do. We prepare our non-GAAP measures to eliminate the impact of items that we do not consider indicative of our core operating performance. We
encourage you to evaluate these adjustments, the reasons we consider them appropriate and the material limitations of these non-GAAP measures as described in "Management's discussion and
analysis of financial condition and results of operations—Key business metrics—Use of non-GAAP financial measures."
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Risk factors
Investing in our common stock involves a high degree of risk. You should consider carefully the risks and
uncertainties described below, together with all of the other information in this prospectus, including our consolidated financial statements and related notes, before deciding whether to purchase
shares of our common stock. If any of the following risks is realized, our business, financial condition, results of operations and prospects could be materially and adversely affected. In that event,
the price of our common stock could decline and you could lose part or all of your investment.
Risks related to our business and industry
We are subject to the cyclical nature of the markets in which we compete and any future downturn may reduce demand for our products and revenue.
In the past, the markets in which we compete have experienced significant downturns, often connected with, or in anticipation of, the maturation of
product cycles—for both manufacturers' and their customers' products—and with declining general economic conditions. These downturns have been characterized by diminished
product demand, production overcapacity, high inventory levels and accelerated erosion of average selling prices. These markets are impacted by the aggregate capital expenditures of service providers
and enterprises as they build out and upgrade their network infrastructure. These markets are highly cyclical and characterized by constant and rapid technological change, pricing pressures, evolving
standards and wide fluctuations in product supply and demand.
We
may experience substantial period-to-period fluctuations in future results of operations. Any future downturn in the markets in which we compete, or changes in demand for
our products from our customers, could result in a significant reduction in our revenue. It may also increase the volatility of the price of our common stock.
In
addition, the communications networks industry from time to time has experienced and may again experience a pronounced downturn. To respond to a downturn, many service providers and enterprises may
slow their capital expenditures, cancel or delay new developments, reduce their workforces and inventories and take a cautious approach to acquiring new equipment and technologies from OEMs, any of
which could cause our results of operations to fluctuate from period to period and harm our business.
If spending for optical communications networks does not continue to grow as expected, our business may suffer.
Our future success depends on continued capital investment in global communications network infrastructure and on continued demand for
high-bandwidth, high-speed communications networks and the ability of OEMs to meet this demand. Spending on communications networks is limited by several factors,
including limited investment resources, uncertainty regarding the long-term evolution and sustainability of service provider business models and a changing regulatory environment. We
cannot be certain that demand for bandwidth-intensive content will continue to grow at the same pace in the future or that communications service providers will continue to increase spending to meet
such demand. If expectations for growth of communications networks and bandwidth consumption are not realized and investment in communications networks does not grow as anticipated, our business,
results of operations and gross margins could be harmed.
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Given the high fixed costs associated with our vertically integrated business, a reduction in demand for our products may adversely impact our gross profits and our results
of operations.
We have a high fixed cost base due to our vertically integrated business model, including the fact that 442 of our employees as of March 31,
2011 were employed in manufacturing engineering and operations. We may not be able to adjust these fixed costs quickly to adapt to rapidly changing market conditions. Our gross profit and gross margin
is greatly affected by our sales volume and volatility on a quarterly basis and the corresponding absorption of fixed manufacturing overhead expenses. In addition, because we are a vertically
integrated manufacturer, insufficient demand for our products may subject us to the risk of high inventory carrying costs and increased inventory obsolescence. Given our vertical integration, the rate
at which we turn inventory has historically been low when compared to our cost of sales. We do not expect this to change significantly in the future and believe that we will have to maintain a
relatively high level of inventory compared to our cost of sales. As a result, we continue to expect to have a significant amount of working capital invested in inventory. We may be required to write
down inventory costs in the future and our
high inventory costs may have an adverse effect on our gross profits and our results of operations.
We are dependent on our key customers for a significant portion of our revenue and the loss of, or a significant reduction in orders from, any of our key customers may
reduce our revenue and adversely impact our results of operations.
Historically, we have generated most of our revenue from a limited number of customers. In 2010, our top ten customers represented 61.9% of our total
revenue, with only Finisar Corporation (15.3% of revenues) representing more than 10.0% of our revenues. Furthermore, sales of certain of our current products are dependent upon and concentrated among
a limited number of customers and the successful introduction of future component and module products could similarly be dependent upon a limited number of customers. As a result, the loss of, or a
significant reduction in orders from any our key customers would materially and adversely affect our revenue and results of operations. Adverse events affecting our key customers could also negatively
affect our revenue and results of operations. In addition, OEMs may continue to consolidate, and we may not be able to offset any potential decline in revenue arising from the consolidation of our
existing customers with revenue from new customers or additional revenue from the combined company.
We face intense competition which could negatively impact our results of operations and market share.
The communications networking industry is highly competitive. Our competitors range from large, international companies offering a wide range of
products to smaller companies specializing in niche markets. Some of our competitors have substantially greater technical, financial and marketing resources, name recognition, manufacturing capacity,
and/or better-established relationships with customers than we have. Some of our competitors have more resources to develop or acquire, and more experience in developing or acquiring, new products and
technologies and in creating market awareness for and selling these products and technologies. Some of our competitors may be able to develop new products more quickly than we can and may be able to
develop products that are more reliable or which provide more functionality than our products. All of these advantages may cause us to lose sales or market share or reduce the prices of our products.
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We
also face competition from some of our customers who evaluate our capabilities against the merits of manufacturing products internally. Such customers may be able to internally manufacture
competitive products at a lower cost than we would charge these customers. As a result, customers may purchase fewer of our products or we may be forced to lower our selling prices, both of which
would negatively impact our financial results.
We must continually achieve new design wins and enhance existing products or our business may be harmed.
The markets for our products are characterized by frequent new product introductions, changes in customer and market requirements and evolving
industry standards, all with an underlying pressure to reduce cost and meet stringent reliability and qualification requirements. Our future performance will depend on our successful and timely
development, introduction and market acceptance of new and enhanced products that address these challenges. The anticipated or actual introduction of new and enhanced products by us and by our
competitors may lead our customers to defer or cancel orders for our existing products and rapid obsolescence and value diminution of existing inventory.
The
development of new, technologically-advanced products is a complex and uncertain process requiring frequent innovation, highly-skilled engineering and development personnel and significant capital
expenditures, as well as the accurate anticipation of technological and market trends. Product development delays may result from numerous factors, including:
•
changing product specifications and customer requirements;
•
unanticipated engineering and manufacturing complexities and problems discovered during development and manufacturing;
•
difficulties in reallocating engineering resources and overcoming resource limitations; and
•
changing market or competitive product requirements.
We
have in the past experienced slowdowns in demand for existing products and delays in new product development, and such delays may occur again in the future. We cannot assure you that we will be
able to identify, develop, manufacture, market or support new or enhanced products successfully, if at all, or on a timely basis. To the extent customers defer or cancel orders for our products for
any reason or we fail to achieve new design wins, our competitive and financial position would be adversely affected and our ability to grow our revenue would be impaired.
Further,
we cannot assure you that our new products will gain market acceptance or that we will be able to respond effectively to product introductions by competitors, technological changes or
emerging industry standards. We also may not be able to develop and evolve the underlying core technologies necessary to create new products and enhancements, license these technologies from third
parties, or remain competitive in our markets.
We are under continuous pressure to reduce the prices of our products.
The communications networking industry has historically been characterized by declining product prices for components over time as a result of new
product and technology introductions, increased competition, aggressive pricing from our competitors and pricing pressure from customers. We have reduced the prices of some of our products in the
past, and
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we
expect to continue to experience pricing pressure for our products in the future. When seeking to maintain or increase their market share, our competitors may also reduce the prices of their
products. In addition, our customers may have the ability to internally develop and manufacture competing products at a lower cost than we would otherwise charge, which would add additional downward
pressure on our selling prices. If we are unable to offset future reductions in our average selling prices by increasing our sales volume, by reducing our costs and expenses or by introducing new
products at higher price points, our profitability could suffer.
Our manufacturing processes are extremely complex and specialized and disruptions could have a material adverse effect on our business, financial condition and results of
operations.
The fabrication of our products involves extremely complex and precise processes. We may experience delays, disruptions or quality control problems
in our manufacturing operations. For instance, minor impurities, contamination of the clean room environment, errors in any step of the fabrication process, defects in equipment or materials, human
error, or a number of other factors can cause a substantial percentage of our products to be rejected or malfunction. We could also experience a disruption in our fabrication facility for our products
due to equipment maintenance, repairs and/or upgrades.
Additionally,
manufacturing yields depend on a number of factors, including the stability and manufacturability of the product design, manufacturing improvements gained over cumulative production
volumes, the quality and consistency of component parts and the nature and extent of customization requirements by customers. Capacity constraints, raw materials shortages, logistical issues, labor
shortages, the introduction of new product lines and changes in
customer requirements, manufacturing facilities or processes, or those of some third party contract manufacturers and suppliers of raw materials and components have historically caused, and may in the
future cause, reduced manufacturing yields. Moreover, an increase in the rejection and rework rate of products during the quality control process before, during or after manufacture would result in
our experiencing lower yields. As a result of all of these potential difficulties, we could incur additional costs to fulfill customer orders and/or product shipments to our customers could be
delayed, each of which would negatively affect our revenue, costs, competitive position and reputation.
We rely on a limited number of suppliers for certain raw materials, and if they stopped, decreased or delayed shipments to us, it could have an adverse effect on our
business.
We depend on a limited number of suppliers for certain raw materials we have qualified to use in the manufacture of certain of our products. Some of
these suppliers could disrupt our business if they stop, decrease or delay shipments or if the materials they ship have quality or consistency issues. Some of these materials are available only from a
sole source or have been qualified only from a single supplier. For example, we currently rely on two suppliers for certain piece parts used in our products that comprised approximately 23% and 21% of
our total revenue for the year ended December 31, 2010, respectively, and collectively approximately 23% of our revenue for the year ended December 31, 2010. Furthermore, other than our
current suppliers, there are a limited number of entities from whom we could obtain certain of these supplies. We may also face material shortages if we experience increased demand for materials
beyond what our qualified suppliers can deliver on a timely basis or at all. Although we strive to mitigate shortages, any inability on our part to timely obtain sufficient quantities of critical
piece parts at reasonable costs could adversely affect our ability
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to
meet demand for our products, which could cause our revenue, results of operations, or both to suffer.
We
typically have not entered into long-term agreements with our suppliers and, therefore, our suppliers could stop supplying materials at any time or fail to supply adequate quantities of
piece parts on a timely basis. It is difficult, costly, time consuming and, on short notice, sometimes impossible for us to identify and qualify new suppliers. The reliance on a sole supplier, single
qualified vendor or limited number of suppliers could result in delivery and quality problems and reduced control over product pricing, reliability and performance. We
have in the past had to change suppliers, which has, in some instances, resulted in delays in product development and manufacturing and loss of revenue.
If we fail to retain our key personnel or if we fail to attract additional qualified personnel, we may not be able to achieve our anticipated level of growth and our
business could suffer.
Our future success depends, in part, on our ability to attract and retain key personnel, including our senior management team and others, and on the
continued contributions of members of our senior management team and key technical personnel, each of whom would be difficult to replace. The loss of any of the members of our senior management team
or key personnel or the inability to continue to attract and retain qualified personnel could have a material adverse effect on our business. Competition for highly skilled technical personnel is
extremely intense, and we continue to face challenges identifying, hiring and retaining qualified personnel in certain areas of our business. If we fail to retain our senior management and other key
personnel or if we fail to attract additional qualified personnel, our business could suffer.
Our success will depend on our ability to anticipate and quickly respond to rapidly changing technologies and customer requirements.
The communications networking industry is characterized by substantial investment in new technologies and the development of diverse and changing
technologies. For example, new technologies are required to satisfy the emerging standards for 40Gbps and 100Gbps data transmission in communications networks. Furthermore, fast introduction of new
products can be critical to success. It is difficult to displace an existing supplier for a particular type of product once an OEM has chosen a supplier, even if a
later-to-market product provides superior performance or cost efficiency. If we are unable to make our new or enhanced products commercially available on a timely basis, we may
lose existing and potential customers for extended time periods, which would cause our financial results to suffer.
The communications networking industry has long product development cycles requiring us to incur product development costs without assurances of an acceptable investment
return.
The communications networking industry is highly capital-intensive. Large volumes of equipment and support structures are installed with considerable
expenditures of funds and other resources, and long investment return period expectations. At the component supplier level, this creates considerable, typically multi-year, gaps between
the commencement of new product development and volume purchases. Accordingly, we often incur significant research and development costs for products that, at the earliest, will be purchased by our
customers long after much of the cost is incurred and, in some cases, may never be purchased due to changes in industry or customer requirements in the interim.
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Due
to changing industry and customer requirements, we are constantly developing new products and developing and using new technologies in our products. These development activities can and are
expected to necessitate a significant investment of capital. Our new products often require a long time to develop because of their complexity and rigorous testing and qualification requirements.
Additionally, developing a manufacturing approach with an acceptable cost structure and yield for new products can be expensive and time-consuming. Due to the costs and length of research
and development and manufacturing process cycles, we may not recognize revenue from new products until long after such expenditures are incurred, if at all, and our gross margin may decrease if our
costs are higher than expected.
If our customers do not qualify our products for use, then our results of operations may suffer.
Prior to placing volume purchase orders with us, most of our customers require us to obtain their approval of our new and existing products, and our
customers often audit our manufacturing facilities and perform other vendor evaluations during this process. The approval process, generally known as qualification, involves product sampling and
reliability testing and collaboration with our product management and
engineering teams in the design and manufacturing stages. For example, we have developed new technologies and products that are key components in our customers' systems for 40Gbps and 100Gbps data
transmission. While we are shipping certain products for 40Gbps and 100Gbps system designs today, many of our products for these systems are currently being qualified for use by our customers. If we
are unable to qualify these and other of our products with customers, then our future revenues would be lower than expected, and we may not be able to recover the costs of our investments in new and
existing products, each of which would have an adverse effect on our results of operations.
In
addition, due to rapid technological changes in our markets, a customer may cancel or modify a design project before we have qualified our product or begun volume manufacturing of a qualified
product. It is unlikely that we would be able to recover the expenses for cancelled or unutilized custom design projects. It is difficult to predict with any certainty whether our customers will delay
or terminate product qualification or the frequency with which customers will cancel or modify their projects, but any such delay, cancellation or modification would have a negative effect on our
results of operations.
Rapidly changing standards and regulations could make our products obsolete, which would cause our revenue and results of operations to suffer.
We design our products to conform to regulations established by governments and to standards set by industry standards bodies worldwide, such as the
American National Standards Institute, the European Telecommunications Standards Institute, the International Telecommunications Union and the Institute of Electrical and Electronics
Engineers, Inc. Various industry organizations are currently considering whether and to what extent to create standards for elements used in 100Gbps systems. Because certain of our products are
designed to conform to current specific industry standards, if competing or new standards emerge that are preferred by our customers, we would have to make significant expenditures to develop new
products. If our customers adopt new or competing industry standards with which our products are not compatible, or the industry groups adopt standards or governments issue regulations with which our
products are not compatible, our existing products would become less desirable to our customers and our revenue and results of operations would suffer.
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Customer demand is difficult to forecast and, as a result, we may be unable to optimally match production with customer demand.
We make planning and spending decisions, including determining the levels of business that we will seek and accept, production schedules, component
procurement commitments, personnel needs and other resource requirements, based on our estimates of customer demand. The majority of our products are purchased pursuant to individual purchase orders.
While our customers generally provide us with their demand forecasts, they are typically not contractually committed to buy any quantity of products beyond firm purchase orders. The
short-term nature of our customer commitments and the possibility of unexpected changes in demand for their products limit our ability to accurately predict future customer demand. On
occasion, customers have required rapid increases in production, which has strained our resources. We may not have sufficient capacity at any given time to meet the volume demands of our customers, or
one or more of our suppliers may not have sufficient capacity at any given time to meet our volume demands. Conversely, a downturn in the markets in which our customers compete can cause, and in the
past has caused, our customers to significantly reduce the amount of products ordered from us or to cancel existing orders, leading to lower utilization of our facilities. Because many of our costs
and operating expenses are relatively fixed, reduction in customer demand would have an adverse effect on our gross margin, income (loss) from operations and cash flow. During an industry downturn,
there is also a higher risk that our trade receivables would be uncollectible.
It could be discovered that our products contain defects that may cause us to incur significant costs, divert our management's attention, result in a loss of customers and
result in product liability claims.
Our products are complex and undergo quality testing and formal qualification by our customers and us. However, defects may occur from time to time.
Our customers' testing procedures involve evaluating our products under likely and foreseeable failure scenarios and over varying amounts of time. For various reasons, such as the occurrence of
performance problems that are unforeseeable in testing or that are detected only when products age or are operated under peak stress conditions, our products may fail to perform as expected long after
customer acceptance. Failures could result from faulty components or design, problems in manufacturing or other unforeseen reasons. For the majority of our products, we provide a product warranty of
one year or less from date of shipment. For select customers, we provide extended warranties beyond our normal product warranty period for specified failures on a case-by-case basis. As a result, we
could incur significant costs to repair or replace defective products under warranty, particularly when such failures occur in installed systems. We have experienced failures in the past and will
continue to face this risk going forward, as our products are widely deployed throughout the world in multiple demanding
environments and applications. In addition, we may in certain circumstances honor warranty claims after the warranty has expired or for problems not covered by warranty in order to maintain customer
relationships. Any significant product failure could result in lost future sales of the affected product and other products, as well as customer relations problems, litigation and damage to our
reputation.
In
addition, our products are typically embedded in, or deployed in conjunction with, our customers' products, which incorporate a variety of components, modules and subsystems and may be expected to
interoperate with modules and subsystems produced by third parties. As a result, not all defects are immediately detectable and when problems occur, it may be difficult
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to
identify the source of the problem. These problems may cause us to incur significant damages or warranty and repair costs, divert the attention of our engineering personnel from our product
development efforts and cause significant customer relations problems or loss of customers, all of which would harm our business. The occurrence of any defects in our products could also give rise to
liability for damages caused by such defects. Although we carry product liability insurance to mitigate this risk, insurance may not adequately cover costs that may arise from defects in our products
or otherwise, nor will it protect us from reputational harm that may result from such defects.
If we fail to adequately manage our long-term growth and expansion requirements, our business will suffer.
In recent years, we have experienced significant growth through, among other things, internal expansion programs, new product developments and
acquisitions of other companies. We expect to continue to grow, which could require us to expand our manufacturing operations, including hiring new personnel, purchasing additional equipment, leasing
or purchasing additional facilities, expanding our management infrastructure and working with our suppliers to manage any such expansion. If we fail to secure these expansion requirements or manage
our future growth effectively, our business could suffer.
Natural disasters, terrorist attacks or other catastrophic events could harm our operations.
Our worldwide operations could be subject to natural disasters and other business disruptions, which could harm our future revenue and financial
condition and increase our costs and expenses. Further, a terrorist attack, including one aimed at energy or communications infrastructure suppliers, could hinder or delay the development and sale of
our products. Although we maintain casualty and business interruption insurance, if an earthquake, typhoon, hurricane, terrorist attack or other natural or manmade catastrophe were to destroy any part
of our facilities, destroy or disrupt vital infrastructure systems or interrupt our operations for any extended period of time, our business would be materially adversely affected.
Our manufacturing facilities are leased from third parties.
We conduct all of our manufacturing operations at facilities located in Pennsylvania, New Jersey and Mexico. The leases for our facilities located in
Pennsylvania expire in July 2014 and October 2017, if not renewed at our option; the lease for our facility located in New Jersey expires in July 2014, if not renewed at our option; and the lease for
our facility located in Mexico expires in December 2011, if not renewed at our option. We are substantially dependent on our facilities in Pennsylvania and New Jersey and a loss of use of one or more
of our manufacturing facilities may result in an interruption or delay in our ability to manufacture our products. If we are unable to renew our leases with the owners of the facilities on
commercially reasonable terms, or if we migrate to new facilities, we may experience delays in delivering our products until leases for other facilities can be arranged and the migration to a new
facility is completed.
Our
operations also rely heavily on the availability of electrical power and cooling capacity, which are also supplied by third-party providers. If our facilities experience a major power outage or if
the cost of electrical power increases significantly, our operations and profitability could be harmed. If our facilities experience a major power outage, we would have to rely on back-up
generators, which may not function properly, and their supply may be inadequate. Such a power outage could result in the disruption of our business. Additionally, if our current
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facilities
fail to have sufficient cooling capacity or availability of electrical power, we would need to find alternative facilities.
If we fail to protect, or incur significant costs in defending, our intellectual property and other proprietary rights, our business and results of operations could be
materially harmed.
Our success depends to a significant degree on our ability to protect our intellectual property and other proprietary rights. We rely on a
combination of patent, trademark, trade secret and unfair competition laws, as well as license agreements and other contractual provisions, to establish and protect our intellectual property and other
proprietary rights. We have applied for patent registrations in the United States and selected international jurisdictions, most of which have been issued. In addition, we are applying to register the
trademark "CyOptics" in the United States. We cannot guarantee that our pending applications will be approved by the applicable governmental authorities. Moreover, our existing and future patents and
trademarks may not be sufficiently broad to protect our proprietary rights or may be held invalid or unenforceable in court. Failure to obtain patents or trademark registrations or a successful
challenge to our registrations in the United States or other foreign countries may limit our ability to protect the intellectual property rights that these applications and registrations are intended
to cover.
We
also attempt to protect our intellectual property, including our trade secrets and know-how, through the use of trade secret and other intellectual property laws, and contractual
provisions. We enter into confidentiality and invention assignment agreements with our employees and independent consultants. We also use non-disclosure agreements with other third parties
who may have access to our proprietary technologies and information. Such measures, however, provide only limited protection, and there can be no assurance that our confidentiality and
non-disclosure agreements will not be breached, especially after our employees or those of our third-party contract manufacturers end their employment or engagement, and that our trade
secrets will not otherwise become
known by competitors or that we will have adequate remedies in the event of unauthorized use or disclosure of proprietary information. Unauthorized third parties may try to copy or reverse engineer
our products or portions of our products, otherwise obtain and use our intellectual property, or may independently develop similar or equivalent trade secrets or know-how. If we fail to
protect our intellectual property and other proprietary rights, or if such intellectual property and proprietary rights are infringed or misappropriated, our business, results of operations or
financial condition could be materially harmed.
Policing
unauthorized use of our technology is difficult, and we cannot be certain that the steps we have taken will prevent the misappropriation, unauthorized use or other infringement of our
intellectual property rights. Further, we may not be able to effectively protect our intellectual property rights from misappropriation or other infringement in foreign countries where we have not
applied for patent protections, and where effective patent, trademark, trade secret and other intellectual property laws may be unavailable, or may not protect our proprietary rights as fully as U.S.
law.
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In the future, we may need to take legal actions to prevent third parties from infringing upon or misappropriating our intellectual property or from otherwise gaining access to
our technology. Protecting and enforcing our intellectual property rights and determining their validity and scope could result in significant litigation costs and require significant time and
attention from our technical and management personnel, which could significantly harm our business. In addition, we may not prevail in such proceedings. An adverse outcome of such proceedings may
reduce our competitive advantage or otherwise harm our financial condition and our business.
We
have entered into an agreement with one of our customers that requires us to place manufacturing or technical information, including patents, trade secrets, know-how, source code and
other intellectual property, into an escrow. Such agreement provides that the customer will have a right to access the escrowed materials if we experience insolvency, commit a material breach and/or
are unable or unwilling to deliver the ordered products in the allotted timeframe. Depending on the licenses granted upon release of the escrow, we may not be able to control the customer's use of the
released materials and may not be able to receive the same revenue that we would receive when selling the products in the ordinary course of business.
Our
participation in standards setting organizations or industry initiatives may require us to license our patents to other companies that adopt certain standards or specifications. As a result of
such licensing, our patents may not be enforceable against others who might otherwise be infringing those patents and the value of our intellectual property may be impaired. Likewise, in order to
provide products that are compliant with standards that have been adopted or will be adopted in the future, we may have to license patents owned by others. Such licensing requirements may materially
adversely affect the value of our products, and, consequently, our business, financial condition, liquidity, and operating results.
We may be involved in intellectual property disputes in the future, which could divert management's attention, cause us to incur significant costs and prevent us from
selling or using the challenged technology.
Participants in the markets in which we sell our products have experienced litigation regarding patent and other intellectual property rights.
Regardless of their merit, responding to claims against us alleging infringement of certain patents or other intellectual property rights of others can be time consuming, divert management's attention
and resources and may cause us to incur significant expenses. While we do not believe that our products infringe upon the intellectual property rights of other parties and meritorious defenses would
exist with respect to any assertions to the contrary, we cannot be certain that our products would not be found infringing the intellectual property rights of others. If certain of our proprietary
rights are found to be invalid, among other potential actions, we may be required to:
•
obtain from a third party claiming infringement a license to sell or use the relevant technology, which may not be
available on reasonable terms, or at all;
•
stop manufacturing, selling, incorporating or using our products that use the challenged intellectual property;
•
pay substantial monetary damages; or
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•
expend significant resources to redesign the products that use the technology and to develop non-infringing
technology.
Any
of these actions could adversely affect our financial results.
We may be obligated to indemnify our customers for claims that our intellectual property infringes the rights of others, which may result in substantial expenses to us.
We often indemnify our customers for intellectual property claims made against them for products incorporating our technology. As such, claims
against our customers may require us to incur substantial expenses, such as legal expenses, damages for past infringement or royalties for future use. While we have not incurred any indemnification
expenses to date, any future indemnity claim could adversely affect our relationships with our customers and result in substantial costs to us.
We face a variety of risks associated with international sales and operations.
We currently derive, and expect to continue to derive, a significant portion of our revenue from international sales in various markets. Our
international revenue and operations are subject to a number of material risks, including, but not limited to:
•
difficulties in staffing, managing and supporting operations in more than one country;
•
difficulties in enforcing agreements and collecting receivables through foreign legal systems;
•
fewer legal protections for intellectual property in foreign jurisdictions;
•
foreign and U.S. taxation issues and international trade barriers;
•
general economic and political conditions in the markets in which we operate;
•
difficulties in obtaining any necessary governmental authorizations for the export of our products to certain foreign
jurisdictions;
•
fluctuations in foreign economies;
•
fluctuations in the value of foreign currencies and interest rates;
•
availability and continuity of labor supply;
•
trade and travel restrictions;
•
outbreaks of contagious diseases;
•
domestic and international economic or political changes, hostilities and other disruptions in regions where we currently
operate or may operate in the future;
•
difficulties and increased expenses in complying with a variety of U.S. and foreign laws, regulations and trade standards,
including the Foreign Corrupt Practices Act; and
•
different and changing legal and regulatory requirements in the jurisdictions in which we currently operate or may operate
in the future.
Negative
developments in any of these areas could result in a reduction in demand for our products, the cancellation or delay of orders already placed, difficulties in producing and
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delivering
our products, threats to our intellectual property, difficulty in collecting receivables, and a higher cost of doing business. In addition, although we intend to implement an
anti-corruption compliance program throughout the company prior to this offering, violations of our compliance program may result in criminal or civil sanctions, including material
monetary fines, penalties and other costs against us or our employees, and may have a material adverse effect on our business.
We have a limited history of operations, making it difficult to predict our future results of operations.
We have a limited history of operations, which makes it difficult to evaluate our business and financial prospects. While our operations began in
1999, we did not generate revenue from the commercial shipments of our initial products until 2001. Since then, our revenue, gross margin and results of operations have varied significantly and are
likely to continue to vary from quarter to quarter due to a number of factors, many of which are not within our control. For instance, changes in gross margin may result from various factors, such as
changes in pricing, changes in our fixed costs, changes in the mix of our products sold and changes in the amount of product manufactured versus the amount of product sold over time. In making an
investment decision, you should evaluate our business in light of the risks, expenses and difficulties frequently encountered by companies in the rapidly changing communications networking industry.
It is difficult for us to accurately forecast our future revenue and gross margin and plan expenses accordingly and, therefore, it is difficult for us to predict our future results of operations.
We may not be able to obtain capital when desired on favorable terms, if at all, or without dilution to our stockholders.
It is possible that we may not generate sufficient cash flow from operations or otherwise have the capital resources to meet our future capital
needs. If this occurs, we may need additional financing to execute on our current or future business strategies, including:
•
investment in our research and development efforts by hiring additional technical and other personnel;
•
expansion of our operating or manufacturing infrastructure;
•
acquisitions of complementary businesses, products or technologies; or
•
pursuit of our strategic plans and response to competitive pressures.
If
we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders could be significantly diluted, and these newly-issued
securities may have rights, preferences or privileges senior to those of existing stockholders, including those acquiring shares in this offering. We cannot assure you that additional financing will
be available on terms favorable to us, or at all. If adequate funds are not available or are not available on acceptable terms, if and when needed, our ability to fund our operations, take advantage
of unanticipated opportunities, develop or enhance our products, or otherwise respond to competitive pressures could be significantly limited.
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Potential future acquisitions could be difficult to integrate, divert the attention of key personnel, disrupt our business, dilute stockholder value and impair our financial
results.
As part of our business strategy, we have pursued and intend to continue to pursue acquisitions of complementary businesses, products or technologies
that we believe could accelerate our ability to compete in our existing markets or allow us to enter new markets.
Acquisitions
involve numerous risks, any of which could harm our business, including:
•
difficulties in integrating the operations, technologies, products, existing contracts, accounting and personnel of the
target company and realizing the anticipated synergies of the combined businesses;
•
difficulties in supporting and transitioning customers, if any, of the target company;
•
diversion of financial and management resources from existing operations;
•
the price we pay or other resources that we devote may exceed the value we realize, or the value we could have realized if
we had allocated the purchase price or other resources to another opportunity;
•
risks of entering new markets in which we have limited or no experience;
•
potential loss of key employees, customers and strategic alliances from either our current business or the target
company's business;
•
assumption of unanticipated problems or liabilities, such as problems with the quality of the target company's products;
•
inability to generate sufficient revenue to offset acquisition costs;
•
dilutive effect on our stock as a result of any equity-based acquisitions;
•
failure to realize anticipated tax benefits;
•
inability to successfully complete transactions with a suitable acquisition candidate; and
•
in the event of international acquisitions, risks associated with accounting and business practices that are different
from applicable U.S. practices and requirements.
Acquisitions
also frequently result in the recording of goodwill and other intangible assets which are subject to potential impairments which have occurred in the past and which, were they to occur in
the future, could harm our financial results.
Acquisitions
may also result in the incurrence of liabilities. For example, in July 2008, we acquired PGT Photonics, Inc., or PGT, which enabled us to gain access to PGT's unique tunable laser
products and technologies, complementary PIC capabilities and manufacturing infrastructure. In September 2009, as a result of the macroeconomic downturn, we commenced dissolution of PGT and
synergized the acquired PGT technologies into our ongoing operations, and a liquidator was assigned to dissolve PGT pursuant to Italian law. Dissolution of entities under Italian law is a lengthy
process and we have not finalized the PGT dissolution. While we believe we have satisfied all outstanding PGT-related liabilities and have no material continuing obligations or commitments related to
PGT, it is possible that we may be subject to liabilities which, if substantial, could harm our operating results.
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As
a result, if we fail to properly evaluate acquisitions or investments, we may not achieve the anticipated benefits of any such acquisitions, and we may incur costs in excess of what we anticipate.
The failure to successfully evaluate and execute acquisitions or investments or otherwise adequately address these risks could materially harm our business and financial results.
If we fail to maintain effective internal control over financial reporting in the future, the accuracy and timing of our financial reporting may be adversely affected.
The preparation of our consolidated financial statements involves a number of complex manual and automated processes, which are dependent upon
individual data input or review and require significant management judgment. One or more of these elements may result in errors that may not be detected and could result in a material misstatement of
our consolidated financial statements.
The
Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley Act, requires, among other things, that as a publicly traded company we maintain effective internal control over financial reporting and disclosure
controls and procedures.
If
a material misstatement occurs in the future, we may fail to meet our future reporting obligations, we may need to restate our financial results and the price of our common stock may decline. Any
failure of our internal controls could also adversely affect the results of the periodic management evaluations and annual independent registered public accounting firm attestation reports regarding
the effectiveness of our internal control over financial reporting that will be required when the rules of the Securities and Exchange Commission, or the SEC, under Section 404 of the
Sarbanes-Oxley Act, which would most likely become applicable to us beginning with the filing of our Annual Report on Form 10-K for the year ending December 31, 2012.
Effective internal controls are necessary for us to produce reliable financial reports and are important to helping prevent financial fraud. As a public company, we will need to augment our internal
finance functions and, if we are unable to do so, it may make it more difficult for us to meet our obligations under the Sarbanes-Oxley Act, including the requirement to find that our internal
controls are effective. If we cannot provide reliable financial reports or prevent fraud, our business and results of operations could be harmed, investors could lose confidence in our reported
financial information, and the trading price of our stock could drop significantly.
Potential changes in our effective tax rate could harm our future results.
We are subject to income taxes in the United States and various foreign jurisdictions, and our domestic and international tax liabilities are subject
to the allocation of expenses in differing jurisdictions. Our tax rate is affected by changes in the mix of earnings and losses in countries with differing statutory tax rates, certain
non-deductible expenses arising from the requirement to expense stock options and the valuation of deferred tax assets and liabilities, including our ability to utilize any net operating
losses. Increases in our effective tax rate could harm our results of operations.
We may be unable to utilize our net operating loss carryforwards to reduce our income taxes.
As of December 31, 2010, we had net operating loss, or NOL, carryforwards for U.S. federal and state tax purposes of $186.9 million and
$64.8 million, respectively, with a corresponding valuation allowance. If not utilized, these NOL carryforwards expire, beginning in 2022.
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Subsequent
to December 31, 2010, as a consequence of equity transactions in January 2011, we anticipate further limitation on the use of our NOL carryforwards. The utilization of the NOL
carryforwards are subject to a substantial limitation imposed by Section 382 of the Internal Revenue Code of 1986, as amended, and similar state provisions. As of December 31, 2010, we
recorded deferred tax assets with a corresponding valuation allowance for the NOL carryforwards currently available after considering the existing Section 382 limitation, based on the
preliminary results of a study that we are in the process of completing to assess the ownership changes that have occurred since our formation and their impact on the value of the NOLs. Upon
finalization of the Section 382 study, we may adjust the amount of the NOLs that we can utilize.
We will incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives.
As a public company, we will incur legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley
Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules subsequently implemented by the SEC and the NASDAQ Stock Market, impose additional requirements on
public companies, including specific corporate governance practices. For example, the listing requirements of the NASDAQ Stock Market require that we satisfy certain corporate governance requirements
relating to independent directors, audit and compensation committees, distribution of annual and interim reports, stockholder meetings, stockholder approvals, solicitation of proxies, conflicts of
interest, stockholder voting rights and codes of conduct. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and
regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect these rules and regulations to make
it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantial additional
costs to maintain the same or similar coverage. These rules and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our
board committees or as executive officers.
We are subject to governmental export and import controls that could subject us to liability or impair our ability to compete in international markets.
We are subject to export control laws, regulations and requirements that limit which products we sell and where and to whom we sell our products. In
some cases, it is possible that export licenses would be required from U.S. government agencies for some of our products in accordance with various laws, including but not limited to the International
Traffic in Arms Regulations, the Export Administration Act of 1979, the International Emergency Economic Powers Act of 1977, the Trading with the Enemy Act of 1917 and the Arms Export Control Act of
1976. In addition, various countries regulate the import of certain technologies and have enacted laws that could limit our ability to distribute our products. We may not be successful in obtaining
the necessary export and import licenses. Failure to comply with these and similar laws on a timely basis, or at all, or any limitation on our ability to export or sell our products would adversely
affect our business, financial condition and results of operations.
Changes
in our products or changes in export and import laws and implementing regulations may create delays in the introduction of new products in international markets, prevent our
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customers
from deploying our products internationally or, in some cases, prevent the export or import of our products to certain countries altogether. Any change in export or import regulations or
related legislation, shift in approach to the enforcement or scope of existing regulations, or change in the countries, persons or technologies targeted by such regulations, could result in decreased
use of our products by, or in our decreased ability to export or sell our products to, existing or potential customers with international operations. In such event, our business and results of
operations could be adversely affected.
We are subject to government regulations that could adversely impact our business.
The Federal Communications Commission, or FCC, has jurisdiction over the entire U.S. telecommunications industry and, as a result, our products and
our U.S. customers are subject to FCC rules and regulations. Our business is also subject to other U.S. governmental and regulatory authorities, including the Environmental Protection Agency, the Food
and Drug Administration, the Department of Homeland Security, International Trafficking in Arms Regulations and the Department of Defense. Current and future regulations affecting communications
services, our products or our customers' businesses could impose new requirements or result in more stringent enforcement of existing laws, which could result in additional costs and increased
penalties, which could negatively affect our business. In addition, international regulatory standards could impair our ability to develop products for international customers in the future. Delays
caused by our compliance with regulatory requirements could result in postponements or cancellations of product orders. Further, we may not be successful in obtaining or maintaining any regulatory
approvals that may, in the future, be required to operate our business. Any failure to obtain such approvals could harm our business and results of operations.
We sell our products to federal government entities under prime contracts and subcontracts. A loss or reduction of such contracts, a failure to obtain new contracts or a
modification or termination under such contracts could have an adverse effect on our business.
We derived a portion of our revenues for the fiscal year 2010 from contracts with agencies of the federal government or subcontracts with prime
defense contractors or subcontractors of the federal government. The loss or significant curtailment of any of these government contracts or subcontracts, or failure to exercise renewal options or
enter into new contracts or subcontracts, could have an adverse effect on our business, results of operations and financial condition. Continuation and the exercise of renewal options on existing
government contracts and subcontracts and new government contracts and subcontracts are, among other things, contingent upon the availability of adequate funding for the various federal government
agencies with which we and prime government contractors do business. Changes in federal government spending could directly affect our financial performance. Among the factors that could impact federal
government spending and which would reduce our federal government contracting and subcontracting business are:
•
a significant decline in, or reapportioning of, spending by the federal government;
•
changes, delays or cancellations of federal government programs or requirements;
•
the adoption of new laws or regulations that affect companies that provide products or services to the federal government;
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•
federal government shutdowns or other delays in the government appropriations process;
•
curtailment of the federal government's use of third-party firms;
•
changes in the political climate, including with regard to the funding for the products we provide; and
•
general economic conditions.
Furthermore,
if the current presidential administration were to reorder its budgetary priorities resulting in a general decline in U.S. defense spending, it could cause federal government agencies to
reduce their purchases under contracts, exercise their rights to terminate contracts in whole or in part, to issue temporary stop work orders or decline to exercise options to renew contracts, all of
which could harm our operations and significantly reduce our future revenues.
In
addition, the federal government can terminate or modify any of its contracts with us or its prime contractors either for its convenience, or if we or its prime contractors default, by failing to
perform under the terms of the applicable contract. A termination arising out of our default could expose us to liability and have a material adverse effect on our ability to compete for future
contracts and subcontracts. If the federal government or its prime contractors terminate and/or materially modify any of our contracts or if any applicable options are not exercised, our failure to
replace sales generated from such contracts would result in lower sales and could adversely affect our earnings, which could have a material adverse effect on our business.
We are subject to environmental, health and safety laws and regulations, which could subject us to liabilities, increase our costs, or restrict our business or operations in
the future.
Our manufacturing operations and our products are subject to a variety of federal, state, local and international environmental, health and safety
laws and regulations. These laws and regulations govern, among other things, air emissions, wastewater discharges, the handling and disposal of hazardous substances and wastes, soil and groundwater
contamination, employee health and safety, and the use of hazardous materials in our products. Liability under environmental, health and safety laws can be joint and several and without regard to
fault or negligence. There can be no assurance that violations of these laws will not occur in the future, as a result of human error, accident, equipment failure or other causes. Our failure to
comply with present and future environmental, health or safety requirements, or the identification of contamination, could cause us to incur substantial costs, including cleanup costs, monetary fines,
and civil or criminal penalties, and subject us to property damage or personal injury claims, suspension of production, alteration of our manufacturing facilities or processes, or curtailment of
operations sales and adverse publicity. In addition, these laws and regulations have increasingly become more stringent over time and we expect that our operations and products will be affected by new
environmental requirements on an ongoing basis, which will likely result in additional costs, which could have a material adverse effect on our business. The identification of presently unidentified
environmental conditions, more vigorous enforcement of current environmental, health and safety requirements by regulatory agencies, or other unanticipated events could restrict our ability to expand
our facilities, require us to install costly pollution control equipment or incur other additional expenses, or require us to modify our manufacturing processes or the contents of our products, which
could have a material adverse effect on our business, financial condition and results of operations.
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Our
manufacturing facilities use, store and dispose of hazardous substances in connection with their processes. In addition, our operations have grown through acquisitions, and it is possible that
businesses that we have acquired may expose us to environmental liabilities that have not yet been discovered associated with historical site conditions or offsite locations. Some environmental laws
impose liability for contamination on current and former owners and operators of affected sites, or on parties that generated wastes disposed of at off-site locations, regardless of fault.
In the event we are found liable for any such contamination in the future, there can be no assurance that remediation costs, or
potential claims for personal injury or property or natural resource damages resulting from contamination, will not be material.
Some
jurisdictions in which our products are sold have enacted requirements regarding the hazardous material content of certain products. For example, member states of the European Union, are among a
growing number of jurisdictions, which have placed restrictions on the use of lead, among other chemicals, in electronic products, which affects the composition and packaging of our products. The
passage of such requirements in additional jurisdictions, or the tightening of standards or elimination of certain exemptions in jurisdictions where our products are already subject to such
requirements, could cause us to incur significant expenditures to make our products compliant with new requirements, or could limit the markets into which we may sell our products.
Additionally,
increasing efforts to control emissions of greenhouse gases, or GHG, may also impact us. Additional restrictions, limits, taxes, or other controls on GHG emissions could significantly
increase our operating costs and, while it is not possible to estimate the specific impact any final GHG regulations will have on our operations, there can be no assurance that these measures will not
have significant additional impact on us.
Risks related to this offering and our common stock
There is no existing market for our common stock and we do not know if one will develop to provide our stockholders adequate liquidity.
There has not been a public trading market for shares of our common stock prior to this offering. An active trading market may not develop or be
sustained after this offering. The initial public offering price for the shares of common stock sold in this offering will be determined by negotiations between us and representatives of the
underwriters. This price may not be indicative of the price at which our common stock will trade after this offering.
Our financial results may vary significantly from quarter to quarter due to a number of factors, which may lead to volatility in our stock price.
Our quarterly revenue and results of operations have varied in the past and may continue to vary significantly from quarter to quarter. This
variability may lead to volatility in our stock price as research analysts and investors respond to these quarterly fluctuations. These fluctuations are due to numerous factors,
including:
•
fluctuations in demand for our products;
•
the timing, size and product mix of sales of our products;
•
changes in our pricing and sales policies or the pricing and sales policies of our competitors;
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•
our ability to design, manufacture and deliver products to our customers in a timely and cost-effective manner
and that meet customer requirements;
•
quality control or yield problems in our manufacturing operations;
•
our ability to timely obtain adequate quantities of the components used in our products;
•
length and variability of the sales cycles of our products;
•
new product introductions and enhancements by our competitors and ourselves;
•
unanticipated increases in costs or expenses; and
•
fluctuations in foreign currency exchange rates.
The
foregoing factors are difficult to forecast, and these, as well as other factors, could materially adversely affect our quarterly and annual results of operations. In addition, a significant
amount of our operating expenses is relatively fixed in nature due to our internal manufacturing, research and development, sales and general administrative efforts. Any failure to adjust spending
quickly enough to compensate for a revenue shortfall could magnify the adverse impact of such revenue shortfall on our results of operations. Moreover, our results of operations may not meet our
announced guidance or the expectations of research analysts or investors, in which case the price of our common stock could decrease significantly. There can be no assurance that we will be able to
successfully address these risks.
Our stock price may be volatile and you may be unable to sell your shares at or above the offering price.
The market price of our common stock could be subject to wide fluctuations in response to, among other things, the risk factors described in this
section of this
prospectus, and other factors beyond our control, such as fluctuations in the valuation of companies perceived by investors to be comparable to us.
Furthermore,
the stock markets have experienced price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations
often have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political and market
conditions, such as recessions, interest rate changes or international currency fluctuations, may negatively affect the market price of our common stock.
In
the past, many companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may become the target of this type of
litigation in the future. Securities litigation against us could result in substantial costs and divert our management's attention from other business concerns, which could seriously harm our
business.
As
a result of the foregoing, fluctuations in the market price of our common stock could prevent our investors from selling their shares at or above the offering price.
If research analysts do not publish research about our business or if they issue unfavorable commentary or downgrade our common stock, our stock price and trading volume
could decline.
The trading market for our common stock will depend in part on the research and reports that research analysts publish about us and our business. The
price of our common stock could
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decline
if one or more research analysts downgrade our stock or if those analysts issue other unfavorable commentary or cease publishing reports about us or our business. If one or more of the
research analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our common stock could decrease, which could cause our stock price or trading volume to
decline.
Our principal stockholders, executive officers and directors own a significant percentage of our stock and will continue to have significant control of our management and
affairs after the offering, and they can take actions that may be against your best interests.
Following the completion of this offering, our executive officers and directors, and entities that are affiliated with them, will beneficially own an
aggregate of approximately         % of our outstanding common stock. Our largest stockholder, Jerusalem Venture Partners, will beneficially own an aggregate of
approximately         % of
our outstanding common stock following completion of this offering. This significant concentration of share ownership may adversely affect the trading price for our common stock because investors
often perceive disadvantages in owning stock in companies with controlling stockholders. Also, as a result, these stockholders, acting together, may be able to control our management and affairs and
matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, such as mergers, consolidations, the sale of substantially all of our
assets or amendments to our certificate of incorporation or by-laws. Consequently, this concentration of ownership may have the effect of delaying or preventing a change in control, including a
merger, consolidation or other business combination involving us, or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control, even if such a change in
control would benefit our other stockholders.
Our stock price could decline due to the large number of outstanding shares of our common stock eligible for future sale.
Sales of substantial amounts of our common stock in the public market following this offering, or the perception that these sales could occur, could
cause the market price of our common stock to decline. These sales could also make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem
appropriate.
Assuming
completion of this offering as of             , 2011, we would have had an aggregate of             shares of common
stock outstanding, assuming no exercise of the underwriters'
over-allotment option and no exercise of outstanding options or warrants. The             shares sold pursuant to this offering will be immediately tradable without restriction. Of the
remaining shares:
•
no shares will be eligible for sale immediately upon completion of this offering;
•
shares will be eligible for sale upon the expiration of lock-up agreements, subject in some
cases to volume and other restrictions of Rule 144 and Rule 701 under the Securities Act of 1933, as amended, or the Securities Act; and
•
The number of shares eligible for sale upon expiration of lock-up agreements assumes the conversion of all
outstanding shares of our Series A Preferred Stock, Series B Preferred Stock, Series B-2 Preferred Stock, Series C Preferred Stock,
Series C-1 Preferred Stock into an aggregate of 12,399,825 shares of common stock on a 1-for-1 basis and the conversion of all outstanding shares of our
Series B-1 Preferred Stock into an aggregate of 665,013 shares of Common Stock on a one for 1.161144499 basis.
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The
lock-up agreements expire 180 days after the date of this prospectus, subject to potential extension in the event we release earning results or material news or a material event
relating to us occurs near the end of the lock-up period. J.P. Morgan Securities LLC and Barclays Capital Inc., as representatives of the underwriters, may, in their discretion and
at any time without notice, release all or any portion of the securities subject to lock-up agreements. After the completion of this offering, we intend to register approximately
             shares of our common stock that have been issued or reserved for future issuance under our stock incentive plans.
Because our initial public offering price is substantially higher than the pro forma as adjusted net tangible book value per share of our outstanding common stock, new
investors will incur immediate and substantial dilution.
The initial public offering price is substantially higher than the pro forma as adjusted net tangible book value per share of our common stock based
on the expected total value of our total assets, less our goodwill and other intangible assets, less our total liabilities immediately following this offering. Therefore, if you purchase shares of our
common stock in this offering, you will experience immediate and substantial dilution of $             per
share in the price you pay for our common stock as compared to the pro forma as adjusted net tangible book value as of March 31, 2011. To the extent outstanding options or warrants to purchase
common stock are exercised, there will be further dilution. For a further description of the dilution that you will experience immediately after this offering, see "Dilution."
Our management has broad discretion in the use of the net proceeds from this offering and may not use the net proceeds effectively.
Our management will have broad discretion in the application of the net proceeds of this offering. We cannot specify with certainty the uses to which
we will apply the net proceeds we will receive from this offering. The failure by our management to apply these funds effectively could adversely affect our ability to continue to maintain and expand
our business.
We currently do not intend to pay dividends on our common stock and, consequently, your only opportunity to achieve a return on your investment is if the price of our common
stock appreciates.
We currently do not plan to declare dividends on shares of our common stock in the foreseeable future. See "Dividend policy" for more information.
Consequently, your only opportunity to achieve a return on your investment in our company will be if the market price of our common stock appreciates and you sell your shares at a profit. There is no
guarantee that the price of our common stock that will prevail in the market after this offering will ever exceed the price that you pay.
Our charter and organizational documents and Delaware law could prevent a takeover that stockholders consider favorable and could also reduce the market price of our stock.
Our amended and restated certificate of incorporation and our amended and restated bylaws, which will be effective upon completion of this offering,
contain provisions that could delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which stockholders might otherwise
receive a premium for their shares. These provisions may also prevent or delay
attempts by stockholders to replace or remove our current management or members of our board of directors. These provisions include:
•
providing for a classified board of directors with staggered, three-year terms;
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•
not providing for cumulative voting in the election of directors;
•
authorizing our board of directors to issue, without stockholder approval, preferred stock rights senior to those of
common stock;
•
prohibiting stockholder action by written consent;
•
limiting the persons who may call special meetings of stockholders; and
•
requiring advance notification of stockholder nominations and proposals.
The
affirmative vote of the holders of at least 66
2
/
3
% of our shares of capital stock entitled to vote, and not less than 66
2
/
3
% of the outstanding shares of each class
entitled to vote thereon as a class, is generally necessary to amend or repeal the above provisions that are contained in our amended and restated certificate of incorporation. Also, absent approval
of our board of directors, our amended and restated by-laws may only be amended or repealed by the affirmative vote of the holders of at least 66
2
/
3
% of our shares of
capital stock entitled to vote.
In
addition, the provisions of Section 203 of the Delaware General Corporate Law will govern us upon completion of this offering. These provisions may prohibit large stockholders, in particular
those owning 15% or more of our outstanding common stock, from engaging in certain business combinations without approval of substantially all of our stockholders for a certain period of time.
These
and other provisions in our amended and restated certificate of incorporation, our amended and restated bylaws, our 2011 amended and restated investor rights agreement and under Delaware law
could discourage potential takeover attempts, reduce the price that investors might be willing to pay for shares of our common stock in the future and result in the market price being lower than it
would be without these provisions. See "Description of capital stock—Preferred stock", "Description of capital stock—Anti-takeover effects of Delaware law and our
certificate of incorporation and bylaws", and "Certain relationships and related party transactions—Private placement financings—Investor rights agreement."
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Special note regarding forward-looking statements
and industry data
This prospectus contains forward-looking statements that are based on our management's beliefs and assumptions and on information
currently available to our management. The forward-looking statements are contained principally in "Prospectus summary," "Risk factors," "Management's discussion and analysis of financial condition
and results of operations," "Business" and "Compensation discussion and analysis." Forward-looking statements include information concerning our possible or assumed future results of operations,
business strategies, financing plans, competitive position, industry environment, potential growth opportunities and the effects of competition. Forward-looking statements include all statements that
are not historical facts and can be identified by terms such as "anticipates," "believes," "could," "seeks," "estimates," "expects," "intends," "may," "plans," "potential," "predicts," "projects,"
"should," "will," "would" or similar expressions and the negatives of those terms.
Forward-looking
statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future
results, performance or achievements expressed or implied by the forward-looking statements. We discuss these risks in greater detail in "Risk factors" and elsewhere in this prospectus. Given these
uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management's beliefs and assumptions only as of the date of this
prospectus. You should read this prospectus and the documents that we have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding
that our actual future results may be materially different from what we expect.
Except
as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these
forward-looking statements, even if new information becomes available in the future.
This
prospectus also contains estimates and other information concerning our industry, including market size and growth rates, that are based on industry publications, surveys and forecasts, including
those generated by Cisco Systems, Dell'Oro and Ovum. This information involves a number of assumptions and limitations, and you are cautioned not to give undue weight to these estimates. These
industry publications, surveys and forecasts generally indicate that their information has been obtained from sources believed to be reliable. The industry in which we operate is subject to a high
degree of uncertainty and risk due to variety of factors, including those described in "Risk factors."
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Table of Contents
Use of proceeds
We estimate that the net proceeds from our sale of                           shares of common stock
in this offering at an assumed initial
public offering price of $             per share, the
midpoint of the price range set forth on the front cover of this prospectus after deducting estimated underwriting discounts and commissions and estimated offering expenses, will be approximately
$              million, assuming no exercise by the underwriters of their over-allotment option, or
$              million if the underwriters' option to purchase additional shares
is exercised in full. A $1.00 increase (decrease) in the assumed initial public offering price would increase (decrease) the net proceeds to us from this offering by
$              million,
assuming the number of shares offered by us, as set forth on the front cover of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions.
We
intend to use the net proceeds of this offering primarily for working capital and general corporate purposes, including capital expenditures. The amount and timing of these expenditures will vary
depending on a number of factors, including competitive and technological developments and the rate of growth, if any, of our business.
In
addition, we may use a portion of the net proceeds to selectively pursue acquisitions that complement our strengths and help us execute our strategies or to repay some or all of the outstanding
amounts under our debt facilities. However, we have no understandings or agreements with respect to any such acquisition or investment or debt repayment.
Pending
their use, we plan to invest our net proceeds from this offering in short-term, interest-bearing obligations, investment-grade instruments, certificates of deposit, or direct or
guaranteed obligations of the U.S. government.
Dividend policy
We have never declared or paid cash dividends on our common stock. We currently intend to retain all available funds and any future
earnings for use in the operation of our business and do not anticipate paying any dividends on our common stock in the foreseeable future. Any future determination to declare dividends will be made
at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our board of
directors may deem relevant. In addition, our debt facility restricts our ability to declare or pay cash dividends on our capital stock.
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Table of Contents
Capitalization
The following table sets forth our consolidated cash and cash equivalents and capitalization as of March 31, 2011
on:
•
an actual basis;
•
on a pro forma basis to give effect to (i) the conversion of all outstanding shares of preferred stock into shares
of our common stock and all outstanding warrants to purchase preferred stock into warrants to purchase common stock; and (ii) the reclassification of our outstanding preferred stock warrants
from long-term liabilities to additional paid-in capital; and
•
on a pro forma as adjusted basis to give effect to the conversion and reclassification described in the prior bullet and
(i) the sale by us of the shares of common stock offered by this prospectus at an initial public offering price of $         per share, the midpoint of the price range on the cover of
this prospectus, and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us; and (ii) the filing of our amended and restated certificate of
incorporation, which will occur immediately prior to the closing of this offering.
The
following information is illustrative only of our cash and cash equivalents and our capitalization following the completion of this offering and will be adjusted based on the actual initial public
offering price and other terms of this offering determined at pricing. You should read this table together with "Management's discussion and analysis of financial
condition and results of operations" and our financial statements and the related notes appearing elsewhere in this prospectus.
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Table of Contents
As of March 31, 2011 (in thousands except share and per share data)
Actual
Pro-forma
Pro-forma
as adjusted(1)
Cash and cash equivalents
$
31,059
$
$
Long-term obligations, including current portion
$
12,551
$
$
Convertible preferred stock, $0.001 par value per share; 18,337,337 shares authorized, 12,972,547 shares issued and outstanding, actual; no shares
authorized, none issued or outstanding, pro forma; no shares authorized, issued or outstanding, pro forma as adjusted
95,404
Stockholders' equity (deficit):
Preferred stock, $0.001 par value per share, no shares authorized or outstanding actual and pro forma; 25,000,000 shares authorized, no shares issued and
outstanding, pro forma as adjusted
—
Common stock, $0.001 par value per share; 22,084,428 shares authorized, 1,294,539 shares issued and outstanding, actual; 500,000,000 shares authorized,
             shares issued and outstanding, pro forma; and             shares authorized,
             shares issued and outstanding, pro forma as adjusted
1
Additional paid-in capital(1)
45,140
Accumulated deficit
(79,916
)
Total stockholders' equity (deficit)(1)
(34,775
)
Total capitalization(1)
$
73,180
$
$
(1)   A $1.00 increase (decrease) in the assumed initial public offering price of $             per share, the midpoint of the range set forth on the cover page of this
prospectus, would
increase (decrease) each of additional paid-in capital, total stockholders' equity and total capitalization by $              million, assuming that the number of shares offered
by us, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Each
increase of              million shares in the number of shares offered by us, together with a
$             increase in the assumed offering price of $             per share, would
increase additional paid-in capital, total stockholders' equity and total capitalization by approximately $              million.
The number of shares of our common stock to be outstanding following this offering as of March 31, 2011 excludes:
•
399,570 shares of common stock issuable upon the exercise of options outstanding as of March 31, 2011, with
a weighted average exercise price of $8.57 per share;
•
26,038 shares of common issuable upon the exercise of outstanding warrants, with a weighted average exercise price
of $10.03 per share; and
•
shares of our common stock reserved for future issuance under our stock-based compensation plans,
including                                        sh
ares of common stock reserved for issuance under our 2011 Equity Incentive Plan, which will become effective in connection with this offering, and any future increase in
shares reserved for issuance under such plan.
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Dilution
If you invest in our common stock, your interest will be diluted to the extent of the difference between the amount per share paid by
purchasers of shares of common stock in this initial public offering and the pro forma as adjusted net tangible book value per share of common stock immediately after completion of this offering.
At
March 31, 2011, our pro forma net tangible book value was approximately $        million, or $         per share of common stock. Pro forma net tangible book
value per
share represents total tangible assets less total liabilities, divided by the number of shares of common stock outstanding after giving effect to (i) the conversion of all outstanding shares of
our convertible preferred stock into an aggregate of 13,064,838 shares of our common stock effective immediately prior to the completion of this offering, for a total of 14,359,377 shares of common
stock outstanding on March 31, 2011 and (ii) the reclassification of our preferred stock warrant liabilities from long-term liabilities to additional paid-in
capital. After giving effect
to our sale of             shares of common stock in this offering at an assumed initial public offering price of
$             , the midpoint of the price range set forth on the front cover of
this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses, our pro forma as adjusted net tangible book value at March 31, 2011 would
have been $             , or $             per share of common stock. This represents an immediate increase in pro forma
net tangible book value of $             per share to existing
stockholders and an immediate dilution of $             per share to new investors.
The
following table illustrates this dilution:
Assumed initial public offering price per share
$
Pro forma net tangible book value per share as of March 31, 2011
$
Increase per share attributable to this offering
Pro forma as adjusted net tangible book value per share after this offering
Dilution per share to new investors in this offering
$
If all our outstanding options had been exercised, the pro forma net tangible book value as of March 31, 2011 would have been
$              million, or $             per share, and the pro forma as adjusted net tangible book value after
this offering would have been $              million, or
$             per share, causing dilution to new investors of $             per share.
The
following table summarizes, on a pro forma as adjusted basis as of March 31, 2011, the total number of shares of common stock purchased from us, the total consideration paid to us, and the
average price per share paid to us by existing stockholders and by new investors purchasing shares in this offering at the initial public offering price of $             , the midpoint
37
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of
the price range set forth on the front cover of this prospectus, before deducting estimated underwriting discounts and commissions and estimated offering expenses:
Shares purchased
Total consideration
Average
price
per share
Number
Percent
Amount
Percent
Existing stockholders
%
$
%
$
New investors
Total
%
$
%
The foregoing calculations exclude as of March 31, 2011:
•
399,570 shares of common stock issuable upon the exercise of options outstanding as of March 31, 2011, with a
weighted average exercise price of $8.57 per share;
•
26,038 shares of common issuable upon the exercise of outstanding warrants, with a weighted average exercise price
of $10.03 per share; and
•
shares of our common stock reserved for future issuance under our stock-based compensation plans,
including                                        sh
ares of common stock reserved for issuance under our 2011 Equity Incentive Plan, which will become effective in connection with this offering, and any future increase in
shares reserved for issuance under such plan.
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Table of Contents
Selected consolidated financial data
The following selected consolidated financial data should be read together with our financial statements and accompanying notes and
"Management's discussion and analysis of financial condition and results of operations" appearing elsewhere in this prospectus. The selected financial data in this section is not intended to replace
our financial statements and the related notes. Our historical results are not necessarily indicative of our future results.
We
derived the consolidated statements of operations data for each of the three years ended December 31, 2010, 2009 and 2008 and the consolidated balance sheet data as of December 31,
2010 and 2009 from our audited consolidated financial statements appearing elsewhere in this
prospectus. The consolidated statements of operations data for the years ended December 31, 2007 and 2006, and the consolidated balance sheet data as of December 31, 2008, 2007 and 2006
are derived from our audited consolidated financial statements that are not included in this prospectus. The consolidated statements of operations data for the three months ended March 31, 2011
and 2010 and the consolidated balance sheet data as of March 31, 2011 are derived from our unaudited condensed consolidated financial statements appearing elsewhere in this prospectus.
Three months ended March 31,
Year ended December 31,
(in thousands, except share and per share data)
2010
2009
2008
2007
2006
2011
2010
(unaudited)
Consolidated Statement of Operations Data:
Total revenues
$
108,336
$
65,730
$
67,211
$
52,029
$
46,719
$
34,028
$
23,633
Cost of revenues
79,375
57,846
63,157
47,673
38,583
24,759
17,742
Gross profit
28,961
7,884
4,054
4,356
8,136
9,269
5,891
Operating expenses:
Research and development
12,010
19,540
19,031
10,569
8,876
3,518
2,860
Sales and marketing
2,671
3,181
3,888
2,459
2,115
801
629
General and administrative
3,270
7,372
5,904
3,136
2,332
863
682
Severance and liquidation expenses
—
6,465
—
—
—
—
—
Asset impairment
—
6,621
9,841
—
—
—
—
Restructuring charge
—
—
—
—
1,502
—
—
Total operating expenses
17,951
43,179
38,664
16,164
14,825
5,182
4,171
Income (loss) from operations
11,010
(35,295
)
(34,610
)
(11,808
)
(6,689
)
4,087
1,720
Other (expense) income:
Interest expense, net
(1,328
)
(1,617
)
(2,148
)
(1,088
)
(972
)
(276
)
(349
)
Other (expense) income, net
(292
)
1,574
4,711
(387
)
433
(145
)
52
Total other income (expense)
(1,620
)
(43
)
2,563
(1,475
)
(539
)
(421
)
(297
)
Income (loss) before provision for income taxes
9,390
(35,338
)
(32,047
)
(13,283
)
(7,228
)
3,666
1,423
Provision for income taxes
501
128
177
—
—
1,384
78
Net income (loss)
$
8,889
$
(35,466
)
$
(32,224
)
$
(13,283
)
$
(7,228
)
$
2,282
$
1,345
Net income (loss) attributable to common shareholders
$
1,115
$
(35,466
)
$
(32,224
)
$
(13,283
)
$
(7,228
)
$
47,678
$
169
Net income (loss) per common share(1):
Basic
$
0.73
$
(23.74
)
$
(22.68
)
$
(15.22
)
$
(8.62
)
$
36.35
$
0.11
Diluted
$
0.73
$
(23.74
)
$
(22.68
)
$
(15.22
)
$
(8.62
)
$
0.15
$
0.11
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Three months ended March 31,
Year ended December 31,
(in thousands, except share and per share data)
2010
2009
2008
2007
2006
2011
2010
(unaudited)
Weighted average number of common shares outstanding
Basic
1,519,124
1,494,124
1,420,786
872,714
838,059
1,311,760
1,521,308
Diluted
1,523,183
1,494,124
1,420,786
872,714
838,059
15,692,812
1,521,308
Pro forma net income per common share (unaudited)(2):
Basic
$
$
$
$
$
$
$
Diluted
$
$
$
$
$
$
$
Weighted average number of shares used in pro forma computation (unaudited)(2):
Basic
Diluted
Pro forma as adjusted net income per common share (unaudited)(3):
Basic
$
$
$
$
$
$
$
Diluted
$
$
$
$
$
$
$
Weighted average number of shares used in pro forma as adjusted computation (unaudited)(3):
Basic
Diluted
(1)   We
applied the two-class method to compute net income (loss) per common share which requires that earnings for the period be allocated between common and participating
securities based upon their respective contractual rights to receive distributed and undistributed earnings. See Note 2 of the notes to each of our consolidated financial statements included
elsewhere in this prospectus.
(2)   The
pro forma basic and diluted net income per share have been calculated assuming (i) the conversion of all outstanding shares of convertible preferred stock into an aggregate
of                      shares of our common stock as of the beginning of the applicable period and (ii) the reclassification of
outstanding preferred stock warrants from long term liabilities to
additional paid-in capital as of the beginning of the applicable period. The numerator of the pro forma net income per share calculation is derived by adding
$                      for the year
ended December 31, 2010 related to the preferred stock warrant liability and by excluding the impact of $                      for the
three months ended March 31, 2011 related to the
redemption of preferred stock below carrying value to net income as reported to arrive at net income attributable to common shares of approximately
$                      and
$                      for the year
ended December 31, 2010 and the three months ended March 31, 2011, respectively.
(3)   The
pro forma as adjusted basic and diluted net income per share have been calculated assuming (i) the conversion of all outstanding shares of convertible preferred stock into
an aggregate of                      shares of our common stock as of the beginning of the applicable period and (ii) the
reclassification of outstanding preferred stock warrants from long term
liabilities to additional paid-in capital as of the beginning of the applicable period, (iii) the sale by us of the             shares of common stock in our initial public
offering as of the beginning of the applicable period, and (iv) the filing of our amended and restated certificate of incorporation immediately prior to the closing of this offering. The
numerator of the pro forma net income per share calculation is derived by adding $             for the year ended December 31, 2010 related to the preferred stock warrant liability
and
subtracting $             for the three months ended March 31, 2011 related to the redemption of preferred stock below carrying value to net income as reported to arrive at net
income
attributable to common shares of
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approximately
$             and $             for the year ended December 31, 2010 and the three months ended March 31, 2011,
 respectively.
As of December 31,
As of March 31,
(in thousands)
2010
2009
2008
2007
2006
2011
(unaudited)
Consolidated balance sheet data:
Cash and cash equivalents
$
12,397
$
9,122
$
35,929
$
6,033
$
7,323
$
31,059
Working capital
34,978
25,632
44,561
7,992
15,261
55,418
Total assets
74,311
55,433
107,331
48,295
38,908
97,756
Long-term obligations, including current portion
13,033
14,750
16,287
19,102
14,930
12,551
Convertible preferred stock
122,958
122,958
122,958
49,582
34,037
95,404
Total stockholders' equity (deficit)
(84,561
)
(93,471
)
(61,039
)
(30,100
)
(18,024
)
(34,775
)
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Management's discussion and analysis of financial condition and results of operations
The following discussion and analysis of our financial condition and results of operations should be read in
conjunction with "Selected consolidated financial data" and our consolidated financial statements and related notes appearing elsewhere in this prospectus. In addition to historical information, this
discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking
statements as a result of certain factors. Factors that we believe could cause or contribute to these differences include, but are not limited to, those identified below and elsewhere in this
prospectus, including those set forth under "Risk factors" and "Special note regarding forward-looking statements and industry data."
Overview
We are a leading platform-based provider of core optical technologies enabling bandwidth for high-speed networks. Our
solutions provide the fundamental building blocks—the creation, modulation, routing and detection of light—that enable high-performance and
cost-effective optical networking. We produce active components that create and detect light, passive components that guide and combine light, and packaging solutions that integrate active
and passive components into high-performance, power-efficient, cost-effective, compact products. Through our vertically integrated technology and manufacturing platforms, we
design, fabricate and package a broad portfolio of optical components—lasers, detectors, transmitters, receivers and modulators—for module manufacturers and OEMs, who sell to
communication service providers and enterprises in the Access, Enterprise/Data Center and Long Haul/Metro segments of the communications network, and for other emerging end market applications, such
as defense and avionics, high performance computing, medical and security.
We
are one of the few companies in our industry with vertically integrated technology and manufacturing platforms that span from Indium Phosphide and Silica-on-Silicon
fabrication to proprietary, highly automated assembly and test facilities. Our in-house capabilities allow us to offer a dependable supply of quality optical components and modules. Our
PIC and COB solutions incorporate greater functionality and intelligence at the component level, which enables us to serve next-generation, higher speed networks.
We
sell our products to a global, diversified customer base that includes module manufacturers and OEMs, who in turn sell to communication service providers and enterprises, and to defense and
avionics contractors. Our customers include Cambridge Industries Group Ltd., Ciena Corporation, Finisar Corporation, Huawei Technologies Co., Ltd., Lockheed Martin Corporation,
Source Photonics, Inc. and Superxon Technology, Ltd. We believe that greater than 70% of our revenue was sole-sourced in 2010, which we believe demonstrates the
differentiation of our products and gives us significant insight into our customers' product and technology roadmaps.
We
believe we have an attractive financial profile, with superior top-line performance and strong quarter over quarter revenue visibility. We have grown our revenue at a 31.3% CAGR between
2005 and 2010 and 44.0% quarter over quarter from March 31, 2010 to March 31, 2011. We have also experienced significant margin expansion, as our income (loss) from operations margin
increased from 7.3% in the three months ended March 31, 2010 to 12.0% in
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the
three months ended March 31, 2011, and our adjusted income (loss) from operations margin increased from 9.8% in the three months ended March 31, 2010 to 13.2% in the three months
ended March 31, 2011. Adjusted income (loss) from operations margin is not calculated in accordance with GAAP. A reconciliation of this non-GAAP measure to income (loss) from
operations margin calculated and presented in accordance with GAAP is included below in "—Key business metrics." Adjusted income (loss) from operations margin should not be considered as
an alternative to income (loss) from operations margin calculated and presented in accordance with GAAP.
Our history and key milestones
In 1999, the company was founded with a vision of providing core optical technologies to enable bandwidth for high-speed
networks. Key milestones in our development include:
•
In February 2003, we acquired the optical component packaging capabilities of CENIX, Inc., an optical start-up that
developed high-speed optical modules using an automated manufacturing platform;
•
In April 2003, we introduced what we believe to be one of the first commercially available 10Gbps TOSAs to enable
pluggable transceivers;
•
In April 2005, we acquired the optoelectronics division of TriQuint Semiconductor, Inc., formerly the
optoelectronics divisions of Lucent Technologies and Bell Labs;
•
In September 2005, we introduced what we believe to be one of the lowest power consumption cooled 2.5Gbps small form
factor laser transmitters for integration into pluggable transceivers;
•
In April 2007, we acquired Apogee Photonics, Inc., a supplier of laser sources for 10Gbps and 40Gbps markets;
•
In November 2007, we acquired Inplane Photonics, Inc., a manufacturer of planar lightguide circuits,
or PLCs, for optical networks in defense and telecommunications applications using Silica-on-Silicon PLC technology;
•
In July 2008, we acquired PGT Photonics S.p.A., or PGT, a silicon-based photonics business with tunable laser
technology, photonic integrated circuit, or PIC, capabilities and manufacturing infrastructure;
•
In March 2011, we introduced what we believe to be one of the first 40Gbps/100Gbps coherent receivers with full
integration of 90 degree hybrids, detectors, Trans-Impedance Amplifiers, or TIAs, and polarization splitters; and
•
In May 2011, we introduced what we believe to be one of the first commercially available 10Gbps TOSAs for DWDM in small
form-factor pluggable plus (SFP+) transceivers.
Key business metrics
Presented in the following table is a number of key metrics that we believe are helpful to evaluate our business.
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Table of Contents
Our
management monitors a number of the key financial metrics shown below to help us evaluate trends, measure the effectiveness and efficiency of our operations and gauge our cash generation. These
include revenue, gross profit and gross margin, income (loss) from operations, income (loss) from operations margin, net income (loss) and net cash provided by (used in) operating activities. We
discuss a number of the elements of these metrics in "—Financial operations overview" and "—Critical accounting policies and estimates."
In
addition, we present a number of key non-GAAP financial metrics in the table below that we believe are useful for investors and that we expect our management to use to evaluate our
business in future periods. These include adjusted gross profit, adjusted gross margin, earnings before interest, taxes, depreciation and amortization or EBITDA, EBITDA margin, adjusted EBITDA,
adjusted EBITDA margin, adjusted income (loss) from operations, adjusted income (loss) from operations margin, adjusted net income (loss) and free cash flow. These measures are not a recognized
presentation under GAAP. An explanation of the elements of each non-GAAP measure and a full reconciliation of each non-GAAP measure to the most directly comparable GAAP
measure, as well as a discussion of the material limitations of adjusted EBITDA, is presented in "—Use of non-GAAP financial measures—Reconciliation of
non-GAAP measures to most comparable GAAP measure."
Years ended December 31,
Three months
ended March 31,
(in thousands, except percentages)
2010
2009
2008
2011
2010
GAAP metrics:
Total revenues
$
108,336
$
65,730
$
67,211
$
34,028
$
23,633
Gross profit
$
28,961
$
7,884
$
4,054
$
9,269
$
5,891
Gross margin
26.7%
12.0%
6.0%
27.2%
24.9%
Income (loss) from operations
$
11,010
$
(35,295
)
$
(34,610
)
$
4,087
$
1,720
Income (loss) from operations margin
10.2%
(53.7)%
(51.5)%
12.0%
7.3%
Net income (loss)
$
8,889
$
(35,466
)
$
(32,224
)
$
2,282
$
1,345
Net cash provided by (used in) operating activities
$
8,233
$
(14,766
)
$
(23,176
)
$
1,456
$
2,483
Non-GAAP metrics:
Adjusted gross profit
$
30,483
$
9,198
$
5,028
$
9,499
$
6,336
Adjusted gross margin
28.1%
14.0%
7.5%
27.9%
26.8%
Adjusted income (loss) from operations
$
13,175
$
(19,664
)
$
(22,214
)
$
4,477
$
2,326
Adjusted income (loss) from operations margin
12.2%
(29.9)%
(33.1)%
13.2%
9.8%
Adjusted net income (loss)
$
11,216
$
(19,835
)
$
(19,828
)
$
2,510
$
1,932
EBITDA
15,694
(25,167
)
(22,928
)
4,957
3,285
EBITDA margin
14.5%
(38.3)%
(34.1)%
14.6%
13.9%
Adjusted EBITDA
$
15,953
$
(12,056
)
$
(12,523
)
$
4,961
$
3,290
Adjusted EBITDA margin
14.7%
(18.3)%
(18.6)%
14.6%
13.9%
Free cash flow
$
5,306
$
(18,217
)
$
(25,015
)
$
(784
)
$
2,226
Use of non-GAAP financial measures
Adjusted gross profit, adjusted gross margin, adjusted income (loss) from operations, adjusted income (loss) from operations margin, adjusted net
income (loss), EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin and free cash flow are performance measures that are not calculated in accordance with GAAP. The foregoing
non-GAAP measures should not be
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considered
as a substitute for, or superior to, the information provided to measures of financial performance calculated and presented in accordance with GAAP. The table at the end of this section in
"—Reconciliation of non-GAAP measures to most comparable GAAP measure" provides a reconciliation of these non-GAAP measures to the most directly comparable measures
calculated and presented in accordance with GAAP.
Our
non-GAAP measures may not be comparable to similarly titled measures of other companies because other companies may not calculate such similarly titled measures in the same manner as
we do. We prepare our non-GAAP measures in each case to eliminate the impact of items that we do not consider indicative of our core operating performance. We encourage you to evaluate
these adjustments and the reasons we consider them appropriate.
Definitions of Non-GAAP Financial Measures
Our non-GAAP financial measures are calculated as follows:
•
Adjusted gross profit
is based on gross profit and excludes the
amortization of certain purchased intangible assets and stock-based compensation expense.
•
Adjusted gross margin
is equal to adjusted gross profit divided by total
revenues.
•
Adjusted income (loss) from operations
is based on our income (loss) from
operations and excludes the amortization of purchased intangible assets, acquired in-process research and development costs, stock-based compensation expense, severance and liquidation
expenses related to PGT and asset impairment charges.
•
Adjusted income (loss) from operations margin
is equal to adjusted income
(loss) from operations divided by total revenues.
•
Adjusted net income (loss)
is based on our net income (loss) and excludes
the amortization of purchased intangible assets, acquired in-process research and development costs, preferred stock warrant charges, stock-based compensation expense, severance and
liquidation expenses related to PGT, asset impairment charges and the related tax effects of such non-GAAP adjustments.
•
EBITDA
is based on our net income (loss) and excludes amortization of
purchased intangible assets, depreciation expense, net interest expense and provision for income taxes.
•
EBITDA margin
is equal to EBITDA divided by total revenues.
•
Adjusted EBITDA
is based on our net income (loss) and excludes the
amortization of purchased intangible assets, depreciation expense, acquired in-process research and development costs, preferred stock warrant charges, stock-based compensation expense,
severance and liquidation expenses related to PGT, asset impairment charges, net interest expense and provision for income taxes.
•
Adjusted EBITDA margin
is equal to adjusted EBITDA divided by total
revenues.
•
Free cash flow
is based on our cash provided by (used in) operating
activities and includes our purchases of property and equipment.
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Use of Non-GAAP Financial Measures by Investors
We believe that the use of the foregoing non-GAAP measures is helpful for an investor in determining whether to invest in our common
stock.
We
believe these non-GAAP measures are useful to investors because they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in
our industry. In addition, we believe that these measures are useful in evaluating our operating performance compared to that of other companies in our industry because the calculation of these
measures generally eliminates the effects of certain items that items may vary for different companies for reasons unrelated to overall operating performance.
Exclusions of GAAP-Measures from Non-GAAP Measures
We believe that it is appropriate to exclude items from certain of our non-GAAP measues that are not necessarily indicative of ongoing
operating performance and, therefore, limit comparability between periods and between us and similar companies. Further explanation of the excluded items is provided below:
•
Amortization of purchased intangible assets.
Included in
our GAAP financial results is the amortization of purchased intangible assets associated with prior acquisitions and which is non-cash in nature. We exclude these expenses from our
adjusted gross profit, adjusted gross margin, adjusted EBITDA, adjusted EBITDA margin, adjusted income (loss) from operations, adjusted income (loss) from operations margin and adjusted net income
(loss) because we believe they are not indicative of our core operating performance.
•
Stock-based compensation expense.
Included in our GAAP
financial results are non-cash charges for the fair value of stock options granted to employees. While this is a recurring item, we believe that excluding these charges from our adjusted
gross profit, adjusted gross margin, adjusted EBITDA, adjusted EBITDA margin, adjusted income (loss) from operations, adjusted income (loss) from operations margin and adjusted net income (loss)
provides for more accurate comparisons of our historical and current results of operations to those of similar companies because various valuation methodologies with subjective assumptions may be used
to calculate stock-based compensation expense.
•
Acquired in-process research and development
expenses.
Included in our GAAP financial results is an acquired in-process research and development charge in 2008. We
exclude acquired in-process research and development expenses from our adjusted EBITDA, adjusted EBITDA margin, adjusted income (loss) from operations, adjusted income (loss) from
operations margin and adjusted net income (loss) because we believe they are not indicative of our core operating performance.
•
Severance and liquidation expenses.
Included in our GAAP
financial results in 2009 are severance and liquidation expenses related to the down-sizing and dissolution of PGT in late 2009. We exclude severance and liquidation expenses from our adjusted EBITDA,
adjusted EBITDA margin, adjusted income (loss) from operations, adjusted income (loss) from operations margin and adjusted net income (loss) because we believe they are not indicative of our core
operating performance.
•
Asset impairment charges.
Included in our GAAP financial
results in 2009 and 2008 are non-cash asset impairment charges related primarily to the dissolution of our Italian
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subsidiary,
PGT, in late 2009. We exclude asset impairment charges from adjusted EBITDA, adjusted EBITDA margin, adjusted income (loss) from operations, adjusted income (loss) from operations margin
and adjusted net income (loss) because they are unique to the specific events and circumstances and we do not believe they are indicative of our core operating performance.
•
Preferred stock warrant charge.
Included in our GAAP
financial results is a preferred stock warrant charge in 2010. We exclude preferred stock warrant charges from our adjusted EBITDA, adjusted EBITDA margin and adjusted net income (loss) because we
believe they are not indicative of our core operating performance. Additionally, this charge will no longer be applicable subsequent to this initial public offering.
•
Depreciation expense.
Included in our GAAP financial
results is depreciation expense associated with our capital expenditures. While the use of the capital equipment enables us to generate revenue for our business, we exclude depreciation expenses from
our EBITDA, EBITDA margin, adjusted EBITDA and adjusted EBITDA margin as the exclusion of depreciation expense enable us to compare our financial results with other companies in our industry.
•
Interest expense, net.
Included in our GAAP financial
results is interest income and interest expense. Although our investing and borrowing activities are elements of our cost structure and provide us the ability to generate revenue and returns for our
owners, we exclude interest income and interest expense from our adjusted EBITDA and adjusted EBITDA margin to provide period-to-period comparability of our core results of
operations unassociated with our investing and borrowing activities.
•
Income tax effect of non-GAAP
adjustments.
This amount adjusts the provision for income taxes to reflect the effect of the non-GAAP adjustments on
non-GAAP net income. The adjustments were calculated by applying the effective tax rate of the entity where each non-GAAP adjustment was recorded.
•
Provision for income taxes.
Included in our GAAP
financial results is provision for income taxes. While we are subject to various state and foreign taxes and the payment of such taxes is a necessary element of our operations, we exclude provision
for income taxes from our adjusted EBITDA and adjusted EBITDA margin to provide period-to-period comparability of our core results of operations unassociated with the varying
effective tax rates to which we are subject.
Material Limitations of Non-GAAP Measures
Although non-GAAP measures are frequently used by investors and securities analysts in their evaluations of companies,
non-GAAP measures each have limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our results of operations as reported under
GAAP.
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Table of Contents
A
number of the material limitations of our use and presentation of non-GAAP measures include:
Non-GAAP Measure
Limitations
Adjusted gross profit and adjusted gross margin
•
Exclusion of amortization of purchased
intangibles does not reflect the costs of acquiring or replacing intangible assets, which may be significant.
•
Exclusion of stock-based compensation expense does not necessarily reflect the full economic costs incurred by us for compensating our employees and service providers, which
may be significant.
Adjusted net income (loss) from operations and adjusted net income (loss) from operations margin
In addition to the limitations on adjusted gross profit and adjusted gross margin:
•
Exclusion of acquired in-process research
and development expenses does not necessarily reflect the full economic costs incurred by us in acquiring certain research and development activities, which may be significant.
•
Exclusion of severance and liquidation expenses does not reflect the actual cost, which includes
severance and other costs, that were incurred in connection with the down-sizing and dissolution of PGT.
Adjusted net income (loss)
In addition to the limitations on adjusted net income (loss) from operations and adjusted net income (loss) from
operations margin:
•
Exclusion of preferred stock warrant
charge does not reflect the full economic cost of financing our business.
•
Exclusion of asset impairment charges
does not reflect the cost of acquiring or replacing tangible and intangible assets, which may be significant.
Adjusted EBITDA and adjusted EBITDA margin
In addition to the limitations on adjusted net income (loss):
•
Exclusion of depreciation expense does
not reflect the full economic costs of acquiring or replacing our long-term assets, which may be significant.
•
Exclusion of interest expense, net does not reflect the full economic cost of financing our business, including cash paid for interest.
•
Exclusion of provision for taxes does not reflect the full economic cost of conducting our business,
including cash paid for taxes, which may be significant.
EBITDA and EBITDA margin
•
Exclusion of amortization of purchased
intangibles does not reflect the costs of acquiring or replacing intangible assets, which may be significant.
•
Exclusion of depreciation expense does not reflect the full economic costs of acquiring or replacing our long-term assets, which may be significant.
•
Exclusion of interest expense, net does not reflect the full economic cost of financing our
business, including cash paid for interest.
•
Exclusion of provision
for taxes does not reflect the full economic cost of conducting our business, including cash paid for taxes, which may be significant.
Free cash flow
•
Exclusion of purchases of property and
equipment does not reflect the full cash cost of conducting our business, which may be significant.
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Table of Contents
Reconciliation of Non-GAAP Measures to Most Comparable GAAP Measure
The following table reflects the reconciliation of our non-GAAP financial measures to the most comparable GAAP measure, for each of the
periods identified.
Three months ended March 31,
Years ended December 31,
Unaudited
(in thousands, except percentages)
2010
2009
2008
2011
2010
Total revenues
$
108,336
$
65,730
$
67,211
$
34,028
$
23,633
Gross profit
$
28,961
$
7,884
$
4,054
$
9,269
$
5,891
Non-GAAP adjustments:
Amortization of purchased intangibles
1,522
1,314
958
230
445
Stock-based compensation expense
—
—
16
—
—
Adjusted gross profit
$
30,483
$
9,198
$
5,028
$
9,499
$
6,336
Adjusted gross margin
28.1%
14.0%
7.5%
27.9%
26.8%
Income (loss) from operations
$
11,010
$
(35,295
)
$
(34,610
)
$
4,087
$
1,720
Non-GAAP adjustments:
Amortization of purchased intangible assets(1)
2,145
2,520
1,991
386
601
Acquired in-research and development
—
—
510
—
—
Stock-based compensation expense
20
25
54
4
5
Severance and liquidation expenses
—
6,465
—
—
—
Asset impairment charges
—
6,621
9,841
—
—
Adjusted income (loss) from operations
$
13,175
$
(19,664
)
$
(22,214
)
$
4,477
$
2,326
Adjusted income (loss) from operations margin
12.2%
(29.9
)%
(33.1
)%
13.2%
9.8%
Net income (loss)
$
8,889
$
(35,466
)
$
(32,224
)
$
2,282
$
1,345
Non-GAAP adjustments:
Amortization of purchased intangible assets(1)
2,145
2,520
1,991
386
601
Acquired in-research and development
—
—
510
—
—
Stock-based compensation expense
20
25
54
4
5
Severance and liquidation expenses
—
6,465
—
—
—
Asset impairment charges
—
6,621
9,841
—
—
Preferred stock warrant charge
239
—
—
—
—
Tax effect of non-GAAP adjustments
(77
)
—
—
(162
)
(19
)
Adjusted net income (loss)
$
11,216
$
(19,835
)
$
(19,828
)
$
2,510
$
1,932
Net income (loss)
$
8,889
$
(35,466
)
$
(32,224
)
$
2,282
$
1,345
Non-GAAP adjustments:
Amortization of purchased intangible assets
2,145
2,520
1,991
386
601
Depreciation expense
2,831
6,034
4,980
629
912
Interest expense, net
1,328
1,617
2,148
276
349
Provision for income taxes
501
128
177
1,384
78
EBITDA
$
15,694
$
(25,167
)
$
(22,928
)
$
4,957
$
3,285
EBITDA margin
14.5%
(38.3
)%
(34.1
)%
14.6%
13.9%
Net income (loss)
$
8,889
$
(35,466
)
$
(32,224
)
$
2,282
$
1,345
Non-GAAP adjustments:
Amortization of purchased intangible assets(1)
2,145
2,520
1,991
386
601
Acquired in-process research and development
—
—
510
—
—
Stock-based compensation expense
20
25
54
4
5
Depreciation expense
2,831
6,034
4,980
629
912
Severance and liquidation expenses
—
6,465
—
—
—
Asset impairment charges
—
6,621
9,841
—
—
Interest expense, net
1,328
1,617
2,148
276
349
Preferred stock warrant charge
239
—
—
—
—
Provision for income taxes
501
128
177
1,384
78
Adjusted EBITDA
$
15,953
$
(12,056
)
$
(12,523
)
$
4,961
$
3,290
Adjusted EBITDA margin
14.7%
(18.3
)%
(18.6
)%
14.6%
13.9%
Net cash provided by (used in) operating activities
$
8,233
$
(14,766
)
$
(23,176
)
$
1,456
$
2,483
Non-GAAP adjustments:
Purchase of property and equipment
(2,927
)
(3,451
)
(1,839
)
(2,240
)
(257
)
Free cash flow
$
5,306
$
(18,217
)
$
(25,015
)
$
(784
)
$
2,226
(1)   Reflects amortization of purchased intangible assets included in cost of revenues and operating expenses.
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Financial operations overview
Total revenues
We derive our revenues from sales of hardware products to module manufacturers and OEMs with end market applications in communications and
enterprise networks and other emerging end market applications. Geographically, while many design wins are obtained outside of Asia, given the predominance of Asia-based manufacturing, in
2010, 76.3% of our products were shipped to the Asia Pacific region, 16.7% to North America and 7.0% to Europe and the Middle East. We sell our products primarily through our direct sales force and in
certain cases in conjunction with manufacturer representatives and distributors. In 2010, we sold our products to more than 180 customers with only one of our customers, Finisar Corporation (15.3% of
revenues), representing more than 10.0% of our revenues. We expect that a substantial portion of our revenues will continue to come from a limited number of customers. We closely monitor customer
orders and work directly with many of our customers to understand their forward-looking demand profiles, which we use to build our rolling forecast models. Several of our larger customers grant annual
or semi-annual percent share awards based on a competitive bidding process, the results of which are incorporated into our forecasts and provide us with increased visibility into our
revenues. We anticipate that our revenues will increase as a result of increased demand for our products.
Cost of revenues and gross profit
Our cost of revenues consists primarily of the cost to manufacture and test our products, which are assembled at one of our internal manufacturing
facilities or our contract manufacturing partners' facilities. We have a diverse set of suppliers to help balance considerations related to product availability, quality and cost. Our cost of revenues
also includes labor costs for our employees and contract laborers engaged in the production of our products. Our cost of revenues is impacted by manufacturing variances such as assembly and test
yields and production volumes. For new product introductions, our manufacturing yields typically increase over time as we gain manufacturing experience with the product, and increased production
volumes provide economies of scale in material procurement unit costs and manufacturing fixed cost distribution. Additionally, our cost of revenues includes reserves for excess and obsolete inventory,
amortization of certain purchased intangible assets, warranty, shipping and allocated facilities costs. We anticipate our gross margins will improve over time due to increased scale, manufacturing
efficiencies and continued introduction of higher performance products with greater component-level intelligence and integrated functionality.
Operating expenses
Our operating expenses have traditionally consisted of research and development, sales and marketing and general and administrative expenses. In
addition, in certain periods our operating expenses have also included severance and liquidation expenses and asset impairment charges.
Research and development.
Research and development expenses consist primarily of salaries, bonuses and benefits for research and development personnel involved in
the design, development and quality testing of new products or enhancements of existing products including engineering services, development software and hardware tools, depreciation of
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capital
equipment and the cost of facilities attributable to research and development. We generally expense research and development as incurred. Property and equipment that are acquired or
constructed for research and development activities and that have alternate future
uses are capitalized and depreciated over their estimated useful lives on a straight-line basis. We have invested and expect to continue to invest significant time and capital into our
research and development operations. Consistent with our strategy, we expect research and development expenses to increase in absolute dollars as we enhance and expand our products in the future.
Sales and marketing.
Sales and marketing expenses consist primarily of salaries, bonuses and benefits for our sales and marketing personnel, sales commissions paid
to manufacturer representatives, distributors and others, costs related to sales and marketing programs and services and the cost of facilities attributable to sales and marketing operations. We
expect sales and marketing expenses to increase in absolute dollars as we increase the number of sales and marketing professionals and sales commissions paid to manufacturer representatives,
distributors and others.
General and administrative.
General and administrative expenses consist primarily of salaries, bonuses and benefits for our executive, finance, human resources and
administrative personnel, as well as the cost of facilities attributable to general and administrative operations, depreciation, legal, accounting and professional service fees and other corporate
expenses. We expect general and administrative expenses to increase in the short term, as we develop the infrastructure necessary to operate as a public company, including but not limited to costs and
expenses for directors fees, increased personnel costs, increased directors and officers insurance premiums, audit and legal fees, investor relations fees, expenses for compliance with the
Sarbanes-Oxley Act of 2002 and rules implemented by the SEC and The NASDAQ Stock Market, LLC.
Severance and liquidation expenses.
Severance and liquidation expenses related to costs incurred in connection with the down-sizing and dissolution of PGT in late
2009.
Asset impairment.
We record asset impairment charges when it is determined that the carrying value of our assets is not recoverable. In 2009, we recorded an asset
impairment charge of $6.6 million related to PGT. In 2008, we recorded asset impairment charges of $9.8 million, primarily related to the goodwill and intangible assets acquired in the
acquisition of PGT.
Interest expense, net
Interest expense, net consists of amounts incurred with respect to our short-term and long-term borrowings offset by interest
income received on our cash and cash equivalents.
Other (expense) income, net
Other (expense) income, net primarily consists of change in the fair value of preferred stock warrants, foreign exchange gains (losses), gain (loss)
on disposal of property and equipment and other income or expense.
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Change
in the fair value of preferred stock warrants consists of charges recorded to mark our company's outstanding preferred stock warrants to fair value at each reporting date. In connection with
this initial public offering, our preferred stock warrants will be reclassified to additional paid-in capital, and they will no longer be required to be classified as a liability and
adjusted to their fair market value through earnings each period.
For
operations in Mexico, the functional currency is the U.S. Dollar. Assets and liabilities of those operations are translated into U.S. dollars using period-end exchange rates; income
and expenses are translated using the average exchange rates for the reporting period. Translation adjustments for the operations in Mexico are included in other (expense) income, net. Realized
foreign currency transaction gains and losses are included in other (expense) income, net.
Provision for income taxes
Our income (loss) from operations is subject to varying rates of tax in the United States, Mexico and other jurisdictions. Consequently, our
effective tax rate is dependent upon the geographic distribution of our earnings or losses and the tax laws and regulations in each geographical region. We expect that our income taxes will vary in
relation to our profitability and the geographic distribution of our profits.
Critical accounting policies and estimates
To understand our financial statements, it is important to understand our critical accounting policies and estimates. We prepare our
consolidated financial statements in accordance with GAAP. The preparation of consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts of
assets, liabilities, revenue, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the
circumstances. Actual results could differ significantly from the estimates made by our management. To the extent that there are differences between our estimates and actual results, our future
financial statement presentation, financial condition, results of operations and cash flows will be affected. We believe that the accounting policies discussed below are critical to understanding our
historical and future performance, as these policies relate to the more significant areas involving management's judgments and estimates.
Revenue recognition
We generate revenues principally from the sale of hardware products to our customers. Revenues from product sales are recognized when delivery has
occurred, persuasive evidence of an agreement exists, the price is fixed or determinable, no further obligation exists and collectability is reasonably assured. Delivery is generally considered to
have occurred upon shipment of products. Contracts and/or customer purchase orders are used to determine the existence of an arrangement. We assess whether the price is fixed or determinable based on
the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. We generally do not grant a right of return to our customers. In transactions where a
customer's contractual terms include a provision for customer acceptance, revenues are recognized either when such acceptance has been obtained or the acceptance
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provision
has lapsed. We assess collectability based primarily on the creditworthiness of the customer as determined by credit checks and the customer's payment history.
Our
terms of sale generally provide that title passes to the buyer upon shipment by us. Amounts billed to clients for shipping and handling of products are classified as total revenues in the
consolidated statements of operations.
Valuation of long-lived assets
Long-lived assets, including property and equipment and intangible assets, such as technology and customer relationships, are reviewed
for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. An impairment loss would be recognized in the consolidated statement of operations
in the period that the impairment occurs. As a result of the significance of our long-lived assets, any recognized impairment loss could have a material adverse impact on our financial
position and/or results of operations.
No
asset impairment charges were recognized during the year ended December 31, 2010. During the year ended December 31, 2009, an asset impairment charge of $6.6 million was
recognized for the impairment of property and equipment, inventory, and receivables at PGT. During the year ended December 31, 2008, we recorded asset impairment charges of $9.8 million,
primarily related to the goodwill and intangible assets acquired in the acquisition of PGT. As a result, we had no goodwill balances remaining as of December 31, 2010, 2009 or 2008.
Events
giving rise to impairment are an inherent risk in the industry and cannot be predicted. Factors that we consider in deciding when to perform an impairment review include significant
under-performance of a product line in relation to expectations, significant negative industry or economic trends, and significant changes or planned changes in our use of the assets.
Valuation of inventories
Inventories are recorded at the lower of cost (using the first-in, first-out method) or market, after we give appropriate
consideration to obsolescence and inventories in excess of anticipated future demand. In assessing the ultimate recoverability of inventories, we are required to make estimates regarding future
customer demand, the timing of new product introductions, economic trends and market conditions. If the actual product demand is significantly lower than forecasted, we could be required to record
additional inventory write-downs that would be charged to cost of revenues. Any write-downs would have an adverse impact on our gross profit. During the years ended December 31, 2010, 2009 and
2008, we recorded (recovery) provision for excess and obsolete inventory of $(0.2 million), $0.9 million and $2.0 million, respectively. During the three months ended
March 31, 2011 and 2010, we did not record any provision for excess and obsolete inventory.
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Product warranties
For the majority of our products, we provide a product warranty of one year or less from the date of shipment. We estimate the costs of our warranty
obligations based on our historical experience, expectations and future conditions. To the extent we experience increased warranty claim activity or increased costs associated with servicing those
claims, our warranty costs will increase resulting in decreases to gross margin. We periodically assess the adequacy of our recorded warranty liabilities and adjust the amounts as necessary. Products
are tested against specified functionality requirements prior to delivery, but we nevertheless from time to time experience claims under our warranty guarantees. A provision for estimated future costs
related to warranty activities is charged to cost of revenues based upon historical product failure rates and historical costs incurred in correcting product failures. If we experience an increase in
warranty claims compared with our historical experience, or if the cost of servicing warranty claims is greater than expected, our gross margin would be adversely affected.
Stock-based compensation
We account for stock options issued to employees using a fair-value-based method, under which we measure the cost of employee services
received in exchange for an award of equity instruments, including stock options, based on the grant-date fair value of the award. The resulting cost is recognized for the awards expected
to vest over the period during which an employee is required to provide service in exchange for the award, usually the vesting period.
The
fair value of the stock options issued to employees was estimated at each grant date using the Black-Scholes option-pricing model. One of the inputs to this model is the estimate of the fair value
of the underlying common stock on the date of grant. The other inputs include an estimate of the expected volatility of the stock price, an option's expected term, the risk-free interest
rate over the option's expected term, the option's exercise price and our expectations regarding dividends.
We
do not have a history of market prices for our common stock because our stock has not been publicly traded. We utilized the observable data for a group of peer companies that grant options with
substantially similar terms to assist in developing our volatility assumption. We have derived our expected term assumption based on the simplified method, which results in an expected term based on
the midpoint between the vesting date and the contractual term of an option. The simplified method was chosen because we have limited historical option exercise experience due to our company being
privately held. The weighted-average risk-free interest rate was based on a zero coupon U.S. Treasury instrument whose term was consistent with the expected life of the stock options. We
have not paid and do not anticipate paying cash dividends on our shares of common stock; therefore, the expected dividend yield was assumed to be zero.
The
value of options issued to nonemployees was insignificant. No employee equity awards were issued during the three months ended March 31, 2011. A summary of the significant
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assumptions
used to estimate the fair value of employee equity awards during the years ended December 31, 2010 and 2009 were as follows:
Year ended December 31,
2010
2009
Expected life (in years)
7.00
7.00
Risk-free interest rate
1.14%
1.52%
Expected volatility
75%
75%
Dividend yield
0%
0%
If factors change and we employ different assumptions, stock-based compensation expense on future awards may differ significantly from what we have recorded in
the past. Higher volatility and longer expected terms result in an increase to stock-based compensation determined at the date of grant. Future stock-based compensation expense and unrecognized
stock-based compensation will increase to the extent that we grant additional equity awards to employees or we assume unvested equity awards in connection with acquisitions. If there are any
modifications or cancellations of the underlying unvested securities, we may be required to accelerate any remaining unearned stock-based compensation expense or incur incremental cost. Stock-based
compensation expense affect our cost of revenue; research and development expenses; sales and marketing expenses; and general and administrative expenses.
Assuming
a fair value of our common stock of $2.37 at December 31, 2010 and March 31, 2011, respectively, the aggregate intrinsic value of the vested and unvested options to purchase
shares of our common stock outstanding as of December 31, 2010 and March 31, 2011, was $0.3 million.
We
estimate our forfeiture rate based on an analysis of our actual forfeitures and will continue to evaluate the appropriateness of the forfeiture rate based on actual forfeiture experience, analysis
of employee turnover behavior, and other factors. Changes in the estimated forfeiture rate can have a significant effect on reported stock-based compensation expense, because the cumulative effect of
adjusting the rate for all expense amortization is recognized in the period the forfeiture estimate is changed. The effect of forfeiture adjustments during 2010 and 2009 and the three months ended
March 31, 2011 was insignificant.
Significant factors, assumptions, and methodologies used in estimating fair value of common stock
We performed valuations to estimate the fair value of our common stock for option grants from January 1, 2010 to March 31, 2011. The
fair value of our common stock was $0.12 for the
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2010
grants. The per share exercise prices and Black-Scholes fair values of the option awards as of the respective dates of valuation are as follows:
Date of grant
Number of
options granted
Exercise price
per share of
common stock
Black-Scholes
fair value per
option award
April 22, 2010
1,767
$
0.52
$
0.05
May 24, 2010
20,672
$
0.52
$
0.05
July 12, 2010
4,326
$
0.52
$
0.05
November 9, 2010
3,652
$
0.52
$
0.05
The fair value of our common stock for the 2010 grants was based on a valuation that was completed as of December 31, 2009, and took into consideration a
number of objective and subjective factors that we believe market participants would consider, including (a) our business, financial condition and results of operations, including related
industry trends affecting our operations; (b) our forecasted operating performance and projected future cash flows; (c) the liquid or illiquid nature of our common stock;
(d) liquidation preferences, redemption rights and other rights and privileges of our preferred stock; (e) market multiples of our most comparable public peers; (f) recent sales
of our securities; and (g) market conditions affecting our industry.
We did not update the valuation during 2010 due to the fact that 2010 option grants were not significant as noted in the table above.
We
used the market-comparable approach and the income approach to estimate our enterprise value. The market-comparable approach estimates the value of a company by applying market multiples of
publicly-traded companies in the same or similar lines of business to the results and projected results of the company being valued. The income approach involves applying an appropriate
risk-adjusted discount rate to projected cash flows based on forecasted revenue and costs. We then used an option pricing model to allocate the calculated enterprise value between the
preferred and common shares outstanding. In applying the market comparable and income approaches to determine a value of the common stock, a discount was applied to reach the final valuation of the
common stock based on the fact that, inasmuch as we are a private company, there are impediments to liquidity, including lack of publicly available information and the lack of a trading market. The
size of the discount was determined using quantitative analysis and was in part a function of market participant assumptions as to the estimated time for us to reach a liquidity event.
When
estimating the enterprise value at each valuation date and the corresponding value of the common stock, we determined an appropriate weighting between the valuations derived from the
market-comparable and the income approaches, based on the quality and reliability of the data underlying each indication of value.
For
our determination of an appropriate discount for lack of marketability, we used a protective put option model that considered such variables as time to liquidity, the volatility and yield of the
underlying stock and the risk-free rate. We utilized a 25% discount for lack of marketability for awards issued in 2010.
There
is inherent uncertainty in our forecasts and projections and, if we had made different assumptions and estimates than those described previously, the amount of our stock-based
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compensation
expense, net loss, and net loss per share amounts could have been materially different.
We
recorded stock-based compensation of $20,000, $25,000, $54,000 and $4,000 during 2010, 2009 and 2008, and the three months ended March 31, 2011, respectively. In future periods, we expect
stock-based compensation to increase as we issue additional stock-based awards to continue to attract and retain employees. As of March 31, 2011, we had $14,000 of
unrecognized stock-based compensation expense related to equity instruments previously granted, which is expected to be recognized over a weighted average period of 0.7 years.
Income taxes
We use the liability method of accounting for income taxes as set forth in the authoritative guidance for income taxes. Under this method, we
recognize deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the respective carrying amounts and tax bases of our assets and liabilities.
We
continue to assess the realizability of our deferred tax assets, which primarily consist of net operating loss, or NOL, carry-forwards. In assessing the realizability of these deferred tax assets,
management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. We establish valuation allowances when necessary to reduce deferred tax
assets to the amounts expected to be realized. The factors used to assess the likelihood of realization include our latest forecast of future taxable income and available tax planning strategies that
could be implemented to realize the net deferred tax assets. As of March 31, 2011 and December 31, 2010 and 2009, our deferred tax assets had full valuation allowances on them as we do
not currently have sufficient positive evidence to recognize such deferred tax assets at this time.
If
our recent trend of profitability continues, we may determine that there is sufficient positive evidence to support a reversal of, or decrease in, the valuation allowance. If we were to reverse all
or some part of our valuation allowance our financial statements in the period of reversal would likely reflect an increase in assets on our balance sheet and a corresponding tax benefit to our
statement of operations in the amount of the reversal.
As
of December 31, 2010, we had U.S. federal net operating loss carryforwards of $186.9 million and state net operating loss carryforwards of $64.8 million which expire in 2022
through 2029. The Tax Reform Act of 1986, or the Act, provides for a limitation of the annual use of net operating loss and research and development tax credit carryforwards following certain
ownership changes (as defined by the Act) that limit our ability to utilize carryforwards. As such, we are in the process of completing a study to assess ownership changes that have occurred since our
formation and their impact on the value of the NOLs. As a result, we expect that the federal and state net operating loss carryforwards mentioned above will be limited, and we have disclosed our
deferred tax asset related to net operating losses based on our best estimate of useable net operating losses. As a consequence of equity transactions consummated in January 2011, we anticipate
further limitations on the use of our net operating losses. Our current estimate is that the total available net operating loss carryforwards are approximately
$19 million for federal purposes and approximately $18 million for state purposes. This limit could change upon completion of the study. In addition, we have concluded that there are
sufficient net operating loss carryforwards from a federal tax perspective to offset the 2010 federal tax liability.
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We
adopted Accounting Standards Codification (ASC) 740-10,
Accounting for Uncertainty in Income Taxes—an Interpretation of FASB Statement
No. 109
, on January 1, 2007. We have analyzed our tax position in all jurisdictions where we are required to file an income tax return and have concluded that we
do not have any material unrecognized tax benefits. We have filed a U.S. income tax return as well as returns for various state jurisdictions. Our policy is to recognize interest and penalties accrued
on any unrecognized tax benefit within the provision for income taxes on the consolidated statement of operations. We have no interest or penalties accrued for any unrecognized tax benefits for any
periods presented.
Our
annual provision for income taxes and the determination of the resulting deferred tax assets and liabilities involve a significant amount of management judgment. Management's judgments,
assumptions and estimates relative to the current provision for income taxes take into account current tax laws, our interpretation of current tax laws and possible outcomes of current and future
audits conducted by foreign and domestic tax authorities. We operate within federal, state and international taxing jurisdictions and are subject to audit in these jurisdictions. These audits can
involve complex issues that may require an extended period of time to resolve.
We
intend either to invest our non-United States earnings permanently in foreign operations or to remit these earnings to our United States entities in a tax-free manner. For
this reason, we have not recorded federal income taxes on the $1.8 million of undistributed earnings of our foreign subsidiaries.
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Results of operations
The following tables set forth a summary of our consolidated statement of operations and the related changes for the periods
indicated:
Three months
ended March 31,
Year ended December 31,
(in thousands, except for percentages, share and per share amounts)
2010
2009
2008
2011
2010
(unaudited)
Consolidated statement of operations data:
Total revenues
$
108,336
$
65,730
$
67,211
$
34,028
$
23,633
Cost of revenues
79,375
57,846
63,157
24,759
17,742
Gross profit
28,961
7,884
4,054
9,269
5,891
Gross margin
26.7%
12.0%
6.0%
27.2%
24.9%
Operating expenses:
Research and development
12,010
19,540
19,031
3,518
2,860
Sales and marketing
2,671
3,181
3,888
801
629
General and administrative
3,270
7,372
5,904
863
682
Severance and liquidation expenses
—
6,465
—
—
—
Asset impairment
—
6,621
9,841
—
—
Total operating expenses
17,951
43,179
38,664
5,182
4,171
Operating income (loss)
11,010
(35,295
)
(34,610
)
4,087
1,720
Interest expense, net
(1,328
)
(1,617
)
(2,148
)
(276
)
(349
)
Other (expense) income, net
(292
)
1,574
4,711
(145
)
52
Income (loss) before income taxes
9,390
(35,338
)
(32,047
)
3,666
1,423
Provision for income taxes
501
128
177
1,384
78
Net income (loss)
$
8,889
$
(35,466
)
$
(32,224
)
$
2,282
$
1,345
Comparison of three months ended March 31, 2011 and 2010
Total revenues
Total revenues were $34.0 million for the three months ended March 31, 2011 compared to $23.6 million for the three months ended
March 31, 2010, an increase of $10.4 million, or 44.1%. This increase in total revenues was primarily attributable to growth in sales of our products in support of the Access and Long
Haul/Metro network segments. Sales to customers located in the Asia-Pacific region, primarily due to China's aggressive FTTH rollout, grew by $8.8 million in the three months ended
March 31, 2011 compared to March 31, 2010.
Cost of revenues and gross margin
Cost of revenue was $24.8 million for the three months ended March 31, 2011 compared to $17.7 million for the three months ended
March 31, 2010, an increase of $7.1 million, or 40.1%. Cost of revenues increased primarily due to higher sales volumes that drove higher material and labor costs. Gross margin was 27.2%
for the three months ended March 31, 2011 compared to 24.9% for the three months ended March 31, 2010. Gross margin increased as a
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result
of economies of scale realized as a result of higher levels of manufacturing equipment utilization and improvements in manufacturing yields and cycle times.
Operating expenses
The following table sets forth operating expenses in absolute dollars and as a percentage of revenue:
Three months ended March 31,
2011
2010
Change
(dollars in thousands)
Amount
Percentage of
revenue
Amount
Percentage of
revenue
$
%
(unaudited)
Operating expenses:
Research and development
$
3,518
10.3%
$
2,860
12.1%
$
658
23.0%
Sales and marketing
801
2.4%
629
2.7%
172
27.3%
General and administrative
863
2.5%
682
2.9%
181
26.5%
Total operating expenses
$
5,182
15.2%
$
4,171
17.7%
$
1,011
24.2%
Research and development.
The increase in research and development expenses was primarily due to higher research and development personnel costs resulting from
increases in salary, bonuses and benefits, and the increased utilization of development materials during the three months ended March 31, 2011 as we continued to invest in research and
development activities to support our current and future technology and product roadmaps.
Sales and marketing.
The increase in sales and marketing expenses was primarily attributable to an increase in sales commissions resulting from higher sales
volumes.
General and administrative.
The increase in general and administrative expenses was primarily due to an increase in general and administrative personnel costs
resulting from increases in salary, bonuses and benefits and outside professional services in support of continued business expansion.
Other expense (income), net
Other expense was $0.1 million for the three months ended March 31, 2011 compared to other income of $0.1 million for the three
months ended March 31, 2010. The increase of $0.2 million in other expense was primarily a result of gains on the sale of assets and grant income received in 2010 that did not occur in
2011.
Interest expense, net
Interest expense, net was $0.3 million for the three months ended March 31, 2011 compared to $0.3 million for the three months
ended March 31, 2010. The decrease of $73,000 was primarily a result of declining principal balances on our outstanding debt.
Provision for income taxes
Our effective tax rate for the three months ended March 31, 2011 was expense of 37.6% compared to an expense of 5.8% in the
prior-year period. Our expense from income taxes is based on an estimated annual effective tax rate for 2011 of 37.6%. Our estimated annual
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effective
tax rate includes the U.S. federal statutory rate of 35.0%, state income taxes and foreign income taxed at different rates, partially offset by the impact of the expected usage of NOLs that
are not currently estimated to be limited. Our effective tax rate for the three months ended March 31, 2010 principally reflected state and foreign taxes, and was lower than the same period in
2011, due to our ability to utilize NOLs without limitation in 2010.
Comparison of the years ended December 31, 2010 and 2009
Total revenues
Total revenues were $108.3 million in 2010 compared to $65.7 million in 2009, an increase of $42.6 million, or 64.8%. This
increase in total revenues was attributable to overall market improvement together with increased market share and new product introductions in the Access network segment, driven by the aggressive
FTTH build out in the Asia-Pacific region, and Long Haul/Metro network segments. Sales to customers located in the Asia-Pacific region grew by $36.2 million in 2010 compared to 2009.
Cost of revenues and gross margin
Cost of revenues was $79.4 million for the year ended December 31, 2010 compared to $57.8 million for the year ended
December 31, 2009, an increase of $21.6 million, or 37.4%. Cost of revenues increased due to higher sales volumes that drove higher material and labor costs primarily for the Access and
Long Haul/Metro products. Gross margin was 26.7% for the year ended December 31, 2010 compared to 12.0% for the year ended December 31, 2009. This significant improvement in gross margin
was due to improved economies of scale realized as a result of higher levels of manufacturing utilization, improved manufacturing yields and cycle times, improved efficiencies from the dissolution and
integration of PGT and lower charges for excess and obsolete inventory in 2010 compared to 2009.
Operating expenses
The following table sets forth operating expenses in absolute dollars and as a percentage of revenue:
Years ended December 31,
2010
2009
Change
Percentage of
revenue
Percentage of
revenue
(dollars in thousands)
Amount
Amount
$
%
(unaudited)
Operating expenses:
Research and development
$
12,010
11.1%
$
19,540
29.7%
$
(7,530
)
(38.5)%
Sales and marketing
2,671
2.5%
3,181
4.8%
(510
)
(16.0)%
General and administrative
3,270
3.0%
7,372
11.2%
(4,102
)
(55.6)%
Severance and liquidation expenses
—
—
6,465
9.8%
(6,465
)
(100.0)%
Asset impairment
—
—
6,621
10.1%
(6,621
)
(100.0)%
Total operating expenses
$
17,951
16.6%
$
43,179
65.7%
$
(25,228
)
(58.4)%
Research and development.
The decrease in research and development expenses was primarily related to the absence of $7.7 million of PGT research and
development expenses incurred in
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2009
that did not recur in 2010 due to the dissolution of PGT in late 2009, partially offset by increased research and development personnel costs, resulting from increases in salary, bonuses and
benefits.
Sales and marketing.
The decrease in sales and marketing expenses was primarily related to the absence in 2010 of $0.5 million of PGT-related sales and
marketing expenses due to the down-sizing and dissolution of PGT in late 2009.
General and administrative.
The decrease in general and administrative expenses was primarily related to the absence in 2010 of $4.6 million of PGT-related
general and administrative expenses due to the down-sizing and dissolution of PGT in late 2009. This was partially offset by increases in personnel costs, resulting from increases in salary, bonuses
and benefits and information system costs to help support our continued business expansion.
Severance and liquidation expenses.
Severance and liquidation expenses were related to expenses incurred pursuant to the down-sizing and dissolution of PGT in late
2009. No such expenses were incurred in 2010.
Asset impairment.
We record asset impairment charges when it is determined that the carrying value of our assets is not recoverable. In September 2009, in
conjunction with our dissolution of PGT, we recorded an asset impairment charge of $6.6 million related to the write down of property and equipment, inventory and receivables to their net
realizable value.
Interest expense, net
Interest expense, net was $1.3 million for the year ended December 31, 2010 compared with $1.6 million for the year ended
December 31, 2009. The decrease was primarily a result of a reduction in the interest rate on our revolving credit facility for 2010 compared to 2009.
Other (expense) income, net
Other expense, net was $0.3 million for the year ended December 31, 2010 compared to other income, net of $1.6 million for the
year ended December 31, 2009. This decrease in other income, net was primarily related to certain income earned by PGT in 2009, which was not part of the ongoing operations of the business and
was therefore classified as other income.
Provision for income taxes
Our effective tax rate for the year ended December 31, 2010 was 5.3% compared to 0.4% in the prior year period. Our tax expense for the year
ended December 31, 2010 consisted of state and foreign income taxes. The tax expense for the year ended December 31, 2009 consisted solely of foreign income tax expense. The increase
from 2009 to 2010 is due to the generation of U.S. taxable income in 2010.
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Comparison of the years ended December 31, 2009 and 2008
Total revenues
Total revenues declined to $65.7 million in 2009 from $67.2 million in 2008, a decrease of $1.5 million, or 2.2%. The decline
was due to a decrease in sales in the Long Haul/Metro network segments partially offset by an increase in sales in the Access network segment. This decrease was primarily related to the macroeconomic
downturn that began in late 2008 and continued into the first half of 2009.
Cost of revenues and gross margin
Cost of revenues was $57.8 million for the year ended December 31, 2009 compared to $63.2 million for the year ended
December 31, 2008, a decrease of $5.4 million, or 8.5%. Cost of revenues decreased primarily as a result of lower sales volumes and increased manufacturing efficiencies that resulted in
material, labor and overhead cost reductions of $2.2 million in our U.S. and Mexican operations, a reduction of $2.0 million in PGT-related costs of revenues as a result of
cost reduction measures taken in late 2008 and 2009 and a reduction in charges recorded for excess and obsolete inventory in our U.S. and Mexican operations. Gross margin was 12.0% for the year ended
December 31, 2009 compared to 6.0% for the year ended December 31, 2008. The improvement in gross margin was due to lower charges for excess and obsolete inventory in 2009 compared to
2008 and general cost reduction initiatives initiated in late 2008 and 2009 that had a greater impact in 2009.
Operating expenses
The following table sets forth operating expenses in absolute dollars and as a percentage of revenue:
Years ended December 31,
2009
2008
Change
(dollars in thousands)
Amount
Percentage of
revenue
Amount
Percentage of
revenue
$
%
(unaudited)
Operating expenses:
Research and development
$
19,540
29.7%
$
19,031
28.3%
$
509
2.7%
Sales and marketing
3,181
4.8%
3,888
5.8%
(707
)
(18.2)%
General and administrative
7,372
11.2%
5,904
8.8%
1,468
24.9%
Severance and liquidation expenses
6,465
9.8%
—
—
6,465
N/A
Asset impairment
6,621
10.1%
9,841
14.6%
(3,220
)
(32.7)%
Total operating expenses*
$
43,179
65.7%
$
38,664
57.5%
$
4,515
11.7%
*      Percentages may not add due to rounding.
Research and development.
The increase in research and development expenses was primarily related to the acquisition of PGT in mid-2008, as PGT-related
research and development expenses increased by $1.1 million in 2009 compared to 2008. There were five months of operations for PGT in 2008 versus nine months in 2009. This was partially offset
by the one-time, in-process $0.5 million research and development charge incurred in 2008.
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Sales and marketing.
The decrease in sales and marketing expenses was primarily related to the rationalization of PGT sales and marketing expenses in late 2008,
which resulted in a $0.7 million reduction in sales and marketing expenses in 2009 compared to 2008.
General and administrative.
This increase in general and administrative expenses was primarily related to the acquisition of PGT in mid-2008, as
PGT-related general and administrative expenses increased by $1.5 million in 2009 compared to 2008. There were five months of expenses for PGT in 2008 compared to nine months in 2009. These
expenses were primarily related to the transitional service agreement billings associated with PGT.
Severance and liquidation expenses.
Severance and liquidation expenses of $6.5 million in 2009 were related to expenses incurred pursuant to the down-sizing
and dissolution of PGT in late 2009. No such expenses were incurred in 2008.
Asset impairment.
We record asset impairment charges when it is determined that the carrying value of our assets is not recoverable. In 2009, in conjunction with
our dissolution of PGT, we recorded an asset impairment charge of $6.6 million related to the writedown of property and equipment, inventory and receivables to their net realizable value. In
2008, we recorded asset impairment charges of $9.8 million, primarily related to the goodwill and intangible assets acquired in the acquisition of PGT.
Interest expense, net
Interest expense, net was $1.6 million for the year ended December 31, 2009 compared with $2.1 million for the year ended
December 31, 2008. The decrease was primarily a result of lower interest rates on our borrowings in 2009 as compared to 2008.
Other (expense) income, net
Other income, net was $1.6 million for the year ended December 31, 2009 compared with other income, net of $4.7 million for the
year ended December 31, 2008. This decrease was primarily related to a reduction in certain PGT-related income earned in 2009 as compared to 2008, which was not part of the ongoing operations
of the business and therefore classified as other income.
Provision for income taxes
Our provision for income taxes decreased to $0.1 million for the year ended December 31, 2009 from $0.2 million for the year
ended December 31, 2008. Our provision consisted of foreign income taxes for both periods.
Acquisition/dissolution
On July 24, 2008, we purchased PGT for an aggregate purchase price of $47.7 million. The acquisition of PGT enabled us to gain access
to PGT's unique tunable laser products and technologies, complementary PIC capabilities and manufacturing infrastructure.
The
purchase price was allocated to the assets acquired and the liabilities assumed, based on their estimated fair values at the date of acquisition. In September 2009, as a result of the
macroeconomic downturn, we commenced dissolution of PGT and a liquidator was assigned to dissolve the company. We synergized certain PGT products, technology and manufacturing infrastructure into our
ongoing operations. The assignment of the liquidator effectively marked
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our
loss of control of PGT. As a result of this loss of control, we were required to deconsolidate the subsidiary. Due to the Italian liquidation of PGT, we retained no interest with value in PGT. We
believe we have no material continuing obligations or commitments related to PGT.
During
the third quarter of 2009, an asset impairment charge of $6.6 million was recorded. Also in 2009, prior to deconsolidation, PGT incurred expenses related to the down-sizing and
dissolution of PGT amounting to $6.5 million. There were no assets and liabilities of PGT presented in our consolidated balance sheet as of December 31, 2010 or 2009. Included in our
consolidated statements of operations for 2009 and 2008 were revenues of $3.4 million and $3.5 million and a net loss of $(24.7 million) and $(17.4 million), respectively,
for PGT, including impairment charges. Our consolidated statement of cash flows for 2009 reflects the use of cash in the amount of $14.9 million related to PGT, including $6.9 million in
support of severance and liquidation activities.
Liquidity and capital resources
Since our inception, we have financed our operations primarily through the sale of preferred stock, cash flows generated by
operations and borrowings under debt instruments. As of March 31, 2011, we had cash and cash equivalents totaling $31.1 million and $55.4 million of working capital.
We
believe that our existing cash and cash equivalents and our cash flow from operations will be sufficient to fund our operations and our capital expenditures for at least the next 12 months.
Our future capital requirements will depend on many factors, including our rate of revenue growth, the expansion of our sales and marketing activities, the timing and extent of spending to support
product development efforts and expansion into new markets and geographies, the timing of introductions of new products and enhancements to existing products and the continuing market acceptance of
our products. Although we are not currently a party to any agreement or letter of intent regarding potential investments in, or acquisitions
of, complementary businesses, applications or technologies, we may enter into these types of arrangements, which could require us to seek additional equity or debt financing. Additional funds may not
be available on terms favorable to us or at all.
We
will also incur costs as a public company that we have not previously incurred, including, but not limited to, costs and expenses for directors fees, increased personnel costs, increased directors
and officers insurance premiums, audit and legal fees, investor relations fees, expenses for compliance with the Sarbanes-Oxley Act of 2002 and rules implemented by the SEC and The NASDAQ Stock
Market, LLC and various other costs. We cannot currently estimate how much these costs will be.
As
of March 31, 2011, we have the following indebtedness:
•
In May 2008, we entered into a loan and security agreement with Silicon Valley Bank that includes a revolving credit
facility in the aggregate amount of up to $14.0 million and a term loan commitment of up to $2.0 million. All of our property, including all cash accounts, outstanding trade receivables,
inventory, fixed assets and any intellectual property serve as collateral. The term loan shall be repaid by monthly installment payments of interest only in the first year, and thereafter by monthly
installments of principal and interest payments for a period of 36 months. Interest is payable monthly during the term. In December 2009, we
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amended
our existing loan and security agreement with the bank. The amendment extended the maturity date on the revolving credit facility to December 29, 2011, and reduced the interest rate on
this facility by 1% to 6.5% per year. The amendment did not change the existing terms or rate of interest and expiration date on the term loan. On June 20, 2011, we further amended our existing
loan and security agreement with Silicon Valley Bank. The amendment increased the amount of the credit facility to an aggregate amount of up to $20.0 million. The amendment extended the
maturity date on the revolving credit facility to December 26, 2013, and reduced the interest rate on this facility to Prime Rate plus three-quarters of one percent (4.0% currently). The
amended loan and security agreement does not contain any financial covenants. The outstanding amounts at December 31, 2010 and March 31, 2011 have been classified as
long-term due to our intent and ability to refinance those amounts on a long term basis as occurred in June 2011. $10.2 million is outstanding under the credit line and
$0.8 million is outstanding under the term loan at March 31, 2011.
•
As part of a previous acquisition in 2005, we received a loan from a related party in the amount of $5.6 million.
Interest accrued for the initial 23-month period, with total accrued interest as of April 1, 2006 and 2007 added to the principal balance of the loan. Principal and interest
payments commenced on April 1, 2007, and are payable over 60 equal monthly installments, through March 1, 2012. $1.4 million is outstanding under this loan at March 31,
2011.
The
following table shows selected balance sheet data as well as our cash flows from operating activities, investing activities and financing activities for the stated periods:
As of and for the year ended December 31,
As of and for the three months ended March 31,
(in thousands)
2010
2009
2008
2011
2010
(unaudited)
Cash and cash equivalents
$
12,397
$
9,122
$
35,929
$
31,059
$
10,854
Cash provided by (used in) operating activities
8,233
(14,766
)
(23,176
)
1,456
2,483
Cash (used in) provided by investing activities
(2,854
)
(10,338
)
27,888
(2,221
)
(249
)
Cash (used in) provided by financing activities
(2,104
)
(1,664
)
28,374
19,427
(502
)
Cash and cash equivalents
Our cash and cash equivalents at March 31, 2011 were held for working capital purposes and were invested primarily in cash and money market
accounts. We do not enter into investments for trading or speculative purposes.
Cash flows
Cash provided by (used in) operating activities
Net cash provided by operating activities was $1.5 million and $2.5 million, which included net income of $2.3 million and
$1.3 million for the three months ended March 31, 2011 and 2010, respectively. The primary reasons for the decrease in net cash provided by operating activities for the three months
ended March 31, 2011 was an increase in our inventory balance, as a result of increased manufacturing activity, offset by an increase in net income. The change in operating assets and
liabilities resulted in a net use of cash of $1.9 million and $0.4 million for the three months ended March 31, 2011 and 2010, respectively.
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Net
cash provided by (used in) operating activities was $8.2 million, $(14.8 million) and $(23.2 million) and net income (loss) was $8.9 million, $(35.5 million) and
$(32.2 million) for the years ended December 31, 2010, 2009 and 2008, respectively. The primary reason for the increase in net cash provided by operating activities in 2010 was the
increase in net income during 2010 offset by increases in inventories and accounts receivable.
We
also incurred net non-cash expenses totaling $5.2 million, $16.3 million and $19.6 million for the years ended December 31, 2010, 2009 and 2008,
respectively. Non-cash expenses primarily consisted of depreciation and amortization in 2010, and depreciation and amortization asset impairment charges and provisions for excess and
obsolete inventory in 2009 and 2008. The change in operating assets and liabilities resulted in a net use of cash of $(5.8 million), $4.4 million and $(10.6 million) for the years
ended December 31, 2010, 2009 and 2008, respectively.
Cash provided by (used in) investing activities
Net cash used in investing activities was $(2.2 million) and $(0.2 million) for the three months ended March 31, 2011 and 2010,
respectively. Cash used in investing activities for the three months ended March 31, 2011 and 2010 was primarily for capital expenditures related to property and equipment as we continued to
expand our manufacturing capacity.
Net
cash used in investing activities was $(2.9 million) and $(10.3 million) for the years ended December 31, 2010 and 2009, respectively, and net cash provided by investing
activities was $27.9 million for the year ended December 31, 2008. Cash used in investing activities for the year ended December 31, 2010 was primarily for the purchase of
property and equipment. Cash used in investing activities for the year ended December 31, 2009 was primarily for capital expenditures of $3.5 million related to property and equipment
and $6.9 million of cash used in the dissolution of the PGT business. Cash provided by investing activities for the year ended December 31, 2008 was primarily related to
$28.1 million in net cash acquired as a result of the acquisition of the PGT business partially offset by purchase of property and equipment.
Cash provided by (used in) financing activities
Net cash provided by financing activities was $19.4 million for the three months ended March 31, 2011. Net cash used in financing
activities was $(0.5 million) for the three months ended March 31, 2010. Net cash provided by financing activities for the three months ended March 31, 2011 primarily resulted
from the net proceeds of a round of financing (Series C-1 preferred stock) of $49.6 million. These proceeds were offset by the repurchase of Common and Preferred stock from
investors of $(29.6 million). Net cash used in financing activities for the three months ended March 31, 2010 was related to payments on revolving credit facility and terms loans.
Net
cash used in financing activities was $(2.1 million) and $(1.7 million) for the years ended December 31, 2010 and 2009, respectively. Net cash provided by financing activities
was $28.4 million for the year ended December 31, 2008. Net cash used in financing activities for the years ended December 31, 2010 and 2009 was primarily related to payments on
our revolving credit facility and terms loans. Net cash provided by financing activities for the year ended December 31, 2008 resulted from proceeds from long-term loans and credit
line of $16.7 million and proceeds from the issuance of preferred stock of $20.0 million partially offset by payments on revolving credit facility and term loans of $8.3 million.
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Contractual obligations and commitments
We generally do not enter into long-term minimum purchase commitments. Our principal commitments, in addition to those
related to our long-term debt discussed above, consist of obligations under facility leases for office space. The following table summarizes our outstanding contractual obligations as of
December 31, 2010:
Payments due by period
(in thousands)
Total
Less than
1 year
1 to 3 years
3 to 5 years
More than
5 years
Operating lease obligations
$
11,238
$
2,330
$
3,685
$
5,223
$
—
Debt related payments(1)
11,145
667
10,478
—
—
Related party loans(2)
1,798
1,432
366
—
—
Total
$
24,181
$
4,429
$
14,529
$
5,223
$
—
(1)   We have a credit line $10,200 and a term loan $945. The amount presented in the table represents the principal portion of the obligations. The debt obligations outstanding as of
December 31, 2010 bear interest at rates ranging from the greater of Bank Prime + 1.5% or 6.5% on the credit line and the greater of Bank Prime + 1.5% or 7.5% on the
term loan, all of which was subject to fluctuations in interest rates. Interest is paid monthly over the term of the debt arrangements.
(2)   The
related party loan bears interest at the lesser of 1-year LIBOR + 3%, or 8.5%.
On June 20, 2011, we amended our existing loan and security agreement with Silicon Valley Bank. The amendment increased the amount of the credit facility
to the aggregate amount of up to $20.0 million. The amendment extended the maturity date on the revolving credit facility to December 26, 2013, and reduced the interest rate on this
facility to Prime Rate plus three-quarters of one percent (4.0% currently). As a result, the outstanding balance of $10.2 million has been classified in the 1 to 3 years period in the
table above. There has been no material change in the obligations since December 31, 2010 other than scheduled payments through March 31, 2011.
Off-balance sheet arrangements
During the years ended December 31, 2010, 2009 and 2008, and the three months ended March 31, 2011, we did not have any
relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities, that would have been established for the purpose of facilitating
off-balance sheet arrangements or other contractually narrow or limited purposes.
Recently adopted accounting principles
Recent accounting pronouncements
In January 2010, the Financial Accounting Standards Board, or FASB, issued updated guidance related to fair value measurements and disclosures, which
requires a reporting entity to disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and to describe the reasons for the
transfers. In addition, in the reconciliation for fair value measurements using significant unobservable inputs, or Level 3, a reporting entity should disclose separately information about
purchases, sales, issuances, and settlements (that is, on a gross basis rather than on a net basis). The updated guidance also requires that an entity should provide fair value measurement disclosures
for each class of assets and liabilities and disclosures about the valuation techniques and inputs used to measure
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fair
value for both recurring and non-recurring fair value measurements for Level 2 and Level 3 fair value measurements. The updated guidance is effective for interim or
annual financial reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the rollforward activity in Level 3
fair value measurements, which are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. We adopted the updated guidance in the first
quarter of 2010, and the impact on our consolidated financial statements was not material.
Quantitative and qualitative disclosures about market risk
Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and
rates. Our market risk exposure is primarily a result of fluctuations in interest rates. We do not hold financial instruments for trading purposes.
Interest rate sensitivity
We had cash and cash equivalents of $31.1 million at March 31, 2011, $12.4 million at December 31, 2010,
$9.1 million at December 31, 2009 and $35.9 million at December 31, 2008. We held these amounts primarily in cash or money market funds.
We
hold cash and cash equivalents for working capital purposes. We do not have material exposure to market risk with respect to investments, as our investments consist primarily of highly liquid
investments purchased with original maturities of three months or less. We do not use derivative financial instruments for speculative or trading purposes; however, we may adopt specific hedging
strategies in the future. Any declines in interest rates, however, will reduce future interest income.
We
had total outstanding debt of $12.3 million at March 31, 2011, $12.8 million at December 31, 2010, $14.8 million at December 31, 2009 and
$16.3 million at December 31, 2008, primarily all of which was subject to fluctuations in interest rates. As of December 31, 2010, the weighted average interest rate on the
$12.8 million of outstanding principal subject to interest rate fluctuations was 6.24%. A hypothetical 10% increase in the interest rate could result in approximately $80 of additional annual
interest expense. As of March 31, 2011, the weighted average interest rate on the $12.3 million of outstanding principal subject to interest rate fluctuations was 6.28%. A hypothetical
10% increase in the interest rate could result in approximately $77,000 of additional annual interest expense. The hypothetical changes and assumptions made above will be different from what actually
occurs in the future. Furthermore, the computations do not anticipate actions that may be taken by our management should the hypothetical market changes actually occur over time. As a result, actual
impacts on our results of operations in the future will differ from those quantified above.
Foreign currency risk
Foreign currency exchange rates are subject to fluctuation and may cause us to recognize transaction gains and losses in our statement of operations.
However, to date the vast majority of our purchased materials and services have been procured in U.S. dollars and we have experienced minimal currency fluctuations. A portion of our business is
conducted through our subsidiary in Mexico whose functional currency is the U.S. Dollar. To the extent that transactions by our subsidiary in Mexico are denominated in currencies other than U.S.
Dollar,
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we
bear the risk that fluctuations in the exchange rates of the U.S. Dollar in relation to other currencies could increase our costs and expenses. Translation adjustments are included in other income
(expense) and were immaterial for all periods presented herein. Realized foreign currency transaction gains and losses are also included in other income (expense) and were immaterial for all periods
presented herein.
To
date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future,
the availability and effectiveness of these hedging transactions may be limited and we may not be able to successfully hedge our exposure.
Inflation risk
Inflationary factors, such as increases in our cost of revenues and operating expenses, may adversely affect our results of operations. Although we
do not believe that inflation has had a material impact on our financial position or results of operations to date, an increase in the rate of inflation in the future, particularly in Mexico, may have
an adverse affect on our levels of gross profit and operating expenses as a percentage of revenue if the sales prices for our products do not proportionately increase with these increased expenses.
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Business
Company overview
We are a leading platform-based provider of core optical technologies enabling bandwidth for high-speed networks. Our
solutions provide the fundamental building blocks—the creation, modulation, routing and detection of light—that enable high-performance and
cost-effective optical networking. We produce active components that create and detect light, passive components that guide and combine light, and packaging solutions that
integrate active and passive components into high-performance, power-efficient, cost-effective, compact products. Through our vertically integrated technology and manufacturing
platforms, we design, fabricate and package a broad portfolio of optical components—lasers, detectors, transmitters, receivers and modulators—for module manufacturers and
systems providers, including original equipment manufacturers, or OEMs, who sell to communication service providers and enterprises in the Access, Enterprise/Data Center and Long Haul/Metro segments
of the communications network, and for other emerging end market applications, such as defense and avionics, high performance computing, medical and security.
Network
traffic continues to increase rapidly in volume, volatility and complexity, driven by unprecedented demand for bandwidth-intensive, rich content such as streaming and real-time
video, the growth of online social networking and cloud-based computing services, and the proliferation of mobile devices. Optical networking is becoming the de facto transport technology due to its
attractive bandwidth capacity, reach, reliability, low power consumption and network intelligence capabilities. Within optical networking, innovation at the optical component level is driving
increased functionality, higher performance and cost savings. According to Cisco Systems, while optical components represent approximately 19% of the capital expenditures for 10 gigabits per second,
or Gbps, systems, they represent approximately 68% of the capital expenditures for 100Gbps systems. While Ovum estimates the overall market for optical components will grow at a 13.4% compound annual
growth rate, or CAGR, from $5.6 billion in 2010 to $10.5 billion by 2015, we believe there are specific market segments and geographies which are expected to meaningfully exceed that
growth rate, such as the gigabit passive optical network, or GPON, system deployment in the Access segment supporting China's aggressive fiber-to-the-home,
or FTTH, rollout, and next-generation high speed 40Gbps and 100Gbps deployment in the Enterprise/Data Center and Long Haul/Metro segments.
We
are one of the few companies in our industry with vertically integrated technology and manufacturing platforms that span from Indium Phosphide and Silica-on-Silicon
fabrication to proprietary, highly automated assembly and test facilities. Our in-house capabilities allow us to offer a dependable supply of quality optical components and modules. Our
PICs and components on board, or COB, solutions incorporate greater functionality and intelligence at the component level, which enables us to serve next-generation, higher speed networks.
We continue to leverage and expand upon more than 25 years of research, development and investments, including by the former optoelectronics divisions of Lucent Technologies and Bell Labs,
which we obtained through our acquisition of a division of TriQuint Semiconductor, Inc. in 2005, and our broad portfolio of proprietary technologies, which form the foundation of our technical
expertise and extensive know-how.
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We
sell our products to a global, diversified customer base that includes module manufacturers and OEMs, who in turn sell to communication service providers and enterprises, and to defense and
avionics contractors. Our customers include Cambridge Industries Group, Ciena Corporation, Finisar Corporation, Huawei Technologies Co., Ltd., Lockheed Martin Corporation, Source
Photonics, Inc. and Superxon Technology, Ltd. We believe that greater than 70% of our revenue was sole-sourced in 2010, which we believe demonstrates the differentiation of
our products, and gives us significant insight into our customers' product and technology roadmaps.
We
believe we have an attractive financial profile, with superior top-line performance and strong quarter over quarter revenue visibility. We have grown our revenue at a 31.3% CAGR from
2005 to 2010 and 44.0% quarter over quarter from March 31, 2010 to March 31, 2011. We have also experienced significant margin expansion, as our income (loss) from operations margin
increased from 7.3% in the three months ended March 31, 2010 to 12.0% in the three months ended March 31, 2011. In addition, our non-GAAP adjusted income (loss) from operations margin
increased from 9.8% in the three months ended March 31, 2010 to 13.2% in the three months ended March 31, 2011. Adjusted income (loss) from operations margin is not calculated in
accordance with GAAP. A reconciliation of this non-GAAP measure to income (loss) from operations margin calculated and presented in accordance with GAAP is included in this prospectus in
the "Management's discussion and analysis of financial condition and results of operations—Key business metrics—Use of non-GAAP financial measures." Adjusted income (loss) from
operations margin should not be considered as an alternative to income (loss) from operations margin calculated and presented in accordance with GAAP.
Industry
Network traffic continues to increase rapidly in volume, volatility and complexity, driven by unprecedented demand for
bandwidth-intensive, rich content such as streaming and real-time video, the growth of online social networking, cloud-based computing services and the proliferation of mobile devices.
According to Cisco System's Visual Networking Index, global Internet Protocol, or IP, traffic is expected to grow from 20 exabytes (1 exabyte = 10
9
gigabytes) per month in 2010 to
80 exabytes per month in 2015, representing a 31.9% CAGR. To address this trend, communication service providers and
enterprises are expanding and upgrading their existing network infrastructures. Notwithstanding their investments, network traffic growth is outpacing service provider revenue growth. As a result,
communication service providers and enterprises are investing in higher-data rate, scalable and cost-effective network architectures to increase bandwidth capacity and improve
profitability.
Optical
networking is becoming the de facto transport technology due to its attractive bandwidth capacity, reach, reliability, low power consumption and network intelligence capabilities. Optical
components and modules provide the fundamental building blocks—the creation, modulation, routing and detection of light—of the optical ecosystem, from Long Haul/Metro, Access
to the Digital Home, through FTTH, to Enterprise/Data Center. Ovum estimates the market for optical components and modules was $5.6 billion in 2010 and is forecasted to grow to
$10.5 billion in 2015, representing a 13.4% CAGR. Consumer and enterprise demand for bandwidth-intensive, rich content and services is driving network build outs across the ecosystem. These
build outs are in turn requiring capital investment to alleviate bottlenecks across the network, which we believe is resulting in a persistent growth
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phenomenon
across network segments and geographies and, in many cases, outpacing the growth of the overall optical networking market.
The
optical component and module market consists of traditional network segments—Access, Enterprise/Data Center and Long Haul/Metro which are differentiated primarily based on transmission
distance—and emerging applications in other end markets:
•
Access network segment.
The Access segment comprises network
areas with transmission distances of less than 20 kilometers typically used to connect individual enterprise and residential customers to the network. Due to attractive bandwidth, reliability and cost
advantages, Access networks increasingly use high-speed optical fiber as a replacement for copper lines in legacy networks and as a favorable alternative to wireless access technologies in
new deployments. High-speed Access networks can support high-bandwidth content and enable bundled services, such as "quadruple play", that can include voice, video
on-demand, high-speed data and wireless offerings.
In
Access networks, we believe communication service providers and enterprises are under considerable pressure to deliver emerging, next-generation applications and services at low costs
as traditional voice revenues decline and subscribers of data and video services become increasingly price sensitive and less loyal. We believe OEMs increasingly prefer to procure directly from
optical component vendors to remove module intermediaries. By doing so, OEMs are able to reduce their direct costs and potentially deliver infrastructure solutions to Access communication
service providers and enterprises at lower prices.
Passive
optical networks, or PONs, are currently the fastest-growing broadband Access technology, enabling 1Gbps and higher transmission speeds to the home, a 100-fold increase over legacy
copper networks. Dell'Oro forecasts PON subscribers as a percentage of worldwide broadband subscribers to increase from 10.8% in 2010 to 25.5% in 2015. Communication service providers in the Asia
Pacific region have been early adopters of PON technology, demonstrated by large-scale deployments in Japan and, more recently, by China's aggressive FTTH rollout, including China Telecom's
announcement of their target to connect
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100 million
subscribers by 2015. Gigabit PON, or GPON, has higher data rates, enhanced security and broader multi-protocol support compared to PON. Consequently, it is expected that GPON
will continue to gain market share over previous PON technologies. According to Ovum, GPON transceiver sales are projected to grow from $288.5 million in 2010 to $576.7 million in
2015, representing a 14.9% CAGR. Specifically within China, Dell'Oro estimates that GPON revenue to grow by as much as 40% year-over-year in 2011.
•
Enterprise/Data Center network segments.
Enterprise/Data
Center Network segments provide networking capabilities to clusters of computers and servers in close proximity to each other, such as on a campus, or in an office building or data center. Fueled
primarily by server virtualization and cloud computing, server data transfer rates are doubling every 24 months with the server-to-switch connection rate moving rapidly
from 1 gigabit Ethernet, or GbE, to 10GbE. The adoption of 10GbE on server infrastructure is accelerating the migration of copper to optical fiber and the need for 40GbE and 100GbE on uplinks to the
core of the data centers. Traditionally, links of 10GbE and below relied on only one laser and one receiver per transceiver. These traditional architectures are no longer adequate for 40GbE and
100GbE, which require multi-channel (4x10GbE, 10x10GbE or 4x25GbE) architectures, comprised of multiple lasers and receivers per transceiver, to meet the faceplate density, cost and power consumption
requirements of next-generation switches. According to Ovum, 100GbE transceiver sales will increase from $51.6 million in 2010 to $712.6 million in 2015, representing a 69.1%
CAGR.
•
Long Haul/Metro network segments.
Long Haul/Metro segments
include networks with longer distance transmission for intra-city, city-to-city and country-to-country transport. Communication service
providers have upgraded many legacy 2.5Gbps networks to 10Gbps and are accelerating deployments of next-generation networks capable of transmission at 40Gbps and 100Gbps. According to
Ovum, revenue from 40Gbps and 100Gbps Long Haul/Metro receivers is forecasted to grow from $66.0 million in 2010 to $494.8 million in 2015, representing a 49.6% CAGR. As these networks
need to handle an increasing amount of IP or packet based traffic network operators need to find efficient and scalable ways to upgrade their installed base of disparate synchronous optical networking
and synchronous digital hierarchy (SONET/SDH), Ethernet and Dense Wavelength Division Multiplexing (DWDM) infrastructure. Next generation "packet optical" networks on the basis of 40Gbps and 100Gbps
transport produce the needed capital and operational efficiencies by converging formerly disparate network architectural layers and including integrated routing, switching, reconfigurable optical
add-drop multiplexers (ROADMs), DWDM transport and other optical networking functionality. At next-generation higher 40Gbps and 100Gbps network speeds, we believe there will be
considerable technical challenges resulting in market and supply chain disruption. We believe OEMs will look to procure optical components directly from vendors in order to build their own
solutions in order to successfully overcome these challenges.
A
key emerging technology for next-generation networks is coherent detection, which enables ultra-long reach and efficient spectral bandwidth usage in 40Gbps and 100Gbps
transmission. Coherent detection allows for improved receiver sensitivity and superior data integrity by electronically recovering signal information that is normally lost or distorted, while
leveraging existing infrastructure such as fiber plants and optical amplifiers. According
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to
Ovum, revenue from 100Gbps coherent modules will increase from $35.3 million in 2010 to $786.5 million in 2015, representing an 86.0% CAGR.
•
Other emerging end market applications.
In addition to
traditional telecommunications and networking markets, optical components and modules are increasingly being used in other emerging end market applications, such as defense and avionics, high
performance computing, medical and security markets, all of which require high-speed, high-bandwidth data transmission, higher levels of integration and/or high performance
laser/receiver solutions. For example, the defense and avionics industry is increasingly using optical solutions to reduce size, weight and power in applications such as next-generation
munitions or fiber-based local area networks, or LANs, on aircraft. Other emerging end market applications include: highly reliable, high-power optical lasers in Fiber Optic Gyroscopes on
satellites; highly reliable and efficient lasers for integration onto Silicon Photonics chips to enable exascale computing; and lasers with high power and high spectral purity characteristics for
gas-sensing in security systems.
Optical network market value chain
The optical network market value chain can be broken down into four segments—components, modules, systems and
carriers/providers—that provide the following types of products and services and include the following selected key players:
Optical
components are typically incorporated into optical modules, which are assembled into systems that are purchased and installed into service provider networks. Demand for increased bandwidth
capacity and pressure to control costs is driving higher levels of integration at the product level, delivering increased faceplate density, lower power dissipation and greater
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system
functionality. This trend creates an opportunity for optical component manufacturers to deliver next-generation optical modules and optical COB solutions directly to OEMs.
We
believe that innovation at the optical component level is driving increased functionality, higher performance and cost savings in optical networking solutions. High-speed Long
Haul/Metro network segments, in particular at 40Gbps and 100Gbps transmission speeds, are forecast to be key areas of service provider investment in PICs, tunable lasers and coherent detectors, which
are key enablers of these high-speed, long-distance networks.
Innovative
optical component solutions, many of which are based on PICs, such as multi-channel 10x10Gbps, 4x25Gbps, 40Gbps/100Gbps coherent transmitters, receivers and transceivers, and tunable lasers
are expected to comprise an increasing percentage of total optical system capital expenditures. For example, according to Cisco Systems, while optical components represent approximately 19% of the
capital expenditures for 10Gbps systems, they represent approximately 68% of the capital expenditures for 100Gbps systems.
We
believe optical module manufacturers and OEMs face many challenges, including:
•
Demand for high-performance, high-speed optical
solutions.
To address increasing network traffic demands, optical module manufacturers and OEMs must offer solutions that deliver high data transmission
speed and bandwidth capacity to end customers at a cost competitive to conventional technologies. These solutions must also be interoperable with existing infrastructure, without requiring costly
wholesale infrastructure replacement.
•
Increasing system complexity and decreasing time to
market.
OEMs are beginning to incorporate optical components, rather than modules, directly into their system architectures to reduce their time to market
if advanced module level technology is not available, to reduce their system cost by eliminating the module manufacturer or to enhance their products' technical performance. The ability for
OEMs to be designed into new network architectures is critical, as early design wins and implementations provide a competitive advantage given the prohibitive cost of redesign for communication
service providers and enterprises.
•
Demand for reduced service provider capital investment
requirements.
Communication service providers and enterprises continue to search for more economical ways to increase network capacity to accommodate the continued
growth in IP traffic. For example, by integrating DWDM optics as interfaces within routers, communication service providers and enterprises reduce the need for external optical-electrical-optical, or
OEO, transponder racks, cross connects and SONET/SDH switching layers, resulting in lower up front capital expenditures due to the need for fewer devices in the network. Furthermore, the move to a
DWDM-based optical transport network, or OTN, provides a cost-effective, scalable, high capacity and flexible network platform by further reducing the number and types of
required network element boxes, enabling low cost deployment of 40Gbps and 100Gbps networks.
•
Demand for reduced service provider operating expense
requirements.
Communication service providers target improved operational efficiencies by converging formerly disparate network architectural layers through the
migration to "packet optical" networks on the basis of 40Gbps and 100Gbps. Optical module manufacturers and OEMs seek to reduce the power required to operate optical systems. Heat from
neighboring components or high ambient temperatures degrade the functionality of laser diodes or even require the use of costly thermoelectric coolers, which limit the ability to miniaturize the
optical module. The higher levels of integration, lower power requirements and lower heat dissipation of optical components enable greater faceplate density and result in ongoing operating cost
savings.
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Our solutions
We are a leading platform-based provider of core optical technologies enabling bandwidth for high-speed networks. Our
solutions provide the fundamental building blocks—the creation, modulation, routing and detection of light—that enable high-performance and
cost-effective optical networking. Facilitated by our differentiated technologies and in-house proprietary design, manufacturing, packaging and technology capabilities, we
produce:
•
active components that create, modulate and detect light;
•
passive components that guide and combine light; and
•
packaging solutions that integrate active and passive components into high-performance, compact products.
We
design, fabricate and package a broad portfolio of optical components, including lasers, detectors, transmitters, receivers, and modulators:
Product family
Components
Markets
Devices
•
Die-level lasers and detectors
•
TO-can packaged lasers and receivers
Access, Enterprise/Data Center, Long-Haul/Metro
Large Form Factor Components
•
For integration into Transponders or onto linecards for
transmission speeds up to 10Gbps
•
Planar packaged lasers and
detectors
•
Tunable lasers
Access, Long-Haul/Metro
Small Form Factor Components
•
For integration into pluggable Transceivers for
transmission speeds up to 10Gbps
•
Planar or TO-can style packaged
Transmit/Receive Optical Sub-Assemblies (TOSA/ROSA)
Enterprise/Data Center, Long-Haul/Metro
Components on Board (COB)
•
For integration into Customer Premise or Central Office
Equipment for FTTH and custom designs
•
Bidirectional Optical
Sub-Assemblies (BOSA)
Access, Emerging end market applications
PIC-Based Components and Next-generation Modules (Transceivers)
•
Integrated coherent receivers for 40Gbps and 100Gbps
•
Multi-channel TOSA/ROSA and transceivers for transmission speeds of
40Gbps and beyond
Enterprise/Data Center, Long-Haul/Metro
Specialty Components
•
Custom packaged lasers and detectors
•
Devices and components for emerging end market applications, such as defense and
avionics, high performance computing, medical and security
Emerging end market applications
Key benefits of our solutions include:
•
High levels of photonic integration.
Our in-house
Indium Phosphide and Silica-on-Silicon technology platforms and diverse toolbox of device elements enable the efficient design and the scalable, high volume fabrication of a
broad variety of PICs. As a result, we are able to achieve high levels of integration either by single chip, or "monolithic," integration in a single Indium Phosphide chip, or by
multi-chip, or "hybrid," assemblies using both Indium Phosphide and Silica-on-Silicon, for which we leverage our proprietary, highly automated,
sub-micron precision assembly platform. This high level of integration enables us to provide
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solutions
that have significantly smaller size, higher reliability and lower power consumption as compared to traditional discrete components.
•
High bit rate products.
Our high bit rate BOSA components are
used in next-generation Access networks (10Gbps or higher). Our PIC-based components and next-generation modules are used for communication switches in high
capacity Enterprise/Data Center networks (40Gbps or higher) and for coherent Long Haul/Metro networks (40Gbps or higher). These products enable communication service providers and enterprises to
deliver bandwidth-intensive rich content and services over significantly longer distances than existing solutions.
•
Cost-effective solutions.
Our industry-leading
levels of automation in chip fabrication and packaging operations enable us to manufacture our products at high yields and low labor cost, while the re-usability,
re-configurability and scalability of our assembly and test equipment reduces our on-going capital needs. Our high levels of automation also enable significant consistency and
repeatability throughout the entire manufacturing process, resulting in high performance and highly reliable products. Our flexible and versatile combination of monolithic and hybrid integration
technologies, together with our sub-micron precision alignment capability, enables us to create highly integrated, application-optimized and miniaturized solutions, which reduces the total
cost of ownership for our customers.
•
Tailored solutions.
We leverage our technology platforms and
array of device and packaging technologies across all market segments to customize a broad range of products. Our in-house hybrid and monolithic photonic integration techniques, together
with our highly-automated assembly and test manufacturing capabilities, and cooled and uncooled Indium Phosphide laser fabrication capabilities, allows us to tailor these products to each segment of
the communications network. By reusing proprietary technologies, we can often design new devices more rapidly and at lower cost.
•
Superior quality.
Our automated manufacturing and control
systems that we have built into our device fabrication, packaging and testing processes enable us to deliver products with stable performance, high quality and a high level of reliability. To date, we
have had less than 1 reported laser or detector chip failure in time (FIT), a measure of failure rate in 10
9
service hours (e.g. 1 FIT = 1 failure in 10
9
service
hours), over an estimated 350 billion service hours in the field since our inception.
Competitive strengths
We believe our key competitive strengths include the following:
•
Strong institutional knowledge base and track record of technology
innovation.
We develop industry-leading optical components, including PIC-based components, such as multi-channel TOSA/ROSA and coherent receivers, as
well as next-generation modules by leveraging and expanding upon more than 25 years of investments, including those made by the former optoelectronics divisions of Lucent
Technologies and Bell Labs, which we obtained through our acquisition of a division of TriQuint Semiconductor, Inc. in 2005, and our broad portfolio of proprietary technologies, which form the
foundation of our technical expertise
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and
extensive industry know-how. We believe some of our innovations were among the first commercially available in the industry, including:
•
10Gbps TOSA to enable pluggable transceivers (2003);
•
the lowest power consumption cooled 2.5Gbps small form factor laser transmitter for integration into pluggable
transceivers (2005);
•
40Gbps/100Gbps coherent receiver with full integration of 90 degree hybrids, detectors, Trans-Impedance Amplifiers, or
TIAs, and polarization splitters (2011); and
•
10Gbps TOSA for DWDM in small form factor pluggable plus (SFP+) transceivers (2011).
•
Greater intelligence at the component level.
We are well
positioned to capture a higher proportion of the bill of materials of the optical value chain as the industry migrates to higher speed networks. According to Cisco Systems, optical components
represent approximately 19% of the capital expenditures in 10Gbps optical systems, but approximately 68% of the capital expenditures in 100Gbps optical systems, which we believe is a result of
increased system-level consolidation and integration and hence a greater opportunity for differentiation. We are well positioned to capitalize on this industry trend with our PICs and COB solutions,
which provide our customers with significant performance and cost advantages due to the need for fewer components.
•
Vertical integration.
We are one of the few companies in our
industry with vertically integrated technology and manufacturing platforms that span from Indium Phosphide and Silica-on-Silicon fabrication to proprietary, highly automated
assembly and test facilities. Our comprehensive in-house capabilities allow us to offer our customers a dependable supply of quality optical components and modules, giving us significant
time-to-market, time-to-volume and cost advantages as well as the ability to respond more quickly to changing market and customer requirements. As a
result of the complexity of the design and manufacturing disciplines involved in the creation of our products, we believe it would be difficult for others to replicate the platforms we have developed.
•
Industry-leading market position.
We are a leader in several
of the market segments that we serve. For example, we believe that based on Ovum's 2010 market data and our shipment history, our FTTH BOSA, TO-cans and devices were deployed in 49.5% of
all GPON and Ethernet Passive Optical Network, or EPON, Optical Line Terminals, or OLTs, and 47.3% of all GPON Optical Network Units, or ONUs, sold worldwide in 2010. Furthermore, we
believe that based on Ovum's 2010 market data and our shipment history, our 2.5Gbps to 10Gbps TOSAs and devices for high-performance, long-reach and temperature controlled
applications using a thermo-electric cooler, or TEC, were deployed in approximately 35.8% of all Standard Form Factor Pluggable (SFP), 10G Form Factor Pluggable (XFP) and SFP+ pluggable optical
transceivers worldwide. In addition to our strong presence across network segments, we also believe that we have an entrenched position within our existing customer base. For example, we believe that
greater than 70% of our revenue was sole-sourced in 2010, which we believe demonstrates the differentiation of our products and gives us significant insight into our customers' product and
technology roadmaps.
•
Diversity across network segments, products and
customers.
Our revenues are diversified across network segments, with approximately 51.8% of our 2010 revenue from Long Haul/
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Metro,
37.4% from Access and 8.8% from Enterprise/Data Center, allowing us to capitalize on growth in capital investment cycles across the communications network. Our global, diversified customer base
includes module manufacturers and OEMs who sell to telecom carriers, bandwidth providers and defense and avionics contractors, such as Cambridge Industries Group, Ciena Corporation, Finisar
Corporation, Huawei Technologies Co., Ltd., Lockheed Martin Corporation, Source Photonics, Inc. and Superxon Technology, Ltd. Furthermore, our products are deployed in a
number of major communication service provider networks. Our revenue is also well diversified by product, with more than 2,500 products across six product families.
•
Experienced management team with strong execution
track-record.
Each of our executive officers has more than 15 years of relevant industry experience, with the substantial majority having more than 25 years
of relevant experience. Members of our management team and board of directors also played integral roles in leading Lucent Technologies' optoelectronic components business in 2000, when the division's
revenues exceeded $1 billion. Our key managers have worked side by side in large and small companies and have a proven track record of strong top-line revenue performance throughout
varied market cycles. We grew our revenues from $27.8 million in 2005 to $108.3 million in 2010, representing a 31.3% CAGR. We have acquired and successfully integrated five businesses
since 2003. Our management is consistently recognized for its visionary leadership and often called upon to present at industry conferences and serve on technical committees that establish industry
standards.
Our strategy
Our goal is to become the leading provider of high-performance optical technologies that enable the rapid growth in
high-speed optical networking communications. Key elements of our strategy are as follows:
•
Extend leadership in FTTH.
We intend to maintain our strong
position in our core GPON FTTH markets and extend GPON market share by winning new customers and introducing next generation products. In addition, we plan to take advantage of market
disruption and product cycle transitions by providing an alternative to traditional transceiver vendors through our BOSA offerings and by addressing emerging FTTH applications (WDM PON and 10 gigabit
Ethernet PON, or GEPON).
•
Capture an increasing share of the Enterprise/Data Center and Long-Haul/Metro market
segments.
We intend to leverage our technology leadership, Indium Phosphide and Silica-on-Silicon integration and high-performance packaging
to develop multi-channel PICs in support of 40Gbps and 100Gbps Ethernet TOSA and ROSA, receivers and miniaturized tunable laser for coherent applications and tunable 10Gbps TOSA for both module
manufacturers and OEM customers. Our goal is to become a leader in these market segments through a combination of high performance, on-time delivery and low manufacturing cost.
•
Continue to grow our defense and avionics business and other emerging end market
applications.
We intend to continue to leverage our differentiated technologies and U.S.-based design and manufacturing operations to address the growing demand for
optical components and modules in the Intelligence, Surveillance and Reconnaissance, or ISR, and munitions industries. We will continue to work with the major US-based defense prime
contractors and look to secure agency development contracts. We also intend to grow our presence in other emerging end market applications such as high-performance computing, medical and
security.
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•
Continue gross margin expansion.
We intend to continue our
gross margin improvement through increased scale across our manufacturing infrastructure and continued introduction of higher performance products with greater component-level intelligence and
integrated functionality to module manufacturers and OEMs.
•
Selectively pursue complementary acquisitions.
We intend to
continue to selectively pursue acquisitions that complement our strengths and help us execute our strategies. Our acquisition strategy is designed to accelerate our revenue growth, increase our
customer penetration, expand our technology and manufacturing platforms and grow our addressable market. We believe our demonstrated experience with successful integration of past acquisitions
provides us an advantage in assessing and integrating companies we may pursue in the future.
Technology
We design and manufacture optical components and modules on the basis of Indium Phosphide and Silica-on-Silicon
technologies. Our design and fabrication expertise is based on more than 25 years of investments, including those made by the former optoelectronics divisions of Lucent Technologies and Bell
Labs, which we obtained through our acquisition of a division of TriQuint Semiconductor, Inc. in 2005, and our broad portfolio of proprietary technologies, which form the foundation of our
technical expertise and extensive industry know-how. Many members of our team are considered innovators in the Indium Phosphide semiconductor photonics market. While most of our
competitors in recent years have outsourced their manufacturing, in whole or in part, we are one of the few companies in our industry with vertically integrated technology and manufacturing platforms
that span from Indium Phosphide and Silica-on-Silicon Planar Lightguide Circuit, or PLC, chip fabrication to proprietary, highly automated assembly and test facilities.
Our in-house capabilities allow us to offer a dependable supply of quality optical components and modules.
We
control of all phases of the development and manufacturing process in-house and leverage a comprehensive library of proprietary and commercially available design tools to accurately
model and optimize the optical, electrical, thermal and mechanical properties prior to fabricating our devices and packages. The increasing complexity of optical devices makes accurate performance
modeling necessary to reduce the number of design iterations thereby reducing our customers' time to market and enabling them to make more efficient engineering investments.
We
also have developed extensive expertise in the design and large scale fabrication of PICs, and are one of the few companies with all the key technologies in-house that enable the
efficient design and the scalable, reliable, high volume fabrication of monolithic and hybrid PICs. In monolithic or single chip PICs, we leverage our advanced design, process know-how and
epitaxial growth techniques to integrate multiple devices and/or functions into a single Indium Phosphide chip. In hybrid PICs, we utilize our highly automated sub-micron precision
assembly platform to integrate multi-chip optical devices that are coupled using optical interconnects into a single package.
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The
following technologies and capabilities are key to our business:
•
Indium Phosphide fabrication.
We have one of the leading
Indium Phosphide fabrication facilities, or Indium Phosphide fabs, in the world with comprehensive, in-house manufacturing from epitaxial growth to wafer and chip fabrication. Optoelectronic design
and manufacturing requires a deep understanding of complex material and their interactions, device structures and the operation of associated complex manufacturing processes and equipment to build the
needed layer structure with atomic-level precision. At the core of our business lies our laser and photo-detector technology, which allows us to efficiently design products that meet or exceed the
power, size, temperature performance and reliability requirements of our customers. In the development and manufacturing of Indium Phosphide based lasers and photo-detectors, we utilize accumulated
knowledge in areas such as semiconductor epitaxial growth, semiconductor material systems, quantum well design and band gap engineering, to achieve high speed performance, wide operating temperature
ranges and precise wavelength control for Dense Wavelength Division Multiplexing, or DWDM, resulting in high manufacturing yield and throughput, and reduced cycle time. In our monolithic PICs, we use
a combination of highly flexible, multi-stage epitaxial growth via metal-organic chemical vapor deposition, or MOCVD, integration technologies such as Selective Area Growth, or SAG, and low loss
coupling waveguide interconnects between active and passive sections, which are the key building blocks enabling the large scale integration of multiple active and passive features in Indium Phosphide
on the same chip.
•
Silica-on-Silicon PLC
fabrication.
Many of our PIC products rely on our Silica-on-Silicon PLC technology. We have developed a broad toolbox of device
elements that provide a variety of optical functions on a single silicon chip. The planar processing enables scalable, high volume production along with high performance and reliability. We use bulk
and thin film capabilities to manufacture our own glass materials on the silicon wafer substrate. By intentionally incorporating impurities, such as Germanium, Boron or Phosphorus, into the Silica
waveguides for the purpose of modifying its optical properties in a controlled manner, a process known as "doping", we can create material structures for lowest optical power loss, highest levels of
integration as well as material that provides optical gain or amplification. In order to achieve a specific functionality, we can vary these doping levels precisely across the wafer and are able to
integrate different elements into optical circuits on a single chip. We routinely utilize micron and submicron scale structures of multiple precision-doped
Silica-on-Silicon PLCs to manufacture and integrate into optical circuits design elements and building blocks for low loss coupling between different waveguides,
Wavelength Division Multiplexer, or WDM, couplers, splitters, turning mirrors to couple light out of the PLC chip into a photo-detector, DWDM and course wavelength division multiplexing, or
CWDM, arrayed waveguide gratings, or AWG, multiplexer and de-multiplexer.
•
Assembly and test.
We have accumulated a significant
knowledge base in laser packaging, and in mechanical, optical, thermal and high frequency design. Laser diodes and photo-detectors are particularly sensitive to external forces, electrostatic fields
and chemical environments, so they are typically housed in hermetically sealed packages. The laser diodes and photo-detectors are typically placed on special silicon or ceramic submounts before being
packaged into the mechanical housing together with certain electronics and other optical and mechanical elements. Substantial investments have been made since 1995 in our in-house
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designed
and built packaging equipment platforms and we believe that our assembly and test operations have the highest level of versatility and automation in our industry. We use
pick-and-place robotics to mount the various optical, electrical and thermal elements in packages that support applications from low cost to high reliability and power, housing
micro-optics, hybrid and monolithically integrated devices. The key differentiation of our automation equipment is the capability to achieve sub-micron alignment precision between optical
elements within the mechanical housing guaranteeing low optical power loss for hybrid or multi-chip integration. We supplement our internal assembly and test capabilities for higher end,
temperature controlled planar packages with the use of contract manufacturers for assembling components in the cylindrical style, or TO-can packages.
Products
We are a leading platform-based provider of core optical technologies enabling bandwidth for high-speed networks. We have
one of the most comprehensive optical component portfolios with more than 195 active datasheets, which we sell to most of the leading transceiver vendors and OEMs addressing the needs of
Access, Enterprise/Data Center, and Long Haul/Metro networks and other emerging end market applications. Our product portfolio primarily consists of chips, subcomponents and components for integration
into optical transceivers or transponders or onto linecards. Our product portfolio includes a broad range of optical components—lasers, detectors, transmitters, receivers and
modulators—that vary by data rate, level of integration and form factor and are distinguishable by their superior performance across several technical parameters, such as reliability,
temperature range, power consumption, wavelength stability or receiver sensitivity.
Our
laser diode and transmit optical subassembly, or TOSA, products include tunable lasers, Fabry Perot lasers, directly modulated lasers, or DMLs, at data rates of up to 25Gbps and electro-absorptive
modulated, or EAM, lasers at data rates of up to 40Gbps with signal wavelengths between 1270nm and 1600nm. We offer high performance avalanche photo-detectors, or APDs, and receivers for data rates of
up to 10Gbps and PIN photo-detector and receivers for data rates of up to 25Gbps. Our 40Gbps and 100Gbps coherent receivers address the emerging end market for the coherent polarization multiplexed
quadrature phase shift keying, or PM-QPSK, transmission standard.
In
some of our newer products we leverage our proprietary Terabit PICs, or TERAPICS
TM
, platform. In TERAPICS
TM
we combine monolithic and hybrid integration to create
optical networking solutions for 40Gbps/100Gbps and beyond. Our active laser or detector arrays are monolithically integrated into Indium Phosphide and are mounted on or interconnected to
Silica-on-Silicon based PLCs, which encompass passive optical features and functions such as an optical multiplexer or demultiplexer. In addition to our Indium Phosphide
and Silica-on-Silicon device technology we leverage our highly automated assembly equipment enabling the very precise and accurate sub-micron mechanical alignment
of optical waveguides between these active and passive functional elements achieving highest performance, highest yields and lowest cost. We believe that TERAPICS
TM
is an important
technology platform for addressing some of the key challenges of OEMs, namely reduction of power consumption, size and cost. The first products leveraging this platform are the 40Gbps/100Gbps coherent
receivers, 40GbE (4x10GbE) and 10x10Gbps DWDM TOSA/ROSA (transmit and receive optical subassembly).
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The
following is a summary of our products in each of our market segments:
Access network segment.
We offer one of the broadest portfolios of optical devices and components for the Access network segment serving the optical networking
unit, or ONU, at the customer premises and the optical line terminal, or OLT, in the central office.
Product family
Products & product description
Product form factor
Devices
Chips and TO-can
For integration into TO-can or TOSA/ROSA, BOSA (bidirectional optical subassembly)
• 2.5Gbps DML
• 10Gbps DML
• 10Gbps EAM laser
• 2.5Gbps and 10Gbps APD
Components on Board (COB)
GPON Bidirectional Optical Sub-Assembly (BOSA)
10GEPON Bidirectional Optical Sub-Assembly (BOSA)
For integration into GPON ONU Transceivers or onto linecards
•
used in customer premise equipment providing voice, data
and internet access over optical FTTH or business
•
used in customer premise equipment providing voice, data
and internet access over optical FTTH or business
Large Form Factor Components
40Gbps Laser
For integration into 300pin Transponder, connecting routers with DWDM Transponder cards
• cooled EAM laser for 2km transmission
Enterprise/Data Center network segments.
We offer a broad portfolio of devices and components for the Enterprise/Data Center market.
Product family
Products & product description
Product form factor
Devices
Chips
For integration into TOSA/ROSA
• 25Gbps DML chips on carrier on LAN-WDM grid
• 40Gbps EAM laser chip on carrier for short reach (VSR) (2km) application
• 25Gbps PIN detectors
Small Form Factor Components
TOSA
For integration into SFP+ or 100G CFP Transceiver
• 10Gbps FP
• 10Gbps DML
• 10Gbps CWDM DML for 40GbE
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Product family
Products & product description
Product form factor
PIC-Based Components
and Next-generation
Modules (Transceivers)
40GbE TOSA/ROSA (based on TERAPICS
TM
platform)
For integration into QSFP Transceiver
•
TOSA integrates 4x10Gbps CWDM DMLs with Optical
Multiplexer
•
ROSA integrates 4x10Gbps PIN photo-detectors with Optical
Demultiplexer
•
10km reach
Long Haul/Metro network segments.
Our portfolio for the Long Haul/Metro market includes differentiated products such as tunable lasers with narrow linewidth for
coherent applications, one of the most compact integrated coherent receivers for 40Gbps and 100Gbps, DWDM TOSAs with low power dissipation for integration into SFP+ transceivers and miniaturized
10x10G TOSA/ROSA and CFP modules.
Product family
Products & product description
Product form factor
Devices
Chips and TO-can
For integration into TO-can or TOSA/ROSA
• 2.5Gbps DWDM/CWDM DMLs
• 10Gbps DWDM EAM lasers
• 2.5Gbps and 10Gbps PIN and APD chip or chip-on-carrier
• 2.5Gbps 1550nm TDM or CWDM DML (up to 80km) integrated into a cylindrical TO package
Devices
Optical Sub-Assembly (OSA)
For integration into TOSA
• Assembly of 10Gbps EAM laser, lens and back facet monitor photo- detector on Silicon Optical Carrier
• 40km, 80km, time division multiplexing (TDM) and DWDM
Large Form Factor Components
Tunable Laser, Integrated Tunable Laser Assembly (ITLA)
For integration into 300pin Transponders
• Full C-Band tunability
• High Output power 16dBm
• Narrow Linewidth of 100kHz
Small Form Factor Components
Transmit Optical Subassembly (TOSA),
Receive Optical Subassembly (ROSA)
For integration into 10G Form Factor Pluggable (XFP), Standard Form Factor Pluggable Plus (SFP+) and Standard Form Factor Pluggable (SFP) transceivers, compatible with 10G/s Miniature Device (XMD) Multisource agreement (MSA)
• 2.5Gbps DML TOSA for up to 200km DWDM and CWDM applications
• 10Gbps DML TOSA, CWDM, 1270nm-1610nm
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Product family
Products & product description
Product form factor
• 10Gbps EAM laser TOSA, up to 80km, TDM, CWDM and DWDM, standard and extended temperature (-40 to 90 degrees Celsius)
• 10Gbps EAM laser TOSA, up to 80km, TDM, CWDM and DWDM for lowest power consumption enabling DWDM in SFP+
• 10Gbps high sensitivity APD
PIC-Based Components and Next-generation Modules (Transceivers)
40G/100G Integrated Coherent Receiver (based on TERAPICS
TM
platform)
For integration into 300pin Transponders and onto linecards
• Integrating polarization splitters, coherent mixers with photo-detectors and Trans-Impedance Amplifier (TIA) ICs
• Compact package adhering to the Optical Internetworking Form (OIF) Implementation Agreement
PIC-Based Components and Next-generation Modules (Transceivers)
10x10Gbps TOSA/ROSA (based on TERAPICS
TM
platform)
For integration into CFP Transceiver
• TOSA integrates ten channel DWDM 10Gbps EAM laser arrays with Optical Multiplexer
• ROSA integrates 10 10Gbps PIN/APD photo-detectors with Optical Demultiplexer
• 100GHz channel spacing
• 65km reach
• 40 channels in C-Band to support 40x10Gbps or 4x100Gbps
PIC-Based Components and Next-generation Modules (Transceivers)
10x10Gbps CFP Module (based on TERAPICS
TM
platform)
For integration into Datacom and Telecom switches and routers
• Hot pluggable module
• Integrates 10 Transmit and 10 Receive channels each operating at 10.3Gbps
• 100GHz channel spacing
• 65km reach
• 4 variants covering the C-Band to support 40x10Gbps or 4x100Gbps
Emerging end market applications.
We design and manufacture tailored products leveraging our Indium Phosphide, Silica-on-Silicon PLC
and automated packaging capabilities for a variety of emerging end market applications, such as the defense and avionics, high performance computing, medical and security markets.
Customer support
We offer our customers a range of support offerings, including on-site product training, application support, product
warranties and around the clock multi-level technical support. Our customer support is provided by our employees, and we believe that providing ongoing support is critical to successful
long-term relationships with, and follow-on sales to, our customers and partners. We are committed to providing our customers and partners with the highest levels of support.
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Marketing and sales
We market and sell our products primarily through our direct sales force, supported by marketing, application engineering and product
management personnel. We also use distribution or support partners to enter new markets or when requested by a potential customer. Our sales team has significant previous experience with the buying
process and sales cycles typical of high-value technology products. We expect to continue to add sales, marketing, application engineering and product management support employees as we
grow our business.
The
sales process for our products entails substantial collaborations with prospective customers, analyzing their existing technology portfolio and future product roadmap and identifying how they can
utilize our tailored-manufacturing, technology and product capabilities. As part of the sales cycle, our customers perform qualification tests and field trials of our products before making a
purchasing decision. Upon successful completion, the customer generally accepts the products and may continue with commercial deployment of additional products. We believe
that the lengthy, multi-stage nature of the sales cycle in the optical networking industry, from initial contact with a customer through the signing of a purchase agreement, fosters
long-term customer partnerships.
Direct sales force.
Our sales team sells directly to customers worldwide with strong development and factory support. Our direct sales teams are based in the
United States, China and Taiwan.
Indirect sales force.
We employ business consultants, resale partners and sales agents to assist in our sales efforts. We work with channel partners to assist our
customers in the design and integration of our products into modules and line cards and have entered into distribution and resale agreements to facilitate the sale of products in certain international
markets. We maintain an indirect sales presence in many geographies, including the United States, Canada, Brazil, Europe, China, Japan, Korea, Singapore and India.
Marketing, application engineering and product management.
Our product management and application engineering team is responsible for defining the new product
features and product development roadmaps. They also support our sales efforts with product and application engineering expertise. Our marketing team works to create demand for our products by
communicating our value proposition and differentiation through direct customer interaction, including product announcements, tradeshows, industry events and other marketing channels.
Research and development
Our research and development team consists of engineers with optoelectronics expertise in Indium Phosphide and
Silica-on-Silicon optical device design, optical, mechanical, thermal and electrical package design, firmware development and module design. We have a rigorous product
development process, which includes sampling and engineering verification, design verification testing and volume production verification. In order for a product to move to the next step in the
process, it must pass through a series of checkpoints to verify both technical and commercial performance. For example, our research and development activities incorporate design for manufacturing
principles to help ensure the high-volume and cost-effective manufacturability of our products, which are verified at each checkpoint.
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We
have dedicated product development and product engineering teams in Breinigsville, Pennsylvania, South Plainfield, New Jersey, Matamoros, Mexico and Taipei, Taiwan. These teams conduct research,
product roadmap definitions, new product development, manufacturing and process engineering, quality control and continuous improvement and cost reduction relating to chip fabrication or package
assembly and test.
Research
and development expenses were $12.0 million, $19.5 million and $19.0 million in 2010, 2009 and 2008, respectively, and $3.5 million for the three months ended
March 31, 2011. Our research and development expenses decreased substantially from 2009 to 2010 due to our dissolution of PGT.
Manufacturing
We have invested significant time and capital to develop and improve the manufacturing process that we use to produce and package our
products. This includes significant investments in personnel and the facilities to manufacture and package our products in Breinigsville, Pennsylvania, South Plainfield, New Jersey and Matamoros,
Mexico. We also have invested in automating our manufacturing process and in training, maintaining and enhancing the quality of our manufacturing workforce. Our manufacturing processes have been
developed over more than 25 years of research, development and investments, including those made by the former optoelectronics divisions of Lucent Technologies and Bell Labs, which we obtained
through our acquisition of a division of TriQuint Semiconductor, Inc. in 2005, and are protected by our trade secrets, technical expertise and extensive industry know-how. There are
several important aspects of our manufacturing platforms:
•
Vertical integration for active and passive devices.
We are
vertically integrated with laser and detector device design, device fabrication and final assembly and test of transmitter and receiver packages. In the design and manufacturing process we use our
accumulated knowledge in areas such as Indium Phosphide and Silica-on-Silicon PLC materials and epitaxial growth, wafer processing and packaging automation. We believe
that the combination of our vertically integrated technology and manufacturing platforms and our know-how and expertise enable us to control and continuously innovate at all phases of the
development and manufacturing process and to offer our customers several product benefits, including better and more reliable performance, continuity and quality of supply, higher data rates, lower
cost, smaller form factor, lower power consumption, greater functionality and shorter time to market.
•
Comprehensive in-house operations.
Our Indium
Phosphide cleanroom fabrication operations are comprehensive, ranging from epitaxial growth to wafer and chip processing. Our wafer and chip fab is one of the most highly automated lines of its kind
utilizing both commercially available and in-house built proprietary tools. Our broad fabrication competencies include a variety of processes by which we can develop custom,
high-performance, high-quality products at high yields. Our core competencies include the precise control of the epitaxial growth parameters, selective area growth and
re-growth, low loss coupling waveguide interconnects and advanced device characterization techniques. Moreover, our Indium Phosphide-based laser transmitter and receiver device product
development teams are co-located with our fabrication operations in Breinigsville, Pennsylvania. The proximity, alignment and close interaction between our experienced product development
teams and our Indium Phosphide fabrication operations enable us to
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rapidly
develop, test and deliver devices with increasing functionality tailored to our customers' needs in a timely, cost-efficient manner.
We
have comprehensive Silica-on-Silicon PLC fabrication operations in South Plainfield, New Jersey, where we do turn-key cleanroom fabrication from bulk or
thin film deposition to wafer and chip fabrication. Our core competencies are in the integration of waveguide materials with different optical properties on the same chip for optimized performance
with the smallest chip size. We offer our customers not only monolithic integration of active and passive components in Indium Phosphide but also hybrid integration of Indium Phosphide with
Silica-on-Silicon PLCs, thereby increasing the range of integration versus performance options.
Our
high volume automated component assembly and test operations for planar style packages are located in Matamoros, Mexico, addressing our commercial products, and in Breinigsville, PA for
prototyping and our defense and avionics products. By leveraging proprietary, in-house designed and built pick and place robotics our assembly and test line is one of the most automated
lines of its kind in the industry. In addition to the level of automation we provide, we also believe that our sub-micron alignment capability between optical elements is a key
differentiator the enables low coupling loss for hybrid or multi-chip photonic integration. This represents a considerable investment that enables us to accelerate the volume production of
highly integrated, complex component packages. The combination of our agile manufacturing operations and design competencies enable us to deliver a wider range of single and multi-chip
components and packages tailored to our customers' specific needs in a timely, cost-efficient manner.
•
Decreased time to market.
We believe that our extensive
know-how and in-house control of the entire optical component manufacturing process enables us to respond more quickly to changing market and customer requirements and to
accelerate the market introduction of new products by achieving best in class manufacturing yields and performance consistency, resulting in reduced manufacturing costs that drive market adoption and
penetration.
By
using common, high volume, well characterized and well controlled building blocks, or optical submounts, across the device fabrication and package assembly process, we are able to reduce the
development time with fewer design iterations for new product introductions. For example, our management team pioneered the use of such building blocks in optical packaging dating back to 1995, when
we introduced the Optical Subassembly, or OSA, concept, which still provides a common platform across all laser families.
Our
broad portfolio of Indium Phosphide active laser and detector devices, as well as passive devices in Silica-on-Silicon PLCs enables us to perform single chip or
multi-chip integration for a number of different application optimized solutions and thereby deliver highly integrated PICs to our customers in a relatively short timeframe. The
co-location of our development and manufacturing teams helps to shorten the time to market and achieve or exceed manufacturing cost and quantity targets.
Finally,
the versatility and scalability of our automated assembly and test equipment enables the manufacturing of a broad range of package assemblies on the same equipment platforms and allows a fast
ramp to volume. The equipment's re-usability and
re-configurability for different manufacturing needs enables us to address changing market requirements quickly and reduces our capital investment needs.
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•
High quality standards.
We have stringent quality control and
management procedures in place for the entire design and manufacturing process from device to package. We follow established introduction processes for new products to ensure product reliability and
manufacturability, including our own in-house quality assurance surveillance procedures and industry-standard quality and testing requirements. Our manufacturing facilities are certified
to the ISO 9001:2000 standard. We employ a custom database that allows us to automatically track the complete history of a manufactured part across our entire manufacturing operation, from the
time the raw materials arrive (i.e., piece part lot information) to the time it ships to our customer (including assembly and test data).
Backlog
Sales of our products generally are made pursuant to purchase orders, often with short lead times. These purchase orders are
typically made without deposits and are often subject to revision or cancellation. The quantities actually purchased by our customers, as well as the shipment schedules, are frequently revised to
reflect changes in our customers' needs and in our supply of products. Because of the possibility of changes in delivery or acceptance schedules, cancellations, modifications or price reductions with
limited or no penalties, we do not believe that backlog is a reliable indicator of our future revenue and do not rely on backlog to manage our business or evaluate our performance. Changes in the
amount of our backlog do not necessarily reflect a corresponding change in the level of actual or potential sales. We define backlog to be the total value of sales orders that have been placed by our
customers for products that have not yet been delivered. As of December 31, 2010, our backlog was $37.7 million compared to a backlog of $16.1 million as of December 31,
2009.
Intellectual property
We have built an extensive intellectual property portfolio both as a core part of our internal research and development and technical
strategies and through our strategic acquisitions, which were driven in part by the acquisition of intellectual property assets. Our intellectual property portfolio extends throughout our vertically
integrated operations, from materials, design, integration and wafer fabrication to module and subsystem assembly and test.
Our
success as a company depends in part upon our ability to obtain and maintain proprietary protections for our technology and intellectual property and prevent others from infringing these
proprietary rights. To accomplish this objective, we rely on a combination of intellectual property rights, including patent, trademark, trade secret, and unfair competition laws, as well as license
agreements and other contractual protections. As an example, we have established broad license agreements for optical technologies with LSI Corporation (formerly Agere Technologies) and TriQuint
Semiconductor as well as with others. We have and will file patent applications to protect our proprietary information, and will pursue such applications, as well as applications for registrations for
other intellectual property rights, as applicable. We have 26 issued patents in the United States. Our patents will expire between 2020 and 2030.
Our
intellectual property covers a broad range of technologies and capabilities that encompasses over six different product families. We seek to protect our intellectual property rights by having our
employees and independent consultants enter into a confidentiality and inventions assignment agreements when they join us. Additionally, we enter into
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non-disclosure
agreements with other third parties who may have access to our proprietary technologies and information.
In
addition, we are applying to register the trademark "CyOptics" in the United States and selected other international jurisdictions.
Customers
We have a global customer base that includes most of the leading module manufacturers and OEMs that sell into the
communications network markets and other emerging end market segments, such as defense and avionics. We sell our products directly to OEMs and indirectly to OEMs through optical module
manufacturers, optical design manufacturers or sub-systems providers.
We
collaborate closely with our customers throughout design cycles that often last several years and entail analyzing their existing technology portfolio and future product roadmap and mapping them to
our tailored manufacturing, technology and product capabilities. As part of the design cycle, our customers also perform extensive qualification tests and field trials of our products before making a
purchasing decision. Due to the lengthy, multi-stage nature of the design cycles and as our technology becomes embedded into our customers' systems or modules, we are able to develop
long-term relationships with them. In instances where commercial solutions are not meeting customer requirements or are not available, especially for next generation optical networking and
for specialized market segments, we have and will continue to establish very strong customer collaborations through development contracts. In the manufacturing phase, our customers then purchase from
us directly or, in many cases, indirectly through their designated contract manufacturers.
During
the year ended December 31, 2010, we sold our products to more than 180 customers. Sales to customers or contract manufacturers in Asia accounted for 76.3%, 70.7% and 62.1% of our total
revenue in the years ended December 2010, 2009 and 2008, respectively. Historically, we believe our customers have increasingly located their manufacturing operations in Asia. Many of our customers
also maintain design teams in North America and Europe and in 2010, 18.9% of our new design wins were added outside of Asia. Although a large percentage of our sales is made to customers or contract
manufacturers in Asia, we believe that a significant number of the systems and modules designed by these customers and incorporating our products are then sold to end users outside Asia.
The
number of leading module manufacturers and OEMs is fairly concentrated, and we currently rely, and expect to continue to rely, on this group of customers for more than 50% of our revenue.
In the years ended December 2010, 2009 and 2008, our ten largest customers accounted for 61.9%, 60.3% and 61.3%, respectively, of our total revenue. In 2010, our largest customer, Finisar, accounted
for 15.3% of our revenue and no other customer accounted for more than 10.0% of sales during this period.
Competition
The market for optical components and modules is highly competitive. While we believe that no company competes against us in all of
our product areas, our competitors range from large
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international
companies offering a wide range of products to smaller companies operating in niche markets. We believe the principal competitive factors in this market are:
•
ability to meet customers' specific requirements;
•
price to performance characteristics;
•
time-to-market and time-to-volume production;
•
ability to design and consistently manufacture products in high volume and high quality;
•
ability to meet customer lead time demands;
•
depth of relationships with and proximity to key customers globally;
•
breadth of product solutions; and
•
financial stability.
We
believe we compete favorably with respect to these factors. We believe our principal competitors are the Optical Divisions of large Japanese conglomerates, including Mitsubishi, NEC Corporation,
NTT Electronics Corporation, Sumitomo Electric Device Innovations, Inc., and Fujitsu Optical Components, as well as smaller, narrowly focused companies, including Multiplex Inc.,
BinOptics Corporation, Santur Corp., Emcore Corporation, u2t Photonics AG and Picometrix. We also compete with various other companies, including some of our customers who evaluate our capabilities
against the merits of manufacturing optical components internally.
Employees
As of March 31, 2011, we employed approximately 550 full-time employees, including 9 in sales and marketing, 49 in product
development, 14 in general and administrative, 36 in business operations and 442 in manufacturing engineering and operations. As of such date, we had 266 employees in the United States and 284
employees internationally. We also engage a number of temporary employees and consultants. Other than our production employees in our Matamoros, Mexico factory, who are subject to a collective
bargaining agreement, none of our employees is represented by a labor union with respect to his or her employment with us. We have not experienced any work stoppages and we consider our relations with
our employees to be good. Our future success will depend upon our ability to attract and retain qualified personnel. Competition for qualified personnel remains intense and we may not be successful in
retaining our key employees or attracting skilled personnel.
Facilities
Our corporate headquarters are located in Breinigsville, Pennsylvania where we lease approximately 117,379 square feet of office,
lab, and manufacturing space. The table below summarizes our facilities as of March 31, 2011. We do not own any real property. We consider our facilities sufficient to meet our current and
planned operational requirements. We believe
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that
suitable additional or substitute space will be available as needed to accommodate any expansion of our operations.
Size (approx. square feet)
Lease expiration
Functions
Breinigsville, PA
(103,000 sq ft.)
October 31, 2017
Manufacturing, Research and Development Lab, Corporate Headquarters
Breinigsville, PA
(14,379 sq ft.)
July 31, 2014
Manufacturing, Corporate Headquarters
South Plainfield, NJ
(21,104 sq ft.)
July 31, 2014
Research and Development Lab, Office and Warehouse
Matamoros, Mexico
(81,750 sq ft.)
December 31, 2011
Manufacturing, Office and Warehouse
New Taipei City, Taiwan
(1,800 sq ft.)
March 15, 2013
Office, Research and Development Lab
Environmental, health and safety matters
Our research and development and manufacturing operations and our products are subject to a variety of federal, state, local and
foreign environmental, health and safety laws and regulations relating to discharges of pollutants to air, water, and soil; the remediation of soil and groundwater contamination; the use, storage,
handling and disposal of hazardous materials; employee health and safety; and the hazardous material content in our products. Liability under environmental, health and safety laws can be joint and
several and without regard to fault or negligence. There can be no assurance that violations of these laws will not occur in the future as a result of human error, accident, equipment failure, or
other causes. We use, store and dispose of hazardous materials in our manufacturing operations and hazardous materials are present in our products. We incur costs to comply with existing
environmental, health and safety requirements, and any failure to comply, or the identification of contamination for which we are found liable, could cause us to incur substantial costs, including
cleanup costs, monetary fines, or civil or criminal penalties, and subject us to property damage and personal injury claims, and result in the suspension of production or alteration of our
manufacturing processes, or curtailment of sales and adverse publicity. We expect that our operations and products will be affected by new environmental requirements on an ongoing basis.
Environmental, health and safety requirements have become more stringent over time, and changes to existing requirements could restrict our ability to expand our facilities, require us to acquire
costly pollution control equipment, or cause us to incur other significant expenses or to modify our manufacturing processes or the hazardous material contents of our products. Some jurisdictions in
which our products are sold have enacted requirements regarding the hazardous material content of certain products. For example, member states of the European Union, are among a growing number of
jurisdictions, which have placed restrictions on the use of lead, among other chemicals, in electronic products, which affects the composition and packaging of our products. The passage of such
requirements in additional jurisdictions, or the tightening of standards or elimination of certain exemptions in jurisdictions where our products are already subject to such requirements, could cause
us to incur significant
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expenditures
to make our products compliant with new requirements, or could limit the markets into which we may sell our products.
Additionally,
increasing efforts to control emissions of greenhouse gases, or GHG, may also impact us. Additional restrictions, limits, taxes, or other controls on GHG emissions could significantly
increase our operating costs and, while it is not possible to estimate the specific impact any final GHG regulations will have on our operations, there can be no assurance that these measures will not
have significant additional impact on us.
Legal proceedings
From time to time, we are involved in various legal proceedings arising from the normal course of business activities. We are not
presently a party to any litigation the outcome of which, we believe, if determined adversely to us, would individually or in the aggregate have a material adverse effect on our business, results of
operations or financial condition.
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Management
Executive officers and directors
The following table sets forth the names, ages and positions of our executive officers and directors as of June 30, 2011:
Name
Age
Position
Ettore J. Coringrato, Jr.
53
President, Chief Executive Officer and Director
Matthew C. Riley
59
Chief Financial Officer and Secretary
Ali A. Abouzari
56
Vice President, Sales
Joseph P. Keska
48
Vice President, Operations
Leonard J.P. Ketelsen
52
Vice President, Product Development
Stefan M. Rochus
48
Vice President, Marketing and Business Development
Erel N. Margalit
50
Director and Chairman of the Board
Mark J. DeNino(1)(2)
58
Director
Robert Finzi(2)(3)
57
Director
John V. Pilitsis(1)(3)
67
Director
Sean D. S. Sebastian(1)(2)
49
Director
Noah D. Yago
35
Director
(1)   Member
of the Audit Committee
(2)   Member
of the Compensation Committee
(3)   Member
of the Nominating and Corporate Governance Committee
Executive officers
Ettore J. Coringrato, Jr.
has served as our President and Chief Executive Officer and
as a member of our board of directors since 2005, and as our Vice President of Business Development from 2003 through the end of 2004. From 2000 until 2003, Mr. Coringrato was
co-founder and served as Chief Financial Officer of CENiX, Inc., an optical start-up that developed high-speed optical modules using an automated manufacturing platform.
Mr. Coringrato also worked for 18 years at AT&T and Lucent Technologies, where he held positions in engineering, marketing and sales, strategic planning, business development and
product management. Mr. Coringrato holds a BS degree in Industrial Engineering and Systems Management and an MBA from The Pennsylvania State University. As our President and Chief Executive
Officer and with extensive experience in strategy, business development, operations, product management and finance, Mr. Coringrato brings many valuable perspectives to our board of directors.
Matthew C. Riley
has served as our Chief Financial Officer since 2005. Prior to his temporary retirement from 2002 to 2005, Mr. Riley was Senior
Vice President & Controller of Agere Systems Inc., a publicly traded semiconductor company, from 2001 to 2002. From 1998 to 2001, he served as Chief Financial Officer of the Lucent
Microelectronics Group. During his career with AT&T and Lucent Technologies, Mr. Riley held financial, information systems and strategic planning positions. Mr. Riley holds a BS in
Business Finance from Mount Saint Mary's University and an MBA from Fairleigh Dickinson University.
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Ali A. Abouzari
has served as our Vice President of Sales since 2003. Previously, Mr. Abouzari was Vice President of Business Development, Sales
and Marketing for Opticalis, a private technology company, where he launched the company's US operations and recruited the senior management team. Prior to that, he served as Director of Marketing for
Agere Systems, and was responsible for marketing initiatives and product strategies for the Microelectronics Group for the Asia/Pacific and China regions. Prior to that, Mr. Abouzari worked at
Lucent Technologies, where he was responsible for marketing optoelectronic components products worldwide to telecom and data networking customers. Mr. Abouzari holds a BS in Mathematics and
Industrial Engineering from the University of Utah, and an ME in Mechanical Engineering/Business Administration from the University of Colorado.
Joseph P. Keska
has served as our Vice President of Operations since 2005. Previously, he served as the Director of Package Development and
Manufacturing Operations at TriQuint Semiconductor, a publicly traded technology company. Before that, he was the Director of Process Development for Agere Systems Inc. Mr. Keska began
his career at AT&T where he held positions in manufacturing and engineering, and subsequently joined Bell Labs where he was a member of the technical staff responsible for receiver development.
Mr. Keska holds a BS in Electrical Engineering from the University of Scranton.
Leonard J.P. Ketelsen
has served as our Vice President of Product Development since 2005. From 2003 to 2005, Dr. Ketelsen worked at TriQuint
Semiconductor, first in its Source Laser Research and Development Department and later in its Optoelectronics Research and Development Department. From 1985 to 2003, Dr. Ketelsen worked for
Bell Labs, AT&T and Lucent Technologies, where he held positions in the Semiconductor Laser Development Department, Optoelectronics Division and the Photonic Research Laboratory. He holds a BS in
Physics from Clarkson College of Technology, and a Masters and a PhD in Physics from the University of Illinois at Urbana-Champaign.
Stefan M. Rochus
has served as our Vice President of Marketing and Business Development since 2005. From 2003 to 2005, he served as a Marketing Director
for TriQuint Semiconductor's Optoelectronics Division and held various director positions in marketing and product line management at Lucent Technologies and Agere Systems managing their EDFA, pump
laser and passives businesses. From 2000 until 2002, Dr. Rochus served as a product line director for Lucent Technologies and Agere Systems Inc. Dr. Rochus also ran Lucent Technologies'
European optoelectronics sales and marketing operations from 1998 to 2000. Dr. Rochus holds a Masters of Science in Optoelectronics from the Technical University of Braunschweig and a PhD in
Electrical Engineering from the Technical University of Munich.
Non-employee directors
Erel N. Margalit
has served on our board of directors since 2007 and as Chairman of
the Board since October 2007. He also served on our board of directors from 1999 to 2006. Dr. Margalit is the founder and chairman of Jerusalem Venture Partners, a leading Israeli venture
capital fund which he founded in 1993. Over the last 18 years, Dr. Margalit has orchestrated some of the largest exits to come out of Israel. Prior to this, Dr. Margalit was the
Director of Business Development for the City of Jerusalem. Dr. Margalit also served on the board of directors of Cogent Communications, Inc., Allot Communications Ltd. and Qlik
Technologies, Inc., as well as on the board of directors of numerous private companies including Siano Mobile Silicon, Inc. and Cyber-Ark Software, Ltd. He holds a BA
in Philosophy from Hebrew University, an MA and
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a
PhD in Philosophy from Columbia University and serves on the Hebrew University Board of Governors. As founder of Jerusalem Venture Partners, our largest stockholder that acquired a controlling
interest in January 2011, Dr. Margalit has a thorough understanding of our business and industry and brings substantial experience in growth-oriented technology companies having both invested
in and served on the board of directors of numerous companies.
Mark J. DeNino
has served on our board of directors since 2010. Mr. DeNino has been a Managing Director at TL Ventures since 1994. Prior to
joining TL Ventures, Mr. DeNino worked at Fidelity Bank (now Wells Fargo) and also helped create an S.B.I.C., Fidelcor Capital, to invest in early-stage technology companies. He holds a BS in
Finance and Accounting from Boston College and an MBA from Harvard Business School. Mr. DeNino's extensive investment experience in technology companies and his past service on the board of
directors of numerous public and private companies make him a valuable asset to our board.
Robert Finzi
has served on our board of directors since April 2009. In May 1991, Mr. Finzi joined Sprout Group, a venture capital firm, and since
November 2003 served as co-managing partner until April 2010 and is now Managing Partner. From October 1984 to May 1991, Mr. Finzi was a partner of Merrill Lynch Venture Capital and
was promoted to general partner in 1985. From May 1983 to October 1984, Mr. Finzi was an associate at Menlo Ventures, a venture capital firm. From August 1976 to August 1981, Mr. Finzi
was a consultant at Arthur Andersen's Administrative Services Division, a consultancy now known as Accenture Ltd. Mr. Finzi currently serves on the board of directors of Aurora
Networks, Inc., Cleantech Group, Teachscape and Womens' Health USA, each a privately-held company. Mr. Finzi previously served on the board of directors of Calix and Concur
Technologies. Mr. Finzi holds an MBA from Harvard Business School, where he received the Baker Scholar Designation, an MS degree in Industrial Engineering from Lehigh University and a BS in
Industrial Engineering from Lehigh University. Mr. Finzi brings to our board of directors extensive experience in board governance, financial management, operations and reporting and management
information systems.
John V. Pilitsis
has served on our board of directors since 2001. Dr. Pilitsis is the Managing Partner of Pilitsis &
Associates, LLC. From 2001 until 2005, Dr. Pilitsis served as our Chief Executive Officer and President. He served as the CEO of FiTEL Technologies, Inc., currently a publicly
traded company in Canada, from 1999 until 2001. In addition, he was the CEO of MKE-Quantum Components LLC from 1998 to 1999 and the President of the Optoelectronics Group of Lucent
Technologies from 1993 until 1999. He also worked as the Vice President of International Marketing and Sales for AT&T Microelectronics, Inc., formerly a division of Lucent Technologies from
1990 to 1993. Dr. Pilitsis served on the board of directors of Syntune, Inc., a private Indium Phosphide photonics components company, until 2009. Dr. Pilitsis holds a BS in
Mechanical Engineering from Farleigh Dickinson University, and a Master of Science and a PhD from the University of Buffalo in Systems Engineering. Due to Dr. Pilitsis' long history with us and
strong leadership and management background, we believe he will be able to continue to make valuable contributions to our board and company as we transition from a private to a public company.
Sean D.S. Sebastian
has served on our board of directors since 2005. Mr. Sebastian is a Partner at Birchmere Ventures, where he has worked since
its formation in 1996. Prior to founding Birchmere Ventures, he served in PNC Bank's Corporate Finance Group. He was previously a founder and CEO of the Telford Group, a technology consulting firm to
financial services clients. He also provided management consulting services to major banking and insurance
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clients
at International Systems Services. Mr. Sebastian holds a BS in Mechanical Engineering from Worcester Polytechnic Institute and an MBA from Rensselaer Polytechnic Institute.
Mr. Sebastian brings substantial investing experience in the technology sector and he has been instrumental in our development since joining our board in 2005.
Noah D. Yago
has served on our board of directors since January 2011. Mr. Yago is a Principal at Jerusalem Venture Partners, where he has worked
since 2009 and is a director of several private companies in the group's portfolio. Prior to joining Jerusalem Venture Partners, Mr. Yago was a Vice President at Millennium Technology Ventures
and an Associate at Veronis Suhler Stevenson. He also worked at Saban Capital Group following his experience as the co-founder of Subvergent Media Studios, a Los Angeles-based interactive
consultancy serving the media and apparel industries. He holds a BA in Computer Science and German from Tufts University and an MBA from the Stanford Graduate School of Business. Mr. Yago
brings to our board significant experience in capital raising, strategic transactions and complex financing structures and will be a valuable asset in our transition from a private to public company.
Board composition
Our Board of Directors is currently composed of seven members. Four of our directors are independent within the meaning of the
independent director guidelines of The NASDAQ Stock Market. Immediately prior to this offering, our Board of Directors will be divided into three staggered classes of directors. At each annual meeting
of stockholders, a class of directors will be elected for a three-year term to succeed the same class whose terms are then expiring. The terms of the directors will expire upon the
election and qualification of successor directors at the Annual Meeting of Stockholders to be held during the years 2012 for the Class I directors, 2013 for the Class II directors and
2014 for the Class III directors.
•
Our Class I directors will be                    ,
                    and                    .
•
Our Class II directors will
be                    and                    .
•
Our Class III directors will
be                    and                    .
Our
amended and restated certificate of incorporation and bylaws provide that the number of our directors, which is currently seven members, shall be fixed from time to time by a resolution of the
majority of our Board of Directors. Each officer serves at the discretion of the Board of Directors and holds office until his successor is duly elected and qualified or until his or her earlier
resignation or removal. There are no family relationships among any of our directors or executive officers.
The
division of our Board of Directors into three classes with staggered three-year terms may delay or prevent a change of our management or a change of control. See "Description of
capital stock—Anti-takeover effects of Delaware law and our certificate of incorporation and bylaws" for a discussion of other anti-takeover provisions found in our
certificate of incorporation.
Director independence
Upon the completion of this offering, we anticipate that our common stock will be listed on The NASDAQ Global Select Market. Under
the rules of The NASDAQ Stock Market,
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independent
directors must comprise a majority of a listed company's board of directors within a specified period of the completion of this offering. In addition, the rules of The NASDAQ Stock Market
require that, subject to specified exceptions, each member of a listed company's audit, compensation and corporate governance and nominating committees be independent. Audit committee members must
also satisfy the independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended. Under the rules of The NASDAQ Stock Market, a director will
only qualify as an "independent director" if, in the opinion of that company's board of directors, that person does not have a relationship that would interfere with the exercise of independent
judgment in carrying out the responsibilities of a director.
In
order to be considered to be independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of
the audit committee, the board of directors, or any other board committee:
(1) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries; or (2) be an affiliated person of the listed
company or any of its subsidiaries.
In
July, 2011, our Board of Directors undertook a review of its composition, the composition of its committees and the independence of each director. Based upon information requested from and provided
by each director concerning his background, employment and affiliations, including family relationships, our board of directors has determined that none of Messrs. Finzi, DeNino or Sebastian or
Dr. Pilitsis, representing four of our seven directors, has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and
that each of these directors is "independent" as that term is defined under the rules of The NASDAQ Stock Market. Our Board of Directors also determined that Messrs. DeNino and Sebastian and
Dr. Pilitsis, who comprise our audit committee, Messrs. DeNino, Finzi and Sebastian, who comprise our compensation committee, and Mr. Finzi and Dr. Pilitsis, who comprise
our nominating and corporate governance committee, satisfy the independence standards for those committees established by applicable SEC rules and the rules of The NASDAQ Stock Market. In making this
determination, our Board of Directors considered the relationships that each non-employee director has with our company and all other facts and circumstances our board of directors deemed
relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director.
Board committees
Our Board has an audit committee, a compensation committee and a nominating and corporate governance committee, each of which has the
composition and the responsibilities described below.
Audit committee.
Our audit committee oversees our corporate accounting and financial reporting process and assists the Board of Directors in monitoring our
financial systems and our legal and regulatory compliance. Our audit committee is responsible for, among other things:
•
appointing, compensating and overseeing the work of our independent auditors;
•
approving engagements of the independent auditors to render any audit or permissible non-audit services;
•
reviewing the qualifications and independence of the independent auditors;
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•
monitoring the rotation of partners of the independent auditors on our engagement team as required by law;
•
reviewing our financial statements and reviewing our critical accounting policies and estimates;
•
reviewing the adequacy and effectiveness of our internal controls; and
•
reviewing and discussing with management and the independent auditors the results of our annual audit, our quarterly
financial statements and our publicly filed reports.
The
members of our audit committee are Messrs. DeNino and Sebastian and Dr. Pilitsis. Mr. Sebastian is our audit committee chairman and our board of directors has designated each
of Dr. Pilitsis and Mr. Sebastian as an "audit committee financial expert," as defined under the applicable rules of the Securities and Exchange Commission. Our Board of Directors has
concluded that the composition of our audit committee meets the requirements for independence under the current requirements of The NASDAQ Stock Market and SEC rules and regulations. We believe that
the functioning of our audit committee complies with the applicable requirements of The NASDAQ Stock Market and SEC rules and regulations.
Compensation committee.
Our compensation committee oversees our corporate compensation policies, plans and programs. The compensation committee is responsible for,
among other things:
•
reviewing and recommending policies, plans and programs relating to compensation and benefits of our directors, officers
and employees;
•
reviewing and recommending compensation and the corporate goals and objectives relevant to compensation of our Chief
Executive Officer;
•
reviewing and approving compensation and corporate goals and objectives relevant to compensation for executive officers
other than our Chief Executive Officer;
•
evaluating the performance of our executive officers in light of established goals and objectives;
and
•
administering our equity compensations plans for our employees and directors.
The
members of our compensation committee are Messrs. DeNino, Finzi and Sebastian. Mr. Finzi is the chairman of our compensation committee. Our Board of Directors has determined that
each member of our compensation committee is independent within the meaning of the independent director guidelines of The NASDAQ Stock Market. We believe that the composition of our compensation
committee meets the requirements for independence under, and the functioning of our compensation committee complies with, any applicable requirements of The NASDAQ Stock Market and SEC rules and
regulations.
Nominating and corporate governance committee.
Our nominating and corporate governance committee oversees and assists our Board of Directors in reviewing and
recommending
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corporate
governance policies and nominees for election to our Company's Board of Directors. The nominating and corporate governance committee is responsible for, among other
things:
•
evaluating and making recommendations regarding the organization and governance of the Board of Directors and its
committees;
•
assessing the performance of members of the Board of Directors and making recommendations regarding committee and chair
assignments;
•
recommending desired qualifications for Board of Directors membership and conducting searches for potential members of the
Board of Directors; and
•
reviewing and making recommendations with regard to our corporate governance guidelines.
The
members of our nominating and corporate governance committee are Mr. Finzi and Dr. Pilitsis. Dr. Pilitsis is the chairman of our nominating and corporate governance committee.
Our Board of Directors has determined that each member of our nominating and corporate governance committee is independent within the meaning of the independent director guidelines of The NASDAQ Stock
Market.
Our
Board of Directors may from time to time establish other committees.
Director compensation
With the exception of Dr. Pilitsis, no members of our board of directors received any compensation from us in their role as
directors in the fiscal year ended December 31, 2010, nor did they have any stock option awards vested or outstanding as of December 31, 2010.
We
paid Dr. Pilitsis $6,250 in consulting fees for his role as a director during the fiscal year ended December 31, 2010. As of December 31, 2010, Dr. Pilitsis had 35,094
stock options vested and outstanding that were awarded to him in March 2002 when he served as our chief executive officer.
Upon
consummation of our initial public offering, non-employee directors will receive an annual retainer of $             . The chair of the audit committee will be paid an additional
annual retainer of $             , and members of the audit committee other than the chair will be paid an additional annual retainer of
$             . The chair of the compensation committee
will be paid an additional annual retainer of $             , and members of the compensation committee other than the chair will be paid an additional annual retainer of
$             . The chair
of the corporate governance and nominating committee will be paid an additional annual retainer of $             , and members of the corporate governance and nominating committee other
than the
chair will be paid an additional annual retainer of $             . The lead independent director will be paid an additional annual retainer of
$             .
Under
the policy, each non-employee director, who first becomes a non-employee director following the effective date of the first registration statement filed by us and
declared effective with respect to any class of our securities, will be automatically granted a stock option to
purchase                            shares of our common stock on the date such person first
becomes a non-employee director. A director who is an employee and
who ceases to be an employee, but who remains a director will not receive such an initial award.
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In
addition, each non-employee director will be automatically granted an annual stock option to
purchase                            shares of our common stock on the date of each annual
meeting beginning on the date of the first annual meeting that is held at least six months after such non-employee director received his or her initial award. In connection with the
pricing of this initial public offering, each non-employee director serving on our Board of Directors at the time of this offering will be automatically granted an option to purchase
              shares of our common stock at the price per share at which such common stock is sold in this offering.
The
exercise price of all stock options granted pursuant to the policy will be equal to the fair market value of our common stock on the date of grant. The term of all stock options will be
              years. Subject to the adjustment provisions of the 2011 Equity Incentive Plan, initial awards will vest annually over three years, provided such non-employee
director continues to serve as a director through each such date. Subject to the adjustment provisions of the 2011 Equity Incentive Plan, the annual awards, including such awards granted in connection
with this offering, will vest on the first anniversary of the date of grant, provided such non-employee director continues to serve as a director through such date.
The
administrator of the 2011 Equity Incentive Plan in its discretion may change or otherwise revise the terms of awards granted under the outside director equity compensation policy.
In
the event of a "change in control," as defined in our 2011 Equity Incentive Plan, with respect to awards granted under the 2011 Equity Incentive Plan to non-employee directors, the
participant non-employee director will fully vest in and have the right to exercise awards as to all shares underlying such awards and all restrictions on awards will lapse, and all
performance goals or other vesting criteria will be deemed achieved at             % of target level and all other terms and conditions met.
Code of business conduct and ethics
Prior to the completion of this offering, we will adopt a code of business conduct that is applicable to all of our employees,
officers and directors. In addition, we will adopt a code of ethics that is applicable to our chief executive and senior financial officers.
Compensation committee interlocks and insider participation
None of the members of our compensation committee is an officer or employee of our company. None of our executive officers currently
serves, or in the past year has served, as a member of the Board of Directors or compensation committee of any entity that has one or more executive officers serving on our Board of Directors or
compensation committee.
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Compensation discussion and analysis
This Compensation discussion and analysis provides information about the material components of our executive compensation program
for:
Name
Position(s)
Ettore J. Coringrato, Jr.
President, Chief Executive Officer and Director
Matthew C. Riley
Chief Financial Officer and Secretary
Leonard J.P. Ketelsen
Vice President, Product Development
Joseph P. Keska
Vice President, Operations
Stefan M. Rochus
Vice President, Marketing and Business Development
We refer to these executive officers collectively in this Compensation discussion and analysis and the related compensation tables as the "named executive
officers."
Specifically,
this Compensation discussion and analysis provides an overview of our executive compensation philosophy, the overall objectives of our executive compensation program and each
compensation component that we provide. In addition, we explain how and why the compensation committee of our board of directors, or the Committee, recommended, and our board of directors approved,
the specific compensation policies and decisions involving our executive officers during 2010.
This
Compensation discussion and analysis contains forward-looking statements that are based on our current plans, considerations, expectations and determinations regarding future compensation
programs. The actual compensation programs that we adopt in the future may differ materially from currently planned programs as summarized in this discussion.
Executive compensation philosophy and objectives
Our compensation philosophy is based on the following objectives and principles:
•
attract, retain and motivate top-level executive talent;
•
provide compensation levels and structures that are both competitive with our peer companies and fiscally responsible;
•
create a culture in which executive compensation aligns with our pay-for-performance business
model;
•
align the interests of our executive officers and stockholders by providing equity incentives, while avoiding unreasonable
levels of stockholder dilution; and
•
maintain simplicity, transparency and ease of administration.
Compensation program design
The compensation of our executive officers, including our named executive officers, consists of a base salary, an annual cash bonus
opportunity, equity-based awards and employee-benefits programs.
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To
date, the primary components of our executive compensation program have been base salary and annual cash bonus opportunities. We have emphasized cash compensation, especially bonuses, to focus our
employees on the achievement of specific near-term financial, strategic and operational objectives that will further our longer-term growth objectives. Though we believe the
cash compensation we offer to our executive officers is competitive, we have historically offered base salaries at the lower end of an identified market range as determined in the collective judgment
of our board of directors, and have emphasized cash bonuses to reward outstanding performance. We believe that cash bonuses are the best motivator for our employees and reflect our
pay-for-performance philosophy.
In
addition, we have granted stock options to purchase shares of our common stock to our executives. We believe that stock options offer our key employees, including our named executive officers, a
valuable long-term incentive that aligns their interests with the interests of our stockholders. We also believe that, for technology companies, stock-based compensation in the form of
stock options continues to be a significant motivator in attracting and retaining employees. Though historically our equity compensation has been towards the low end for a technology company, as we
transition to a public company, we expect that we will rebalance the compensation packages to place greater emphasis on equity compensation, similar to our anticipated peer group companies. We believe
this shift in emphasis will encourage our employees to focus on growing our overall enterprise value, and correspondingly, to create sustainable long-term value for our stockholders.
To
date, we have not employed any policies or guidelines for allocating compensation between current and long-term compensation, between cash and non-cash compensation, or
among different forms of non-cash compensation.
Compensation-setting process
Role of the board and compensation committee
Prior to the formation of the Committee several years ago, our board of directors primarily determined the compensation for our named executive
officers. Since its formation, the Committee has been responsible for overseeing our executive
compensation philosophy and compensation programs, consulting with management on compensation actions and decisions and recommending compensation packages, including cash compensation, equity awards
and benefits, to our board of directors for its approval. Our board of directors has approved a charter for the Committee, which was last revised in May 2010, and we intend to adopt a new charter in
connection with this offering to comply with the applicable rules and regulations of a public company listed on The NASDAQ Stock Market.
Following
this offering, we intend that the Committee will assume the responsibility of administering our executive compensation program as well as determining and approving the compensation for our
executive officers, including the named executive officers, from our board of directors. The Committee intends to review on a periodic basis our executive compensation program, including any incentive
compensation plans, to determine whether they are appropriate, properly coordinated and achieve their intended purposes. The Committee will have the authority to establish and implement any
modifications or new plans or arrangements.
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Role of management
In carrying out their responsibilities, our board of directors and the Committee have worked with members of our management team, including our chief
executive officer. Our board of directors and the Committee also work with our chief financial officer to evaluate the financial, accounting and tax implications, and with our outside legal counsel to
evaluate the legal implications of our various compensation programs. Historically, our management team has assisted our board of directors and the Committee by providing information on corporate and
individual performance, market data and management's perspective and recommendations on compensation matters.
Typically,
our chief executive officer has made recommendations to our board of directors and the Committee regarding the compensation of our employees, including our executive officers (except with
respect to his own compensation), and attends that portion of the meetings in which compensation matters are discussed (except he recuses himself from that portion of meetings with respect to
discussions involving his own compensation).
While
our board of directors and the Committee have solicited and reviewed our chief executive officer's recommendations and proposals with respect to compensation-related matters, they have only used
these recommendations and proposals as one factor in making compensation decisions for our employees, including our executive officers.
Role of compensation consultant
The Committee is authorized to retain the services of compensation consultants and other advisors from time to time, as it sees fit, in connection
with the establishment of cash and equity compensation plans and arrangements and related policies.
In
July 2011, the Committee engaged Compensia, Inc., a national compensation consulting firm providing executive compensation advisory services, to assist it in developing a set of executive
compensation guiding principles, to evaluate the competitiveness of our executive officers' compensation and to assist the Committee in developing public company-oriented executive and director
compensation programs. Compensia serves at the discretion of the Committee. Compensia has not provided any other services to us in 2011.
Use of competitive data
To assess the competitiveness of our executive compensation program and compensation levels going forward, the Committee has instructed Compensia to
develop a peer group of comparable technology companies. The companies comprising the peer group will be selected by the Committee, with the assistance of Compensia, on the basis of their similarity
to us in size as determined by factors such as revenue and market capitalization, geography and industry sector. Data from this peer group will be used to assess current compensation levels and to
assist the Committee in setting compensation levels for 2011 and thereafter. Following development of the initial peer group, the Committee intends to review the peer group at least annually and make
adjustments to its composition as necessary. In 2010, the Committee did not use a peer group to assess the competitiveness of our executive compensation program.
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Executive compensation program components
The following describes each component of our executive compensation program, the rationale for each component and how awards are
determined.
Base salary
Base salary represents the fixed portion of our executive officers' compensation and is set at a minimum level sufficient to attract, retain and
motivate highly talented executive officers when included as one component of our overall total compensation opportunity.
In
past years, our board of directors and the Committee have reviewed the base salaries of our executive officers, including the named executive officers, in the second quarter of each year, taking
into consideration our chief executive officer's base salary recommendations, the executive officer's performance, individual contributions, responsibilities, experience, prior salary level and, in
the case of a promotion, position. In the future, we expect the Committee to continue to conduct an annual review of each executive officer's base salary, with input from our chief executive officer,
and to make adjustments it determines to be reasonable and necessary after a review of similar considerations, but also including competitive market practices, including a review of the compensation
policies of our peer group.
The
base salaries of our named executive officers were increased between 1.2% and 4.1% from 2009 to 2010 and between 6.2% and 9.7% from 2010 to 2011. The primary reasons for these increases were to
reward individual performance and contributions to the company as determined by our board of directors following recommendations by the Committee.
Cash bonuses
Historically, the Committee has recommended and our board of directors has established parameters for annual cash bonus payments to our executive
officers, including the named executive officers, and other key employees. Bonus payments have been based on the overall financial performance and strategic and operating achievements of the company,
as well as the individual performance and overall compensation of the employee, and were considered by the Committee and our board of directors to be appropriate individually and in the aggregate
based on our overall performance.
2010 Cash bonus plan
In April 2010, following consultations with management, including our chief executive officer, the Committee recommended and our board of
directors approved the general parameters for an annual cash bonus plan for 2010 to reward our executive officers, including our named executive officers. The 2010 cash bonus plan was primarily based
on the degree of achievement of certain financial performance and operational objectives, but the Committee and our board of directors also desired to retain the flexibility to make final bonus
determinations based on each participant's individual performance and contributions to the company. As part of the 2010 cash bonus plan, the Committee recommended and our board of directors approved
2010 target bonus opportunities and target upside bonus amounts for each named executive officer, calculated as a percentage of each officer's base salary (as shown in the table below).
For
2010, the Committee and our board of directors selected revenue, gross margin, net income and end of period cash as the principal corporate financial and operational metrics on which to determine
the overall bonus pools, as these metrics were deemed aligned with our
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financial
performance and the creation of stockholder value. Each of these metrics was assigned a weight within each executive officer's target bonus opportunity. Further, the size of each award was
determined by whether we achieved at least a threshold performance level for the year in each financial and operational objective. The Committee believed that these financial metrics, conditions and
thresholds would encourage our executive officers to manage our business in a cost-effective manner and make decisions that would contribute to revenue growth and overall profitability.
The
following weightings were applied for our named executive officers:
•
revenue—30%;
•
gross margin—15-25%;
•
net income—10-15%;
and
•
end of period cash—10-30%.
The
remainder of each target bonus opportunity consisted of company strategic, development and manufacturing objectives that were designed separately for each executive officer. Annual revenue was
generally weighted more heavily than the other metrics because, at this point in our development, the Committee and our board of directors believed that revenue growth was the primary driver of
near-term value. For 2010, our target revenue was $81.7 million, our target gross margin was 21.3%, our target net income was $(1.9 million) and our target end of period cash
was $10.2 million. If we achieved between 80-99.99% of the target for each metric, each executive officer would be paid between 50%-99.99% of his or her target bonus for
that metric, calculated on a sliding scale, with no payment for performance less than 80% of the target level. If we achieved between 100-109.99% of the target for a metric, the executive
officers would be paid 100% of their target bonus for that metric. If we achieved 110% or above the target for a metric, the executive officers would be paid 110% of their target bonus for that
metric, with payment of the full target upside bonus opportunities (as shown in the table below) for performance of 110% or above the targets in all metrics. The Committee and our board of directors
believed that the target levels for these financial and operations objectives, and the performance thresholds, were attainable but challenging. In addition, the Committee and our board of directors
reserved an additional $100,000 in the bonus pool to use in its discretion to award outstanding individual performance. This bonus structure is similar to the practice we have implemented in prior
years.
In
February 2011, following consultation with management, including our chief executive officer, the Committee and our board of directors determined the amount of the overall cash bonus awards for our
executive officers, including our named executive officers, and other key employees for 2010. In making these determinations, the Committee evaluated our financial and operating performance and the
level of achievement against the financial and operational objectives for the year. The Committee and our board of directors determined that we had exceeded the target level objectives for each of the
four principal metrics as follows: We achieved 132.6% of our annual revenue target, 132.4% of our annual gross margin target, 494.7% of our net income target and 121.6% of our end of period cash
target. The Committee and our board of directors determined that these results supported the payment of the target upside bonus to each of our named executive officers as set forth below. In addition,
the Committee recommended and our board of directors approved additional discretionary bonuses to our chief executive officer and chief financial officer of $50,000 and $25,000,
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respectively,
based on their individual contributions, specifically in connection with securing private financing for us in the first quarter of 2011.
The
following table summarizes the original target bonus opportunities under the 2010 bonus incentive plan and the actual cash bonuses paid to our named executive officers for 2010 performance:
Name
2010 Target bonus (% of base salary)(1)
2010 Target
upside
bonus (% of
base salary)
2010 Target bonus($)(1)
2010 Target
upside bonus
($)(1)
2010 Actual
bonus ($)
(includes
discretionary
bonus)
2010 Actual
bonus (% of
base salary)(1)
Ettore J. Coringrato, Jr.
36%
55%
80,000
120,000
$
170,000
77%
Matthew C. Riley
25%
35%
49,000
68,600
$
93,600
48%
Leonard J.P. Ketelsen
25%
35%
42,500
59,500
$
59,500
35%
Joseph P. Keska
25%
35%
40,000
56,000
$
56,000
35%
Stefan M. Rochus
25%
35%
40,000
56,000
$
56,000
35%
(1)   The target bonuses are calculated based on percentages of the named executive officer's base salary currently in place at the time the target bonuses are determined. Once the target
bonuses have been determined, they are not adjusted even if the name executive receives a base salary adjustment later in the year.
2011 Cash bonus plan
In February 2011, following consultations with management, including our chief executive officer, the Committee recommended and our board of
directors approved the general parameters for an annual cash bonus plan for 2011. Structured similar to the 2010 cash bonus plan, the 2011 cash bonus plan is primarily based on certain financial
performance and operational objectives, namely revenue, gross margin, net income before taxes and end of period cash. The target bonus opportunities for our named executive officers were set from
25-35% of base salary, and the upside target bonus opportunities were set from 35-50% of base salary. The Committee and our board of directors also tentatively set aside
$100,000 for discretionary bonuses to award outstanding individual performance.
Equity compensation
We use equity awards to motivate and reward our executive officers, including the named executive officers, for long-term corporate
performance based on the value of our common stock, and to align the interests of our executive officers with those of our stockholders. We believe that stock options, when granted with exercise
prices equal to the fair market value of our common stock on the date of grant, provide an appropriate long-term incentive for our executive officers, because
they reward them only to the extent that our stock price increases and stockholders realize value following their grant date.
To
promote the long-term incentive and retention features of equity compensation, we have typically granted stock options subject to our standard four-year vesting schedule.
Under the vesting schedule, 25% of the stock option becomes exercisable one year after a specified vesting commencement date, and then vesting occurs quarterly thereafter over the remaining
three-year period. On occasion, we have also granted stock options with non-standard vesting or early exercise features, mostly in case-by-case
situations for senior executives, directors, consultants, advisors and other employees.
We
have not applied a rigid formula to determine the size of the stock option awards that have been granted to our executive officers. Instead, these awards were determined in the judgment of the
Committee and our board of directors taking into consideration, among other
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things,
the performance of the company and the executive officer during the past year, the prospective role and responsibility of the executive officer, competitive factors, the amount of equity-based
compensation held by the executive officer and the portion that is vested or unvested and the cash compensation received by the executive officer. Based upon these factors, our board of directors or
the Committee has determined the size of each stock option award at levels it considers appropriate to create a meaningful opportunity for long-term incentive predicated on the creation of
long-term stockholder value.
To
date, we have not granted any equity awards other than stock options to our executive officers. Typically, our executive officers have received an initial stock option grant at the time of hire,
with only periodic additional awards thereafter. In connection with this offering, we expect the Committee to oversee the development of a long-term equity incentive plan. While this plan
is likely to provide for a variety of different types of equity awards, we expect that, reflecting our focus on long-term growth, the Committee will continue to use stock options as our
primary form of long-term incentive compensation. We also expect that the Committee may decide to grant equity awards to our executive officers on a more frequent (for example, annual)
basis than in the past, to the extent that the Committee determines it to be in the best interests of the company based upon its review of competitive market data.
There
were no equity awards granted to the named executive officers during 2010.
Retirement and other benefits
We have established a tax-qualified Section 401(k) retirement savings plan for our executive officers, including the named
executive officers and other employees. Under this plan, participants may elect to make pre-tax contributions, not to exceed the applicable statutory income tax limitation (which was
$16,500 in 2010). In addition, we may make discretionary contributions to the plan in any year, up to certain limits, although we have not made any such contributions to date. We intend for the plan
to qualify under Section 401(a) of the Internal Revenue Code so that contributions by participants to the plan, and income earned on plan contributions, are not taxable to participants until
withdrawn from the plan.
Additional
benefits received by our executive officers, including the named executive officers, include medical and dental benefits, medical and dependent care flexible spending accounts,
short-term and long-term disability insurance, travel, accidental death and dismemberment insurance and basic life insurance coverage. These benefits are provided on the same
basis to all of our full-time employees.
We
design our employee benefits programs to be affordable and competitive in relation to the market, as well as compliant with applicable laws and practices. We adjust our employee benefits programs
as needed based upon regular monitoring of applicable laws and practices and the competitive market.
Historically
we have not provided perquisites or other personal benefits to our executive officers. Currently, we do not view perquisites or other personal benefits as a significant component of our
executive compensation program. In the future, however, we may provide such items in limited circumstances, such as where we believe it is appropriate to assist an individual in the performance of his
or her duties, to make our executive officers more efficient and effective and for recruitment, motivation or retention purposes. All future practices with respect to perquisites or other personal
benefits will be approved and subject to periodic review by the Committee.
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Employment agreements and post-employment compensation
We have entered into employment offer letters with each of our named executive officer other than our chief executive officer,
usually as part of the hiring process, that provide for "at-will" employment, base salary, eligibility to participate in the executive bonus plans, standard employee benefit plan
participation and recommendations for initial stock option grants. These agreements are subject to our standard proprietary information and invention assignment terms. We have entered into an
employment agreement with our chief executive officer that contains certain severance and change of control payments and benefits. This arrangement (including potential payments and terms) are
discussed in more detail in the "Executive compensation—Employment agreements and potential payments upon termination or change in control" section below.
We
believe that these agreements are an important retention tool, and incent the named executive officers to maintain continued focus and dedication to their assigned duties and to
maximize stockholder value. The terms of these agreements were determined after review by the Committee of our retention goals for each named executive officer, as well as analysis of market data and
as a result of individual negotiations with each executive officer.
Other compensation policies
Stock ownership guidelines
As of the date of this prospectus, we have not implemented a policy regarding minimum stock ownership requirements for our executive officers,
including the named executive officers.
Compensation recovery policy
As of the date of this prospectus, we have not implemented a policy regarding retroactive adjustments to any cash or equity-based incentive
compensation paid to our executive officers and other employees where the payments were predicated upon the achievement of financial results that were subsequently the subject of a financial
restatement. We intend to adopt a general compensation recovery, or clawback, policy covering our annual and long-term incentive award plans and arrangements once the SEC adopts final
rules implementing the requirement of Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Tax and accounting considerations
Deductibility of executive compensation
Generally, Section 162(m) of the Internal Revenue Code disallows a tax deduction to any publicly-held corporation for any
remuneration in excess of $1 million paid in any taxable year to its chief executive officer and each of its three next most highly-compensated executive officers (other than its chief
financial officer). Remuneration in excess of $1 million may be deducted if, among other things, it qualifies as "performance-based compensation" within the meaning of the Internal Revenue
Code. In this regard, the compensation income realized upon the exercise of stock options granted under a stockholder-approved stock option plan generally will be deductible so long as the options are
granted by a committee whose members are non-employee directors and certain other conditions are satisfied.
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As
we are not currently publicly-traded, the Committee has not previously taken the deductibility limit imposed by Section 162(m) into consideration in setting compensation for our executive
officers. We expect that when the Committee deems advisable, it will adopt a policy that, where reasonably practicable, we will seek to qualify the variable compensation paid to our executive officers
for the "performance-based compensation" exemption from this deductibility limit. As such, in approving the amount and form of compensation for our executive officers in the future, the Committee will
consider all elements of the cost to us of providing such compensation, including the potential impact of Section 162(m). The Committee may, in its judgment, authorize compensation payments
that do not comply with any of the exemptions in Section 162(m) when it believes that such payments are appropriate to attract and retain executive talent.
Taxation of "parachute" payments
Sections 280G and 4999 of the Internal Revenue Code provide that executive officers, persons who hold significant equity interests and certain
other highly-compensated service providers may be subject to an excise tax if they receive payments or benefits in connection with a change in control of the company that exceeds certain
prescribed limits, and that the company (or a successor) may forfeit a deduction on the amounts subject to this additional tax. We did not provide any executive officer, including any named executive
officer, with a "gross-up" or other reimbursement payment for any tax liability that he or she might owe as a result of the application of Sections 280G or 4999 during 2010 and we
have not agreed and are not otherwise obligated to provide any executive officer, including any named executive officer, with such a "gross-up" or other reimbursement.
Compensation risk assessment
We believe that although a portion of the compensation provided to our executive officers and other employees is performance-based,
our executive compensation program does not encourage excessive or unnecessary risk taking. As a result, we do not believe that our compensation programs are reasonably likely to have a material
adverse effect on the company. In fact, our compensation programs are designed to encourage our executive officers and other employees to remain focused on both short-term and
long-term strategic goals, in particular in connection with our pay-for-performance compensation philosophy.
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Executive compensation
Summary compensation table
The following table presents, for services rendered to the company during 2010, summary information regarding the total compensation
awarded to, earned by or paid to each of the named executive officers.
Name and principal position
Base
salary($)
Non-equity
incentive plan
compensation
($)
All other
compensation
($)(1)
Total($)
Ettore J. Coringrato, Jr.
$
223,365
$
170,000
$
9,493
$
402,858
President, Chief Executive Officer and Director
Matthew C. Riley
$
198,692
$
93,600
$
7,891
$
300,183
Chief Financial Officer and Secretary
Leonard J.P. Ketelsen
$
176,539
$
59,500
$
9,433
$
245,472
Vice President, Product Development
Joseph P. Keska
$
166,538
$
56,000
$
3,961
$
226,499
Vice President, Operations
Stefan M. Rochus
$
159,904
$
56,000
$
9,394
$
225,298
Vice President, Marketing and Business Development
(1)   The amounts reported in the "All other compensation" column consist of medical, dental, life and disability (short and long term) insurance premiums paid by the company on behalf of
each named executive officer.
Grants of plan-based awards
The following table presents information on plan-based awards for the fiscal year ended December 31, 2010 to our
named executive officers:
Grants of plan based awards
All other
stock awards:
number of
shares of
stock or
units
(#)
All other
option awards:
number of
securities
underlying
options
(#)
Estimated possible payouts under
non-equity incentive plan
awards(1)
Grant date
fair value of
stock and
option awards
($)
Exercise price
of option award
($ per share)
Name
Threshold
($)
Target
($)
Maximum
($)
Ettore J. Coringrato, Jr.
40,000
80,000
120,000
—
—
—
—
Matthew C. Riley
24,500
49,000
68,600
—
—
—
—
Leonard J.P. Ketelsen
21,225
42,500
59,500
—
—
—
—
Joseph P. Keska
20,000
40,000
56,000
—
—
—
—
Stefan M. Rochus
20,000
40,000
56,000
—
—
—
—
(1)   The amounts shown in the threshold, target and maximum columns reflect the minimum, target and maximum amounts potentially payable under our 2010 Cash Bonus Plan, respectively,
assuming the minimum performance goals and other conditions were achieved. A threshold of performance of at least 80% of the target level for each financial metric is required for a named executive
officer to receive the portion of the bonus attributable to that metric. With performance of 80% of the target for a certain metric, each executive receives 50% of the target bonus attributable to
that metric. In addition, the Committee and our board of directors reserve the right to pay discretionary bonuses for exceptional individual performance. Hence the reason for Messrs. Coringrato
and Riley receiving actual cash bonuses in 2010 in excess of the maximum set forth above.
Outstanding equity awards at year-end
The following table presents, for each of the named executive officers, information regarding outstanding stock options and other
equity awards held as of December 31, 2010.
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Outstanding equity awards at fiscal year-end
Option awards
Name
Number of
securities
underlying
unexercised
options (#)
exercisable
Number of
securities
underlying
unexercised
options (#)
unexercisable
Equity incentive
plan awards:
number of securities
underlying
unexercised
unearned options
(#)
Option exercise
price($)
Option
expiration
date
Ettore J. Coringrato, Jr.
4,807
(1)
0
0
$
21.32
5/22/13
23,034
(1)
0
0
$
1.04
1/20/15
17
(2)
2
0
$
3.64
1/31/17
Matthew C. Riley
17,307
(1)
0
0
$
2.08
11/15/15
17
(2)
2
0
$
3.64
1/31/17
Leonard J.P. Ketelsen
7,692
(1)
0
0
$
1.04
7/20/15
3,846
(1)
0
0
$
2.08
11/15/15
17
(2)
2
0
$
3.64
1/31/17
Joseph P. Keska
6,730
(1)
0
0
$
1.04
7/20/15
2,884
(1)
0
0
$
2.08
11/15/15
17
(2)
2
0
$
3.64
1/31/17
Stefan M. Rochus
4,230
(1)
0
0
$
1.04
7/20/15
576
(1)
0
0
$
2.08
11/15/15
17
(2)
2
0
$
3.64
1/31/17
(1)   Stock option is fully vested as of December 31, 2010.
(2)   Stock
option vests at the rate of 25% of the total number of shares of our common stock subject to the option after one year and 6.25% per quarter thereafter for the next three years.
Option exercises and stock vested
During the fiscal year ended December 31, 2010, there were no stock option exercises by any of the named executive officers.
Pension benefits
We did not sponsor any defined benefit pension or other actuarial plan for the named executive officers during 2010.
Nonqualified deferred compensation
We did not maintain any nonqualified defined contribution or other deferred compensation plans or arrangements for the named
executive officers during 2010.
Employment agreements and potential payments upon termination or change in control
We have entered into a written employment agreements or employment offer letters with each of our named executive officers. These
agreements provide for "at-will" employment and establish the executive officer's base salary, eligibility to participate in an annual incentive bonus plan, standard employee benefit plan
participation as of the time of their execution and recommendations for initial stock option grants.
In
addition, Ettore J. Coringrato, Jr., our President and Chief Executive Officer, is eligible to receive certain severance payments and benefits in connection with his termination of
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employment
under various circumstances, including following a change in control of the company. For a summary of the material terms and conditions of the severance and change in control payments and
benefits for Mr. Coringrato, as well as the estimated potential severance payments and benefits payable to Mr. Coringrato in the event of termination of employment as of
December 31, 2010, see below.
The
actual amounts that would be paid or distributed to Mr. Coringrato as a result of one of the termination events occurring in the future may be different than those presented below, as many
factors will affect the amount of any payments and benefits upon a termination of employment. For example, some of the factors that could affect the amounts payable include Mr. Coringrato's
base salary and the market price of our common stock at the time of the change in control. In addition, although we have entered into a written arrangement to provide severance payments and benefits
to Mr. Coringrato in connection with a termination of employment under particular circumstances, we may mutually agree with Mr. Coringrato on severance terms that vary from those
provided in the pre-existing arrangement. Finally, in addition to the amounts presented below, Mr. Coringrato would also be able to exercise any vested stock options that he held as
of the time of the termination of employment. For more information about the named executive officers outstanding equity awards as of December 31, 2010, see the table captioned "Outstanding
equity awards at fiscal year-end" table.
In
addition to the severance payments and benefits described in Mr. Coringrato's employment agreement, the named executive offers are eligible to receive any benefits accrued under our
broad-based benefit plans, such as disability benefits and accrued vacation pay, in accordance with those plans and policies.
Involuntary termination of employment not in connection with change in control
In the event of an involuntary termination of employment (defined as either a termination of employment by us without "cause" or by
the executive officer for "good reason") not in connection with a change in control, Mr. Coringrato will be eligible to receive (i) a lump-sum cash payment equal to
6 months of his base salary as in effect as of the date of termination, (ii) 6 months of continued health coverage under our health plans, and (iii) 6 months of
continued vesting in accordance with his normal vesting schedule.
Involuntary termination of employment in connection with change in control
In the event of an involuntary termination of employment (defined as either a termination of employment by us without "cause" or by
the executive officer for "good reason") in connection with a change in control, Mr. Coringrato will be eligible to the same benefits described above with respect to an involuntary termination
not in connection with a change in control.
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Potential payments and benefits upon termination of employment
The following table sets forth the potential estimated payments and benefits to which Mr. Coringrato would have been entitled
to assuming termination of his employment as of December 31, 2010, as specified under the terms and conditions of his employment agreement:
Executive payments and benefits
Involuntary termination
of employment not
in connection with
change in control
Involuntary termination
of employment
in connection with
change in control
Severance Payments
$165,375
$165,375
Accelerated Vesting of Stock Options
(1
)
(1
)
Continued benefits
$
9,709
$
9,709
Total
—
—
(1)
As
there was no public trading market for our common stock at the time of vesting of the stock and option awards listed below, the values realized on
exercise have been calculated based on our estimated initial public offering price of $             , the midpoint of the range on the front cover of this prospectus.
Employee stock plans
The following table provides information as of December 31, 2010 regarding the compensation plans under which our equity
securities are authorized for issuance:
Plan category
Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights
Weighted average exercise
price of outstanding
options, warrants
and rights
Number of securities
remaining available
for future issuance
under equity
compensation plans(1)
Equity compensation plans approved by stockholders(2)
404,708
(3)
$
5.516
491,856
Equity compensation plans not approved by stockholders(4)
19,230
$
83.20
0
Total
423,938
491,856
(1)   Excludes securities to be issued upon exercise of outstanding options, warrants and rights.
(2)   Consists
of the 1999 Plan and 2007 Plan
(3)   Consists
of 404,708 shares of common stock underlying stock options.
(4)   Represents
a grant of s stock option outside the company's stock plans. This grant expired on April 1, 2011.
2011 Equity Incentive Plan
Our board of directors has adopted our 2011 Equity Incentive Plan (the "2011 Plan"). The 2011 Plan will be effective upon the completion of this
offering. The 2011 Plan permits the grant of incentive stock options, within the meaning of Code Section 422, to our employees and any of our subsidiary corporations' employees, and the grant
of non-statutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance units, performance shares, deferred stock units or dividend equivalents to
our employees, directors and consultants and our subsidiary corporations' employees and consultants.
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Shares under the plan.
The maximum aggregate number of shares issuable under the 2011 Plan will be determined by our board of directors prior to this offering, and
will equal approximately         % of the estimated shares of common stock outstanding as of this offing. In addition, shares issuable under the 2011 Plan will include (i) any shares
that, as of the completion of this offering, have been reserved but not issued pursuant to awards granted under
our                                        and are
not subject to any awards granted thereunder,
(ii) any shares subject to stock options or similar awards granted under the                           Plan
that expire or terminate without having been exercised in full and (iii) any unvested
shares issued pursuant to awards granted under
the                                        Plan
that are forfeited to or repurchased by us, with the maximum number of shares to be added to the 2011 Plan pursuant to
(i) through (iii) above equal to a cap to be determined by our board of directors prior to this offering. In addition, the number of shares available for issuance under the 2011 Plan
will be annually increased on the first day of each of our fiscal years, beginning with 2012, by an amount equal to the least of:
•
a number of shares to be specified;
•
% of the outstanding shares of our common stock as of the last day of our immediately preceding fiscal year;
or
•
such other amount as our board of directors may determine.
Shares
issued pursuant to awards under the 2011 Plan that we repurchase or that expire or are forfeited, as well as shares tendered in payment of the exercise price of an award or to satisfy the tax
withholding obligations related to an award, will become available for future grant or sale under the 2011 Plan. In addition, to the extent that an award is paid out in cash rather than shares, such
cash payment will not reduce the number of shares available for issuance under the 2011 Plan.
Plan administration.
The 2011 Plan will be administered by our board of directors which, at its discretion or as legally required, may delegate such administration
to our compensation committee and/or one or more additional committees (referred to as the "Administrator"). In the case of awards intended to qualify as "performance-based compensation" within the
meaning of Code Section 162(m), the committee will consist of two or more "outside directors" within the meaning of Code Section 162(m).
Subject
to the provisions of the 2011 Plan, the Administrator has the power to determine the terms of awards, including the recipients, the exercise price, if any, the number of shares covering each
award, the fair market value of a share of our common stock, the vesting schedule applicable to the awards, together with any vesting acceleration, the form of consideration, if any, payable upon
exercise of the award and the terms of the award agreement for use under the 2011 Plan. The Administrator also has the authority, subject to the terms of the 2011 Plan, to amend existing awards to
reduce or increase their exercise price, to allow participants the opportunity to transfer outstanding awards to a financial institution or other person or entity selected by the Administrator, to
institute an exchange program by which outstanding awards may be surrendered in exchange for awards that may have different exercise prices and terms, to prescribe rules and to construe and interpret
the 2011 Plan and awards granted under the 2011 Plan.
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Stock options.
The Administrator may grant incentive and/or nonstatutory stock options under the 2011 Plan, provided that incentive stock options are only granted
to employees. The exercise price of such options must equal at least the fair market value of our common stock on the date of grant. The term of an incentive stock option may not exceed ten years;
provided, however, that an incentive stock option held by a participant who owns more than 10% of the total combined voting power of all classes of our common stock, or of certain of our subsidiary
corporations, may not have a term in excess of five years and must have an exercise price of at least 110% of the fair market value of our common stock on the grant date. The Administrator will
determine the methods of payment of the exercise price of an option, which may include cash, shares, broker-assisted cashless exercise or other consideration permitted by applicable law and acceptable
to the Administrator. Subject to the provisions of the 2011 Plan, the Administrator determines the remaining terms of the options (e.g., vesting). After the termination of service of an
employee, director or consultant, the participant may exercise his or her options, to the extent vested as of such date of termination, for the period of time stated in his or her award agreement.
However, in no event may an option be exercised later than the expiration of its term. The specific terms will be set forth in an award agreement.
Restricted stock.
Restricted stock may be granted under the 2011 Plan. Restricted stock awards are grants of shares of our common stock that are subject to various
restrictions, including restrictions on transferability and forfeiture provisions. Shares of restricted stock will vest, and the restrictions on such shares will lapse, in accordance with terms and
conditions established by the Administrator. The Administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed. Recipients of restricted stock
awards generally will have voting and dividend rights with respect to such shares upon grant without regard to vesting, unless the Administrator provides otherwise. Shares of restricted stock that do
not vest for any reason will be forfeited by the recipient and will revert to us. The specific terms will be set forth in an award agreement.
Restricted stock units.
Restricted stock units may be granted under the 2011 Plan. Each restricted stock unit granted is a bookkeeping entry representing an amount
equal to the fair market value of one share of our common stock. The Administrator determines the terms and
conditions of restricted stock units including the vesting criteria, which may include achievement of specified performance criteria or continued service to us, and the form and timing of payment. The
Administrator, in its sole discretion, may reduce or waive any vesting criteria that must be met to receive a payout. The Administrator determines in its sole discretion whether an award will be
settled in stock, cash or a combination of both. The specific terms will be set forth in an award agreement.
Stock appreciation rights.
Stock appreciation rights may be granted under the 2011 Plan. Stock appreciation rights allow the recipient to receive the appreciation
in the fair market value of our common stock between the exercise date and the date of grant. Subject to the provisions of the 2011 Plan, the Administrator determines the terms of stock appreciation
rights, including when such rights vest and become exercisable and whether to settle such awards in cash or with shares of our common stock, or a combination thereof, except that the per share
exercise price for the shares to be issued pursuant to the exercise of a stock appreciation right will be no less than 100% of the fair market value per share on the date of grant. The specific terms
will be set forth in an award agreement.
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Performance units/performance shares.
Performance units and performance shares may be granted under our 2011 Plan. Performance units and performance shares are
awards that will result in a payment to a participant only if performance goals established by the Administrator are achieved or the awards otherwise vest. The Administrator determines the terms and
conditions of performance units and performance shares including the vesting criteria, which may include achievement of specified performance criteria or continued service, which, depending on the
extent to which they are met, will determine the number and/or value of performance units and performance shares to be paid out to participants. After the grant of a performance unit or performance
share, the Administrator, in its sole discretion, may reduce or waive any performance objectives or other vesting provisions for such performance units or performance shares. Performance units shall
have an initial dollar value established by the Administrator prior to the grant date. Performance shares will have an initial value equal to the fair market value of our common stock on the grant
date. The Administrator, in its sole discretion, may pay earned performance units or performance shares in the form of cash, in shares or in any combination thereof. The specific terms will be set
forth in an award agreement.
Deferred stock units.
Deferred stock units may be granted under the 2011 Plan. Deferred stock units are restricted shares, restricted stock units, performance
shares or performance units granted under the 2011 Plan that the Administrator permits to be paid out on an installment or deferred basis, in accordance with rules and procedures determined by the
Administrator.
Dividend equivalents.
Dividend equivalents may be granted under the 2011 Plan. Dividend equivalents are credits, paid in cash, equal to the amount of cash
dividends paid on shares represented by awards held by participants. Dividend equivalents may be subject to the same vesting restrictions as the shares subject to an award.
Transferability of awards.
Unless the Administrator provides otherwise, the 2011 Plan generally does not allow for the transfer of awards and only the recipient of
an option or stock appreciation right may exercise such an award during his or her lifetime.
Certain adjustments.
In the event of certain changes in our capitalization, to prevent diminution or enlargement of the benefits or potential benefits available
under the 2011 Plan, the Administrator will make adjustments to one or more of the number and class of shares that may be delivered under the 2011 Plan and/or the number, class and price of shares
covered by each outstanding award. In the event of a proposed dissolution or liquidation, the Administrator will notify participants as soon as practicable prior to the effective date of such proposed
transaction, and all awards, to the extent not previously exercised, will terminate immediately prior to the consummation of such proposed transaction.
Merger or change in control.
The 2011 Plan provides that in the event of a merger or Change in Control, as defined under the 2011 Plan, each outstanding award will
be treated as the Administrator determines, except that if a successor corporation or its parent or subsidiary does not assume or substitute an equivalent award for any outstanding award, then such
award will fully vest, all restrictions on such award will lapse, all performance goals or other vesting criteria applicable to such award will be deemed achieved at 100% of target levels and such
award will become fully exercisable, if applicable, for a specified period prior to the transaction. The award will then terminate to the extent unexercised upon the expiration of the specified period
of time. If the service of an outside director is terminated on or following
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a
merger or Change in Control, other than pursuant to a voluntary resignation, his or her awards will become fully vested and exercisable, and all performance goals or other vesting requirements will
be deemed achieved at 100% of target levels.
Clawback requirement.
The 2011 Plan provides that if the company is required to restate its financial statements due to material noncompliance with financial
reporting requirements under the securities laws, executive officers will be required to repay compensation received pursuant to awards under the 2011 Plan during the three years preceding the
restatement that is in excess of the amount to which they would be entitled under the restated financial statements, in accordance with Section 10D of the Securities Exchange Act of 1934.
Plan amendment, termination.
Our board of directors has the authority to amend, alter, suspend or terminate the 2011 Plan provided such action does not impair the
existing rights of any participant. The 2011 Plan will automatically terminate in 2021, unless terminated earlier by our board of directors.
2007 Stock Plan
The 2007 Stock Plan (as amended, the "2007 Plan") was adopted by our Board of Directors and approved by our stockholders in 2007 The 2007 Plan
provides for
the grant of stock options and restricted stock to employees, directors and consultants of us and our related companies. As of the effective date of this offering, the 2007 Plan will be terminated and
we will not grant any additional awards under the 2007 Plan. However, the 2007 Plan will continue to govern the terms and conditions of outstanding awards granted thereunder.
Shares under the plan.
As of March 31, 2011, there were 707 options to purchase shares of our common stock outstanding and 92,291 shares were available for
future grant under the 2007 Plan. Shares subject to options that expire or become unexercisable without having been exercised in full, or that are used to pay the exercise price of an option or to
satisfy the tax withholding obligations related to an option (including any shares subject to options or similar awards granted under our 2007 Plan that expire or terminate without having been
forfeited to or repurchased by us), will not be returned to the 2007 Plan and will not become available for future grant, following this offering, under the 2011 Plan.
Plan administration.
Our board of directors or a committee appointed by our board of directors administers the 2007 Plan. Under the 2007 Plan, the administrator
has the power to determine the terms and conditions of the awards, including the recipients, the exercise price, the number of shares covering each award and the vesting schedule of awards. The
administrator also has the authority, subject to the terms of the 2007 Plan, to prescribe rules and to construe and interpret the 2007 Plan and awards granted under the 2007 Plan. The administrator
also has the authority, subject to the terms of the 2007 Plan, to amend existing options (including to reduce the option's exercise price), to institute an exchange program by which outstanding
options may be surrendered in exchange for options that may have different exercise prices and terms and/or cash, to prescribe rules and to construe and interpret the 2007 Plan and options granted
under the 2007 Plan.
Option terms.
The 2007 Plan permits the grant of stock options. The exercise price of such options has to be at least equal to 100% of the fair market value of a
share of our common stock on the date of grant except that the price can not be less than 110% of such fair market value with respect to any person who owned securities of more than 10% of the total
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combined
voting power of all classes of our securities and any securities of our subsidiaries. The option term may not exceed ten years. After termination of continuous service with us or a
related company, an optionee may exercise his or her option, to the extent vested as of such date of termination, for the period of time stated in the option agreement (which period of time will be
three months if no period is specified). Generally, if termination is due to disability, or in the event of death, the options will remain exercisable for six months. However, an option may not be
exercised later than the expiration of its term. The 2007 Plan generally does not allow for the transfer of options other than by will or the laws of descent and distribution, and during the
optionee's lifetime, may only be exercised by the optionee.
Restricted stock.
The 2007 Plan permits the grant of restricted stock awards. After the administrator determines that it will grant a restricted stock award, the
terms, conditions and restrictions related to the award were set forth in a restricted stock agreement. The 2007 Plan generally does not allow the transfer of restricted stock other than by will or
the laws of descent and distribution, unless the administrator determines otherwise.
Certain adjustments.
In the event of certain changes in our capitalization, including changes in our capitalization resulting from the issuance of any of our
shares as a share dividend, the administrator will make adjustments to the number and type of shares and exercise price of shares subject to outstanding options and the number and type of shares that
may be delivered under the 2007 Plan. In the event of a proposed liquidation or dissolution, the administrator will notify participants as soon as practicable and all options will terminate to the
extent unexercised immediately prior to the consummation of such proposed transaction.
Merger or other transaction.
The 2007 Plan provides that in the event of our merger into or consolidation with another entity in which we are not the surviving
entity, or we are liquidated or we sell or dispose of all or substantially all of our assets to another entity, then the successor corporation or its parent or subsidiary will assume or substitute an
equivalent award for each outstanding award under the 2007 Plan. If there is no assumption or substitution of outstanding options and restricted stock awards, then such options will become fully
vested and exercisable, and the right of repurchase will lapse with respect to such restricted stock awards. In addition, the administrator will notify participants in writing or electronically that
options under the 2007 Plan will be exercisable for a period of 15 days, and will terminate upon expiration of such period to the extent unexercised.
Plan amendment, termination.
Our board of directors has the authority to amend or terminate
the 2007 Plan provided such action does not adversely affect the rights of any award holder. Our Board of Directors will terminate the 2007 Plan in connection with this offering.
1999 Stock Option Plan
The Amended and Restated 1999 Stock Option Plan (as amended, the "1999 Plan") was adopted by our Board of Directors and approved by our stockholders
in 1999 and 2000, respectively. The 1999 Plan provides for the grant of stock options and restricted stock to employees, directors and consultants of us and our related companies. As of the effective
date of this offering, the 1999 Plan will be terminated and we will not grant any additional awards under the 1999 Plan. However, the 1999 Plan will continue to govern the terms and conditions of
outstanding awards granted thereunder.
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Shares under the plan.
As of March 31, 2011, there were 379,633 options to purchase shares of our common stock outstanding and 1,756,625 shares were
available for future grant under the 1999 Plan. Shares subject to options that expire or become unexercisable without having been exercised in full, or that are used to pay the exercise price of an
option or to satisfy the tax withholding obligations related to an option (including any shares subject to options or similar awards granted under our 1999 Plan that expire or terminate without having
been forfeited to or repurchased by us), will become available for future grant, following this offering, under the 2011 Plan.
Plan administration.
Our board of directors or a committee appointed by our board of directors administers the 1999 Plan. Under the 1999 Plan, the administrator
has the power to determine the terms and conditions of the awards, including the recipients, the exercise price, the number of shares covering each award and the vesting schedule of awards. The
administrator also has the authority, subject to the terms of the 1999 Plan, to prescribe rules and to construe and interpret the 1999 Plan and awards granted under the 1999 Plan. The administrator
also has the authority, subject to the terms of the 1999 Plan, to amend existing options (including to reduce the option's exercise price), to institute an exchange program by which outstanding
options may be surrendered in exchange for options that may have different exercise prices and terms and/or cash, to prescribe rules and to construe and interpret the 1999 Plan and options granted
under the 1999 Plan.
Option terms.
The 1999 Plan permits the grant of stock options. The exercise price of such options has to be at least equal to 100% of the fair market value of a
share of our common stock on the date of grant except that the price can not be less than 110% of such fair market value with respect to any person who owned securities of more than 10% of the total
combined voting power of all classes of our securities and any securities of our subsidiaries. The option term may not exceed ten years. After termination of continuous service with us or a related
company, an optionee may exercise his or her option, to the extent vested as of such date of termination, for the period of time stated in the option agreement (which period of time will be three
months if no period is specified). Generally, if termination is due to disability, or in the event of death, the options will remain exercisable for six months. However, an option may not be exercised
later than the expiration of its term. The 1999 Plan generally does not allow for the transfer of options other than by will or the laws of descent and distribution, and during the optionee's
lifetime, may only be exercised by the optionee.
Restricted stock.
The 1999 Plan permits the grant of restricted stock awards. After the administrator determines that it will grant a restricted stock award, the
terms, conditions and restrictions related to the award were set forth in a restricted stock agreement. The 1999 Plan generally does not allow the transfer of restricted stock other than by will or
the laws of descent and distribution, unless the administrator determines otherwise.
Certain adjustments.
In the event of certain changes in our capitalization, including changes in our capitalization resulting from the issuance of any of our
shares as a share dividend, the administrator will make adjustments to the number and class of shares and exercise price of shares subject to outstanding options and the number and class of shares
that may be delivered under the 1999 Plan. In the event of a proposed liquidation or dissolution, the administrator will notify participants as soon as practicable and all options will terminate to
the extent unexercised immediately prior to the consummation of such proposed transaction.
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Merger or change in control.
The 1999 Plan provides that in the event of our merger or change in control, the successor corporation or its parent or subsidiary
will assume or substitute an equivalent award for each outstanding option. If there is no assumption or substitution of outstanding options, the options will become fully vested and exercisable. In
addition, the administrator will notify participants in writing or electronically that options under the 1999 Plan will be exercisable for a period of time determined by the administrator, and will
terminate to the extent unexercised upon expiration of such period.
Plan amendment, termination.
Our board of directors has the authority to amend or terminate the 1999 Plan provided such action does not adversely affect the rights
of any award holder. Our Board of Directors will terminate the 1999 Plan in connection with this offering.
Limitation on liability and indemnification matters
Our amended and restated certificate of incorporation and bylaws that will become effective upon the completion of this offering
contain provisions that limit the personal liability of our directors for monetary damages to the fullest extent permitted by Delaware law. Consequently, our directors will not be personally liable to
us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for:
•
any breach of the director's duty of loyalty to us or our stockholders;
•
any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;
•
unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the
Delaware General Corporation Law; or
•
any transaction from which the director derived an improper personal benefit.
Our
amended and restated certificate of incorporation that will become effective upon the completion of this offering, provides that we indemnify our directors to the fullest extent permitted by
Delaware law. In addition, our amended and restated bylaws, that will become effective upon the completion of this offering, provide that we indemnify our directors and officers to the fullest extent
permitted by Delaware law. Our amended and restated bylaws, that will become effective upon the completion of this offering, also provide that we shall advance expenses incurred by a director or
officer in advance of the final disposition of any action or proceeding, and permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of
his or her actions in that capacity, regardless of whether we would otherwise be permitted to indemnify him or her under the provisions of Delaware law. We have entered and expect to continue to enter
into agreements to indemnify our directors, executive officers and other employees as determined by the Board of Directors. With certain exceptions, these agreements provide for indemnification for
related expenses including, among others, attorneys' fees, judgments, fines and settlement amounts incurred by any of these individuals in any action or proceeding. We believe that these bylaw
provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers. We also maintain directors' and officers' liability insurance.
The
limitation of liability and indemnification provisions in our amended and restated certificate of incorporation and bylaws, that will become effective upon the completion of this
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offering,
may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty of care. They may also reduce the likelihood of derivative litigation against our
directors and officers, even though an action, if successful, might benefit us and other stockholders. Further, a stockholder's investment may be adversely affected to the extent that we pay the costs
of settlement and damage awards against directors and officers. At present, there is no pending litigation or proceeding involving any of our directors, officers or employees for which indemnification
is sought, and we are not aware of any threatened litigation that may result in claims for indemnification.
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Certain relationships and related party transactions
Since January 1, 2007, there has not been, nor is there currently proposed, any transaction or series of similar transactions
to which we were or are a party in which the amount involved exceeded or exceeds $120,000 and in which any of our directors, executive officers, holders of more than 5% of any class of our voting
securities, or any member of the immediate family of any of the foregoing persons, had or will have a direct or indirect material interest, other than compensation arrangements with directors and
executive officers, which are described where required under the "Management" section of this prospectus, and the transactions described below.
Private placement financings
Bridge financing
In February 2008, we sold an aggregate of $4,122,500 in subordinated convertible promissory notes. Of that amount, we sold $1,721,354 in subordinated
promissory notes to investors that are our affiliates, including entities affiliated with Jerusalem Venture Partners, entities affiliated with Sprout Venture Capital, and entities affiliated with
Birchmere Ventures.
Series C financing
In July 2008 and September 2008, we sold 2,228,666 shares of our Series C preferred stock at a price of $14.35963828 per share for an
aggregate price of $32,003,074. Of that amount, we sold 25,312,887 shares of our Series C preferred stock for an aggregate price of $5,901,712 to investors that are our affiliates, including
entities affiliated with Jerusalem Venture Partners, entities affiliated with Sprout Venture Capital, entities affiliated with Soros Fund Management, entities affiliated with TL Ventures and entities
affiliated with Birchmere Ventures.
Series C-1 financing
In January 2011, we sold 7,692,307 shares of our Series C-1 preferred stock at a price of $6.50 per share for an aggregate price
of $49,999,995. Of that amount, we sold 7,343,846 shares of our Series C-1 preferred stock for an aggregate price of $47,734,999 to investors that are our affiliates, including
entities affiliated with Jerusalem Venture Partners, entities affiliated with Sprout Venture Capital, and entities affiliated with Birchmere Ventures.
Investor rights agreement
In connection with our Series C-1 financing described above, we entered into an amended and restated investor rights agreement
with our preferred stockholders, including entities affiliated with Jerusalem Venture Partners, entities affiliated with Sprout Venture Capital, entities affiliated with Soros Fund Management,
entities affiliated with TL Ventures and entities affiliated with Birchmere Ventures. The amended and restated investor rights agreement, among other things:
•
grants such stockholders certain registration rights with respect to shares of our common stock issuable upon conversion
of the shares of the preferred stock held by them;
•
provides for the voting of shares with respect to the constituency of the board of directors;
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•
grants our major investors a right of first offer with respect to sales of our shares by us, subject to specified
exclusions (which exclusions are expected to include the sale of the shares pursuant to this prospectus);
•
obligates us to deliver periodic financial statements to our major investors; and
•
grants Finisar Corporation, or Finisar, one of our stockholders and our largest customer, the right of first refusal with
respect to any proposed offer from a non-affiliated third party that would result in a change of control. Finisar will have 10 days following receipt of a third-party offer notice
to submit to us a written offer to acquire the company in a sale transaction on terms and conditions at least as favorable to us and our stockholders as those proposed by the third-party offer. In
addition, Finisar has a right of first offer in the event we seek to initiate a sale process with one or more non-affiliated prospective third party purchasers. Finisar will have seven
days following receipt of a notice from us to determine whether it wants to enter into a 37-day exclusive negotiation period to discuss acquiring us in a sale transaction. The parties
would need to negotiate in good faith. If no deal is reached, any sale transaction by a third party would remain subject to Finisar's right of first refusal. Both the right of first refusal and the
right of first offer shall terminate and cease to be of further force and effect immediately upon the consummation of the offering contemplated by this prospectus.
In
addition, under the agreement, Finisar has a right of first negotiation in the event we seek to solicit, encourage, pursue or negotiate an offer from one non-affiliated third-party
purchaser to effect a sale of the company, or a Targeted Solicitation. In the event our board of directors has resolved to pursue a Targeted Solicitation, we must deliver to Finisar a notice
describing the material terms and conditions of the solicited sale transaction. Finisar then has five days to deliver a negotiation notice if it desires to initiate a process to make an offer to
acquire the company. If Finisar fails to deliver the notice, we may freely proceed towards consummating a Targeted Solicitation. If Finisar delivers the notice, we may not enter into an exclusive
negotiating or standstill agreement with any third party and are required to negotiate with Finisar in good faith towards effecting a sale transaction for 25 days. If we are unable to come to
an agreement with Finisar during this period, we may enter into a sale transaction in respect of the Targeted Solicitation within the next 12 months, subject to certain extensions. In the event
we enter into a letter of intent with Finisar regarding a sale transaction, the agreement must include a reasonable break up fee and reasonable exclusive negotiating or standstill period. For the sake
of clarity, Finisar's right of first negotiation does not compel us to accept and offer a sale transaction with Finisar.
This
is not a complete description of the amended and restated investor rights agreement and is qualified by the full text of the 2011 Amended and Restated Investor Rights Agreement filed as an
exhibit to the registration statement of which this prospectus is a part.
For
more information regarding this agreement, please refer to "Description of capital stock—Registration rights."
Co-sale agreement
In connection with our Series C-1 financing described above, we entered into an amended and restated co-sale agreement
with our preferred stockholders, including entities affiliated with Jerusalem Venture Partners, entities affiliated with Sprout Venture Capital, entities affiliated
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with
Soros Fund Management, entities affiliated with TL Ventures and entities affiliated with Birchmere Ventures. This agreement grants our major investors certain rights of first refusal with respect
to proposed transfers of our securities by other major investors.
This
is not a complete description of the amended and restated co-sale agreement and is qualified by the full text of the amended and restated co-sale agreement filed as an
exhibit to the registration statement of which this prospectus is a part.
Product Sales and Purchase Transactions with Certain Investors
During 2010, 2009 and 2008, we entered into various transactions for the purchase of our products in the ordinary course of business
by Finisar, one of our stockholders. We recognized $16.5 million, $11.1 million and $8.0 million of revenue pursuant to such sales during the years ended December 31, 2010,
2009 and 2008, respectively.
During
2010, 2009 and 2008, we also entered into various transactions for the purchase of certain materials in the ordinary course of business from Finisar. We incurred $4.6 million,
$1.3 million and $1.3 million of expenses pursuant to such purchases during the years ended December 31, 2010, 2009 and 2008, respectively.
Stock option awards
Certain stock option grants to our directors and executive officers and related option grant policies are described above in this
prospectus under the caption "Management."
Employment agreements
We have entered into employment agreements and/or offer letters containing compensation, termination and change of control provisions
with, among others, Ettore J. Coringrato, Jr., our President and Chief Executive Officer, as described under the caption "Executive compensation—Employment agreements and potential
payments upon termination or change in control" above.
Indemnification of officers and directors
We have also entered into indemnification agreements with each of our directors and executive officers. The indemnification
agreements and our certificate of incorporation and bylaws require us to indemnify our directors and executive officers to the fullest extent permitted by Delaware law. See
"Management—Limitations on liability and indemnification matters" above.
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Principal stockholders
The following table sets forth information regarding beneficial ownership of our common stock as of March 31, 2011 and as
adjusted to reflect the shares of common stock to be issued and sold in the offering assuming no exercise of the underwriters' over-allotment option, by:
•
each person or group of affiliated persons known by us to be the beneficial owner of more than 5% of our common stock;
•
each of our named executive officers;
•
each of our directors; and
•
all executive officers and directors as a group.
We
have determined beneficial ownership in accordance with SEC rules. The information does not necessarily indicate beneficial ownership for any other purpose. Under these rules, the number of shares
of common stock deemed outstanding includes shares issuable upon exercise of options and warrants held by the respective person or group which may be exercised or converted within 60 days after
March 31, 2011. For purposes of calculating each person's or group's percentage ownership, stock options and warrants exercisable within 60 days after March 31, 2011 are included
for that person or group but not the stock options or warrants of any other person or group.
Applicable
percentage ownership is based on 14,359,377 shares of common stock outstanding at March 31, 2011, assuming the automatic conversion of (i) all outstanding shares of our
Series A Preferred Stock, Series B Preferred Stock, Series B-2 Preferred Stock, Series C Preferred Stock and Series C-1 Preferred Stock on a
one-for-one basis into 12,399,825 shares of common stock and (ii) all outstanding shares of our Series B-1 Preferred Stock on a one for 1.161144499
basis into 665,013 shares of common stock. For purposes of the table below, we have assumed
that                                        shares
of common stock will be outstanding upon completion of this offering, based upon
an assumed initial public offering price of $                           per share.
Unless
otherwise indicated and subject to applicable community property laws, to our knowledge, each stockholder named in the following table possesses sole voting and investment power over the shares
listed. Unless otherwise noted below, the address of each
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person
listed on the table is c/o CyOptics, Inc., 9999 Hamilton Boulevard, Breinigsville, PA 18031.
Shares beneficially
owned prior
to the offering
Shares beneficially
owned after
the offering
Name and address of beneficial owner
Shares
Percentage
Shares
Percentage
5% stockholders:
Funds affiliated with Jerusalem Venture Partners(1)
7,810,984
54.4%
7,810,984
Funds affiliated with Sprout Capital(2)
1,556,036
10.8%
1,556,036
Funds affiliated with Soros Fund Management LLC(3)
787,265
5.5%
787,265
Funds affiliated with TL Ventures(4)
750,690
5.2%
750,690
Named executive officers and directors:
Ettore J. Coringrato, Jr.(5)
27,860
*
27,860
Matthew C. Riley(6)
17,326
*
17,326
Len Ketelsen(7)
11,557
*
11,557
Joe Keska(8)
9,633
*
9,633
Stefan M. Rochus(9)
4,825
*
4,825
Mark DeNino(10)
750,690
5.2%
750,690
Robert Finzi(11)
1,556,036
10.8%
1,556,036
Erel N. Margalit(12)
7,810,984
54.4%
7,810,984
John Pilitsis(13)
42,786
*
42,786
Sean Sebastian(14)
692,416
4.8%
692,416
Noah D. Yago
—
*
—
All directors and executive officers as a group(15)
11,711,378
81.5%
11,711,378
(*)   Represents beneficial ownership of less than 1%.
(1)   Includes
(i) 356,048 shares held by Jerusalem Venture Partners, L.P., (ii) 333,252 shares held by Jerusalem Venture Partners III, L.P.,
(iii) 220,277 shares held by Jerusalem Venture Partners IV, L.P., (iv) 1,857 shares held by Jerusalem Venture Partners IV-A, L.P., (v) 1,972 shares held
by Jerusalem Venture Partners Entrepreneurs Fund IV, L.P., (vi) 25,628 shares held by Jerusalem Venture Partners Entrepreneur Fund III, L.P., (vii) 31,140 shares held by
Jerusalem Venture Partners (Israel), L.P., (viii) 9,315 shares held by Jerusalem Venture Partners III (Israel), L.P., (ix) 5,299 shares held by Jerusalem Venture Partners
IV (Israel), L.P., (x) 509,959 shares held by JVP III Annex Fund, L.P., and (xi) 6,316,237 shares held by JVP Opportunity Fund, L.P., as nominee for itself, JVP
Opportunity Fund-A, L.P., JVP Opportunity Entrepreneur Fund, L.P., Jerusalem Venture Partners IV, L.P., Jerusalem Venture Partners IV-A, L.P.,
Jerusalem Venture Partners Entrepreneurs Fund IV, L.P., Jerusalem Venture Partners IV (Israel), L.P., JVP IV Annex Fund, L.P., JVP IV Annex Entrepreneur Fund, L.P., JVP
Media V, L.P., JVP Media V Entrepreneur Fund, L.P. and JVP Media V (Israel), L.P. Jerusalem Partners, L.P. is the general partner of Jerusalem Venture Partners, L.P.
and may be deemed to have sole voting and dispositive power with respect to shares held by that fund. J.V.P. Jerusalem Venture Partners (Israel) Management Ltd. is the general partner of
Jerusalem Venture Partners (Israel), L.P. and may be deemed to have sole voting and dispositive power with respect to shares held by that fund. Jerusalem Partners III, L.P. is the
general partner of Jerusalem Venture Partners III, L.P. and Jerusalem Venture Partners Entrepreneur Fund III, L.P. and may be deemed to have sole voting and dispositive power with
respect to shares held by those funds. Jerusalem Venture Partners III (Israel) Management Company Ltd. is the general partner of Jerusalem Venture Partners III (Israel), L.P. and may be
deemed to have sole voting and dispositive power with respect to shares held by that fund. Jerusalem Annex Partners III, L.P. is the general partner of JVP III Annex Fund, L.P. and may
be deemed to have sole voting and dispositive power with respect to shares held by that fund. Jerusalem Partners IV, L.P. is the general partner of Jerusalem Venture Partners IV, L.P.,
Jerusalem Venture Partners IV-A, L.P. and Jerusalem Venture Partners Entrepreneurs Fund IV, L.P. and may be deemed to have sole voting and dispositive power with respect to
shares held by those funds. Jerusalem Partners—Venture Capital, L.P. is the general partner of Jerusalem Venture Partners IV (Israel), L.P. and may be deemed to have sole
voting and dispositive power with respect to shares held by that fund. JP Media V, L.P. is the general partner of JVP IV Annex Fund, L.P., JVP IV Annex Entrepreneur Fund, L.P.,
JVP Media V, L.P., JVP Media V Entrepreneur Fund, L.P. and JVP Media V (Israel), L.P. and may be deemed to have sole voting and dispositive power with respect to shares held by
those funds. JP Opportunity Fund, L.P. is the general partner of JVP Opportunity Fund, L.P., JVP
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Opportunity Fund-A, L.P. and JVP Opportunity Entrepreneur Fund, L.P. and may be deemed to have sole voting and dispositive power with respect to shares held by each fund of
which it is a general partner. Jerusalem Venture Partners Corporation is the general partner of Jerusalem Partners, L.P., Jerusalem Partners III, L.P. and Jerusalem Annex Partners
III, L.P. and may be deemed to have sole voting and dispositive power with respect to the shares held by those funds. JVP Corp IV is the general partner of Jerusalem Partners IV, L.P.,
JP Media V, L.P. and JP Opportunity Fund and may be deemed to have sole voting and dispositive power with respect to the shares held by those funds. The mailing address of the individuals and
entities related to Jerusalem Venture Partners is 156 Fifth Avenue, Suite 410, New York, NY 10010.
(2)   Includes
697,568 shares held by CyOptics I LLC, 45,615 shares held by CyOptics II LLC, 682,658 shares held by Sprout Capital VIII, L.P., 81,762 shares held by
Sprout Venture Capital L.P., 4,510 shares held by DLJ Capital Corporation and 43,923 shares held by DLJ ESC II, L.P. The mailing address of Sprout Capital is 11 Madison Avenue,
13
th
Floor New York, NY 10010.
(3)   Includes
657,761 shares held by Tapot LLC ("Tapot"), a Delaware limited liability company, and 129,504 shares held by SFM Domestic Investments LLC ("SFMD"), a Delaware
limited liability company. Quantum Industrial Partners LDC ("QIP"), an exempted limited duration company formed under the laws of the Cayman Islands, is the sole member and manager of Tapot. QIH
Management Investor, L.P. ("QIHMI"), an investment advisory firm organized as a Delaware limited partnership, is a minority stockholder of, and is vested with investment discretion with respect
to portfolio assets held for the account of QIP. The sole general partner of QIHMI is QIH Management LLC ("QIH Management"), a Delaware limited liability company. Soros Fund
Management LLC ("SFM"), a Delaware limited liability company, is the sole managing member of QIH Management. SFM is also the manager of SFMD. George Soros serves as Chairman of SFM, Robert
Soros serves as Deputy Chairman of SFM, and Jonathan Soros serves as President and Deputy Chairman of SFM. The principal address of SFM is at 888 Seventh Avenue, 33rd Floor, New York, New York
10106.
(4)   Includes
12,762 shares held by TL Ventures V Interfund L.P. and 737,928 shares held by TL Ventures V, L.P., including the conversion of certain shares of
Series B-1 Preferred Stock into common stock at a conversion ratio of 1.161144499 per share. TL Ventures V LLC is the general partner of TL Ventures V Interfund, L.P.
and TL Ventures V Management L.P., which is the general partner of TL Ventures V, L.P. and may be deemed to have sole voting and dispositive power with respect to shares held by each
fund of which it is a general partner. The mailing address of TL Ventures is 435 Devon Park Drive, 700 Building, Wayne, PA 19087.
(5)   Includes
options to purchase 27,860 shares of common stock that are exercisable within 60 days of March 31, 2011.
(6)   Includes
options to purchase 17,326 shares of common stock that are exercisable within 60 days of March 31, 2011.
(7)   Includes
options to purchase 11,557 shares of common stock that are exercisable within 60 days of March 31, 2011.
(8)   Includes
options to purchase 9,633 shares of common stock that are exercisable within 60 days of March 31, 2011.
(9)   Includes
options to purchase 4,825 shares of common stock that are exercisable within 60 days of March 31, 2011.
(10) Includes
12,762 shares held by TL Ventures V Interfund L.P. and 737,928 shares held by TL Ventures V, L.P., including the conversion of certain shares of
Series B-1 Preferred Stock into common stock at a conversion ratio of 1.161144499 per share. TL Ventures V LLC is the general partner of TL Ventures V Interfund, L.P.
and TL Ventures V Management L.P., which is the general partner of TL Ventures V, L.P. and may be deemed to have sole voting and dispositive power with respect to shares held by each
fund of which it is a general partner. Mr. DeNino, a member of our board of directors, is a managing director of TL Ventures and may be deemed to have sole voting and dispositive power with
respect to the shares held by funds related to TL Ventures. Mr. DeNino disclaims beneficial ownership of all such shares except to the extent of his pecuniary interest therein.
(11) Includes
697,568 shares held by CyOptics I LLC, 45,615 shares held by CyOptics II LLC, 682,658 shares held by Sprout Capital VIII, L.P., 81,762 shares held by
Sprout Venture Capital L.P., 4,510 shares held by DLJ Capital Corporation, 43,923 shares held by DLJ ESC II, L.P. Mr. Finzi is a member of our board of directors, is the managing
director of Sprout Group, and may be deemed to have sole voting and dispositive power with respect to the shares held by Sprout Group-related funds. Mr. Finzi disclaims beneficial ownership to
all such shares except to the extent of his pecuniary interest therein.
(12) Includes
(i) 356,048 shares held by Jerusalem Venture Partners, L.P., (ii) 333,252 shares held by Jerusalem Venture Partners III, L.P.,
(iii) 220,277 shares held by Jerusalem Venture Partners IV, L.P., (iv) 1,857 shares held by Jerusalem Venture Partners IV-A, L.P., (v) 1,972 shares held
by Jerusalem Venture Partners Entrepreneurs Fund IV, L.P., (vi) 25,628 shares held by Jerusalem Venture Partners Entrepreneur Fund III, L.P., (vii) 31,140 shares held by
Jerusalem Venture Partners (Israel), L.P., (viii) 9,315 shares held by Jerusalem Venture Partners III (Israel), L.P., (ix) 5,299 shares held by Jerusalem Venture Partners
IV (Israel), L.P., (x) 509,959 shares held by JVP III Annex Fund, L.P., and (xi) 6,316,237 shares held by JVP Opportunity Fund, L.P., as nominee for itself, JVP
Opportunity Fund-A, L.P., JVP Opportunity Entrepreneur Fund L.P., Jerusalem Venture Partners IV, L.P., Jerusalem Venture Partners IV-A, L.P.,
Jerusalem Venture Partners Entrepreneurs Fund IV, L.P., Jerusalem Venture Partners IV (Israel), L.P., JVP IV Annex Fund, L.P., JVP IV Annex Entrepreneur Fund, L.P., JVP
Media V, L.P., JVP Media V Entrepreneur Fund, L.P. and JVP Media V (Israel), L.P. Jerusalem Partners, L.P. is the general partner of Jerusalem Venture Partners, L.P.
and may be deemed to have sole voting and dispositive power with respect to shares held by that fund. J.V.P. Jerusalem Venture Partners (Israel) Management Ltd. is the general partner of
Jerusalem Venture Partners (Israel), L.P. and may be deemed to have sole voting and dispositive power with respect to shares held by that fund. Jerusalem Partners III, L.P. is the
general partner of Jerusalem Venture Partners III, L.P. and Jerusalem Venture Partners Entrepreneur Fund III, L.P. and may be deemed to have sole voting and dispositive power with
respect to shares held by those funds. Jerusalem Venture Partners III (Israel) Management Company Ltd. is the general partner of Jerusalem Venture Partners III (Israel), L.P. and may be
deemed to have sole voting and dispositive power with respect to shares held by that fund. Jerusalem Annex Partners III, L.P. is the general partner of JVP III Annex Fund, L.P. and may
be deemed to have sole voting and dispositive power with respect to shares held by that fund. Jerusalem Partners IV, L.P. is the general partner of Jerusalem Venture Partners IV, L.P.,
Jerusalem Venture Partners IV-A, L.P. and Jerusalem Venture Partners Entrepreneurs Fund IV, L.P. and may be deemed to have sole voting and dispositive power with respect to
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shares held by those funds. Jerusalem Partners—Venture Capital, L.P. is the general partner of Jerusalem Venture Partners IV (Israel), L.P. and may be deemed to have sole
voting and dispositive power with respect to shares held by that fund. JP Media V, L.P. is the general partner of JVP IV Annex Fund, L.P., JVP IV Annex Entrepreneur Fund, L.P.,
JVP Media V, L.P., JVP Media V Entrepreneur Fund, L.P. and JVP Media V (Israel), L.P. and may be deemed to have sole voting and dispositive power with respect to shares held by
those funds. JP Opportunity Fund, L.P. is the general partner of JVP Opportunity Fund, L.P., JVP Opportunity Fund-A, L.P. and JVP Opportunity Entrepreneur
Fund, L.P. and may be deemed to have sole voting and dispositive power with respect to shares held by each fund of which it is a general partner. Jerusalem Venture Partners Corporation is the
general partner of Jerusalem Partners, L.P., Jerusalem Partners III, L.P. and Jerusalem Annex Partners III, L.P. and may be deemed to have sole voting and dispositive power with
respect to the shares held by those funds. JVP Corp IV is the general partner of Jerusalem Partners IV, L.P., JP Media V, L.P. and JP Opportunity Fund and may be deemed to have sole
voting and dispositive power with respect to the shares held by those funds. Dr. Margalit, a member of our board of directors, is a director of Jerusalem Venture Partners Corporation, J.V.P.
Jerusalem Venture Partners (Israel) Management Ltd., Jerusalem Venture Partners III (Israel) Management Company Ltd., and JVP Corp IV and may be deemed to have sole voting and
dispositive power with respect to the shares. Dr. Margalit disclaims beneficial ownership of all such shares.
(13) Includes
options to purchase 35,094 shares of common stock that are exercisable within 60 days of March 31, 2011.
(14) Includes
692,416 shares held by Birchmere Ventures III, LP. Mr. Sebastian, a member of our board of directors, is a partner of Birchmere Ventures and may be deemed to have
sole voting and dispositive power with respect to the shares held by funds related to Birchmere Ventures except to the extent of his pecuniary interest therein.
(15) Consists
of (i) 11,711,378 shares held of record by the current directors and executive officers; and (ii) 106,295 shares exercisable within 60 days of
March 31, 2011, all of which are vested.
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Description of capital stock
General
The following is a summary of the rights of our common stock and preferred stock and certain provisions of our amended and restated
certificate of incorporation and amended and restated bylaws, as they will be in effect upon the completion of this offering. For more detailed information, please see our amended and restated
certificate of incorporation and bylaws, which are filed as exhibits to the registration statement of which this prospectus is a part.
Immediately
following the completion of this offering, our authorized capital stock will consist of 525,000,000 shares, with a par value of $0.001 per share, of which:
•
500,000,000 shares are designated as common stock, and
•
25,000,000 shares are designated as preferred stock.
At
March 31, 2011, assuming the conversion of all outstanding shares of our convertible preferred stock into common stock, we had outstanding 14,359,377 shares of common stock, held of record
by 142 stockholders.
Common stock
The holders of our common stock are entitled to one vote per share on all matters to be voted on by the stockholders. Subject to
preferences that may be applicable to any outstanding shares of preferred stock, holders of common stock are entitled to receive ratably such dividends as may be declared by the board of directors out
of funds legally available therefor. In the event we liquidate, dissolve or wind up, holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities and the
liquidation preferences of any outstanding shares of preferred stock. Holders of common stock have no preemptive, conversion or subscription rights. There are no redemption or sinking fund provisions
applicable to the common stock. All outstanding shares of common stock are, and all shares of common stock to be outstanding upon completion of this offering will be, fully paid and
non-assessable.
Preferred stock
Our board of directors has the authority, without further action by the stockholders, to issue from time to time the preferred stock
in one or more series, to fix the number of shares of any such series and the designation thereof and to fix the rights, preferences, privileges and restrictions granted to or imposed upon such
preferred stock, including dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption, redemption prices, liquidation preference and sinking fund terms, any or
all of which may be greater than or senior to the rights of the common stock. The issuance of preferred stock could adversely affect the voting power of holders of common stock and reduce the
likelihood that such holders will receive dividend payments and payments upon liquidation. Such issuance could have the effect of decreasing the market price of the common stock. The issuance of
preferred stock or even the ability to issue preferred stock could have the effect of delaying, deterring or preventing a change in control. We have no present plans to issue any shares of preferred
stock.
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Warrants
As of March 31, 2011, the Company had outstanding warrants to purchase 6,301 shares of Series B-1 Preferred
Stock at any exercise price of approximately $16.0 per share, which represents 7,316 shares of Common Stock on an as converted basis, 18,691 shares of Series B Preferred Stock at an
exercise price of approximately $8.02 per share, and 31 shares of common stock at an exercise price of approximately $4.16 per share. Each warrant contains provisions for the adjustment of the
exercise price and the number of shares issuable upon the exercise of the warrant in the event of certain stock dividends, stock splits, reclassifications and consolidations. Upon the closing of this
offering, the warrants will become exercisable for 26,038 shares of common stock.
Registration rights
The holders of an aggregate of 13,067,700 shares of our common stock and warrants to purchase 26,038 shares of our common stock, or
their permitted transferees, are entitled to rights with respect to the registration of these shares under the Securities Act. These rights are provided under the terms of an investor rights agreement
between us and the holders of these shares, and include demand registration rights, short-form registration rights and piggyback registration rights. All fees, costs and expenses of
underwritten registrations will be borne by us and all selling expenses, including underwriting discounts and selling commissions, will be borne by the holders of the shares being registered.
Demand registration rights.
The holders of an aggregate of 13,067,700 shares of our common stock and warrants to purchase 26,038 shares of our common stock, or
their permitted transferees, are entitled to demand registration rights. Under the terms of the registration agreement, we will be required, upon the written request of holders of thirty percent (30%)
or more of these shares, to use our commercial best efforts to register all or a portion of these shares for public resale. We are required to effect only two registrations pursuant to this provision
of the registration agreement. We are not required to effect a demand registration prior to 180 days after the completion of this offering.
Short form registration rights.
The holders of an aggregate of 13,067,700 shares of our common stock and warrants to purchase 26,038 shares of our common stock, or
their permitted transferees, are also entitled to short form registration rights. If we are eligible to file a registration statement on Form S-3, these holders have the
right, upon the written request of holders of thirty percent (30%) or more of these shares, to have such shares registered by us at our expense.
Piggyback registration rights.
The holders of an aggregate of 13,067,700 shares of our common stock and warrants to purchase 26,038 shares of our common stock, or
their permitted transferees, are entitled to piggyback registration rights. If we register any of our securities either for our own account or for the account of other security holders, the holders of
these shares are entitled to include their shares in the registration. Subject to certain exceptions, we
and the underwriters may limit the number of shares included in the underwritten offering if the underwriters believe that including these shares would adversely affect the offering.
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Anti-takeover effects of Delaware law and our certificate of incorporation and bylaws
Certain provisions of Delaware law, our amended and restated certificate of incorporation and our bylaws contain provisions that
could have the effect of delaying, deferring or discouraging another party from acquiring control of us. These provisions, which are summarized below, may have the effect of discouraging coercive
takeover practices and inadequate takeover bids. These provisions are also designed, in part, to encourage persons seeking to acquire control of us to first negotiate with our board of directors. We
believe that the benefits of increased protection of our potential ability to negotiate with an unfriendly or unsolicited acquiror outweigh the disadvantages of discouraging a proposal to acquire us
because negotiation of these proposals could result in an improvement of their terms.
Undesignated preferred stock.
As discussed above, our board of directors has the ability to issue preferred stock with voting or other rights or preferences that
could impede the success of any attempt to change control of us. These and other provisions may have the effect of deferring hostile takeovers or delaying changes in control or management of our
company.
Limits on ability of stockholders to call a special meeting.
Our bylaws provide that special meetings of the stockholders may be called only by the board of
directors or a committee of the board of directors. A stockholder may not call a special meeting, which may delay the ability of our stockholders to force consideration of a proposal or for holders
controlling a majority of our capital stock to take any action, including the removal of directors.
Requirements for advance notification of stockholder nominations and proposals.
Our bylaws establish advance notice procedures with respect to stockholder
proposals and the nomination of candidates for election as directors. However, our bylaws may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are
not followed. These provisions may also discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquirer's own slate of directors or otherwise attempting to
obtain control of our company.
No cumulative voting.
The Delaware General Corporation Law provides that stockholders are not entitled to the right to cumulate votes in the election of directors
unless our amended and restated certificate of incorporation provides otherwise. Our amended and restated certificate of incorporation and amended and restated bylaws do not expressly provide for
cumulative voting.
Transfer agent and registrar
Upon the completion of this offering, the transfer agent and registrar for our common stock will
be                           .
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Shares eligible for future sale
Before this offering, there has not been a public market for shares of our common stock. Future sales of substantial amounts of
shares of our common stock, including shares issued upon the exercise of outstanding options, in the public market after this offering, or the possibility of these sales occurring, could cause the
prevailing market price for our common stock to fall or impair our ability to raise equity capital in the future.
Upon
the completion of this offering, a total of                           shares of common stock will be outstanding,
assuming that there are no exercises of options after March 31, 2011. Of these
shares, all                           shares of common stock sold in this offering by us, plus any shares sold upon
exercise of the underwriters' over-allotment option, will be freely tradable in
the public market without restriction or further registration under the Securities Act, unless these shares are held by "affiliates," as that term is defined in Rule 144 under the Securities
Act.
The
remaining 14,359,377 shares of common stock will be "restricted securities," as that term is defined in Rule 144 under the Securities Act. These restricted securities are eligible for
public sale only if they are registered under the Securities Act or if they qualify for an exemption from registration under Rules 144 or 701 under the Securities Act, which are summarized
below.
Subject
to the lock-up agreements described below and the provisions of Rules 144 and 701 under the Securities Act, these restricted securities will be available for sale in the
public market as follows:
Date
Number of shares
On the date of this prospectus
Between             and             days after the date of this prospectus
At various times beginning more than             days after the date of this
prospectus
In addition, of the 399,570 shares of our common stock that were subject to stock options outstanding as of March 31, 2011 options to purchase 371,969
shares of common stock were exercisable as of March 31, 2011 and will be eligible for sale 90 days following the effective date of this offering (includes outstanding options under both
our 1999 Stock Option Plan and our 2007 Stock Plan).
Lock-up agreements
We and all of our directors and officers, as well as the other holders of substantially all shares of common stock outstanding
immediately prior to this offering, have agreed that, without the prior written consent of J.P. Morgan Securities LLC and Barclays
Capital Inc., on behalf of the underwriters, we and they will not, during the period ending 180 days after the date of this prospectus:
•
offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares of our common stock or any securities
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convertible
into or exercisable, or exchangeable for shares of our common stock or publicly disclose the intention to make any such offer, sale, pledge or disposition; or
•
enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences
of ownership of our common stock;
whether
any transaction described above is to be settled by delivery of shares of our common stock or such other securities, in cash or otherwise. In addition, such directors, officers and
stockholders have agreed further that, without the prior written consent of J.P. Morgan Securities LLC and Barclays Capital Inc., on behalf of the underwriters, they will not,
during the same period make any demand for or exercise any right with respect to the registration of any shares of our common stock or any security convertible into or exercisable or exchangeable for
common stock. The period may be extended by up to 34 days. This agreement is subject to certain exceptions, and is also subject to extension for up to additional days, as set forth in
"Underwriting."
Rule 144
In general, under Rule 144 as currently in effect, once we have been subject to public company reporting requirements for at
least 90 days, a person who is not deemed to have been one of our affiliates for purposes of the Securities Act at any time during 90 days preceding a sale and who has beneficially owned
the shares proposed to be sold
for at least six months, including the holding period of any prior owner other than our affiliates, is entitled to sell such shares without complying with the manner of sale, volume limitation or
notice provisions of Rule 144, subject to compliance with the public information requirements of Rule 144. If such a person has beneficially owned the shares proposed to be sold for at
least one year, including the holding period of any prior owner other than our affiliates, then such person is entitled to sell such shares without complying with any of the requirements of
Rule 144.
In
general, under Rule 144, as currently in effect, our affiliates or persons selling shares on behalf of our affiliates are entitled to sell upon expiration of the lock-up
agreements described above, within any three-month period beginning 90 days after the date of this prospectus, a number of shares that does not exceed the greater of:
•
1% of the number of shares of common stock then outstanding, which will equal
approximately                            shares
immediately after this offering; or
•
the average weekly trading volume of the common stock during the four calendar weeks preceding the filing of a notice on
Form 144 with respect to such sale.
Sales
under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the
availability of current public information about us.
Rule 701
Rule 701 generally allows a stockholder who purchased shares of our common stock pursuant to a written compensatory plan or
contract and who is not deemed to have been an affiliate of our company during the immediately preceding 90 days to sell these shares in reliance upon Rule 144, but without being
required to comply with the public information, holding period,
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volume
limitation or notice provisions of Rule 144. Rule 701 also permits affiliates of our company to sell their Rule 701 shares under Rule 144 without complying with the
holding period requirements of Rule 144. All holders of Rule 701 shares, however, are required to wait until 180 days after the date of this prospectus before selling such shares
pursuant to Rule 701.
As
of March 31, 2011, 107,997 shares of our outstanding common stock had been issued in reliance on Rule 701 as a result of exercises of stock options and stock awards. These shares will
be eligible for resale in reliance on this rule upon expiration of the lockup agreements described above.
Stock options
We intend to file a registration statement on Form S-8 under the Securities Act covering all of the shares
of our common stock subject to options outstanding or reserved for issuance under our stock plans and shares of our common stock issued upon the exercise of options by employees. We expect to file
this registration statement as soon as practicable after this offering. In addition, we intend to file a registration statement on Form S-8 or such other form as may be
required under the Securities Act for the resale of shares of our common stock issued upon the exercise of options that were not granted under Rule 701. We expect to file this registration
statement as soon as permitted under the Securities Act. However, the shares registered on Form S-8 will be subject to volume limitations, manner of sale, notice and public
information requirements of Rule 144 and will not be eligible for resale until expiration of the lock-up agreements to which they are subject.
Registration rights
Upon completion of this offering, the holders of 13,067,700 shares of our common stock and warrants to purchase 26,038 shares of our
common stock or their respective transferees will be entitled to various rights with respect to the registration of these shares under the Securities Act. Registration of these shares under the
Securities Act would result in these shares becoming fully tradable without restriction under the Securities Act immediately upon the effectiveness of the registration, except for shares purchased by
affiliates. See "Description of capital stock—Registration rights" for additional information.
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Material United States federal income tax and estate tax
consequences to non-U.S. holders
The following is a summary of the material U.S. federal income tax and estate tax consequences of the ownership and disposition of
our common stock to non-U.S. holders, but does not purport to be a complete analysis of all the potential tax considerations relating thereto. This summary is based upon the provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), Treasury regulations promulgated thereunder, administrative rulings and judicial decisions, all as of the date hereof. These authorities may
be changed, possibly retroactively, so as to result in U.S. federal income or estate tax consequences different from those set forth below.
This
summary does not address the tax considerations arising under the laws of any non-U.S., state or local jurisdiction or under U.S. federal gift and estate tax laws, except to the
limited extent below. In addition, this discussion does not address tax considerations applicable to an investor's particular circumstances or to investors that may be subject to special tax rules,
including, without limitation:
•
banks, insurance companies or other financial institutions;
•
persons subject to the alternative minimum tax;
•
tax-exempt organizations;
•
controlled foreign corporations, passive foreign investment companies and corporations that accumulate earnings to avoid
United States federal income tax;
•
dealers in securities or currencies;
•
traders in securities that elect to use a mark-to-market method of accounting for their securities
holdings;
•
persons that own, or are deemed to own, more than five percent of our capital stock (except to the extent specifically set
forth below);
•
certain former citizens or long-term residents of the United States;
•
persons who hold our common stock as a position in a hedging transaction, "straddle," "conversion transaction" or other
risk reduction transaction;
•
persons who do not hold our common stock as a capital asset within the meaning of Section 1221 of the Code
(generally, for investment purposes); or
•
persons deemed to sell our common stock under the constructive sale provisions of the Code.
In
addition, if a partnership or entity classified as a partnership for U.S. federal income tax purposes holds our common stock, the tax treatment of a partner generally will depend on the status of
the partner and upon the activities of the partnership. Accordingly, partnerships that hold our common stock, and partners in such partnerships, should consult their tax advisors.
You are urged to consult your tax advisor with respect to the application of the United States federal income tax laws to your particular situation, as well as any tax
consequences of the
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purchase, ownership and disposition of our common stock arising under the United States federal estate or gift tax rules or under the laws of any state, local, non-U.S. or other taxing
jurisdiction or under any applicable tax treaty.
Non-U.S. holder defined
For purposes of this discussion, you are a non-U.S. holder if you are any holder (other than a partnership or entity
classified as a partnership for U.S. federal income tax purposes) that is not:
•
an individual citizen or resident of the United States;
•
a corporation or other entity taxable as a corporation created or organized in the United States or under the laws of the
United States or any political subdivision thereof;
•
an estate whose income is subject to U.S. federal income tax regardless of its source; or
•
a trust (x) whose administration is subject to the primary supervision of a U.S. court and which has one or more
U.S. persons who have the authority to control all substantial decisions of the trust or (y) which has made an election to be treated as a U.S. person.
Distributions
We have not made any distributions on our common stock, and we do not plan to make any distributions for the foreseeable future.
However, if we do make distributions on our common stock, those payments will constitute dividends for U.S. tax purposes to the extent paid from our current or accumulated earnings and profits, as
determined under U.S. federal income tax principles. To the extent those distributions exceed
both our current and our accumulated earnings and profits, they will constitute a return of capital and will first reduce your basis in our common stock, but not below zero, and then will be treated
as gain from the sale of stock, subject to the tax treatment described below in "Gain on disposition of common stock."
Any
dividend paid to you generally will be subject to U.S. withholding tax either at a rate of 30% of the gross amount of the dividend or such lower rate as may be specified by an applicable income
tax treaty. In order to receive a reduced treaty rate, you must provide us with an IRS Form W-8BEN or other appropriate version of IRS Form W-8 certifying
qualification for the reduced rate. A non-U.S. holder of shares of our common stock eligible for a reduced rate of U.S. withholding tax pursuant to an income tax treaty may obtain a refund
of any excess amounts withheld by filing an appropriate claim for refund with the IRS. If the non-U.S. holder holds the stock through a financial institution or other agent acting on the
non-U.S. holder's behalf, the non-U.S. holder will be required to provide appropriate documentation to the agent, which then will be required to provide certification to us or
our paying agent, either directly or through other intermediaries.
Dividends
received by you that are effectively connected with your conduct of a U.S. trade or business (and, if an income tax treaty applies, attributable to a permanent establishment maintained by
you in the United States) are exempt from such withholding tax. In order to obtain this exemption, you must provide us with an IRS Form W-8ECI or other applicable IRS
Form W-8 properly certifying such exemption. Such effectively connected dividends, although not subject to withholding tax, are generally taxed at the same graduated rates
applicable to
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U.S.
persons, net of certain deductions and credits. In addition, if you are a corporate non-U.S. holder, dividends you receive that are effectively connected with your conduct of a U.S.
trade or business may also be subject to a branch profits tax at a rate of 30% or such lower rate as may be specified by an applicable income tax treaty.
Gain on disposition of common stock
You generally will not be required to pay U.S. federal income tax on any gain realized upon the sale or other disposition of our
common stock unless:
•
the gain is effectively connected with your conduct of a U.S. trade or business (and, if an income tax treaty applies, the
gain is attributable to a permanent establishment maintained by you in the United States);
•
you are an individual who is present in the United States for a period or periods aggregating 183 days or more
during the calendar year in which the sale or disposition occurs and certain other conditions are met; or
•
we were a "United States real property holding corporation" for U.S. federal income tax purposes (a "USRPHC") at any time
within the shorter of the five-year period preceding the disposition or your holding period for our common stock.
In
general, we would be a USRPHC if interests in U.S. real property comprised at least 50% of the fair market value of our assets. We believe that we are not currently and will not become a USRPHC.
However, because the determination of whether we are a USRPHC depends on the fair market value of our U.S. real property relative to the fair market value of our other business assets, there can be no
assurance that we will not become a USRPHC in the future. Even if we become a USRPHC, however, as long as our common stock is regularly traded on an established securities market, such common stock
will be treated as a U.S. real property interest only if you actually or constructively hold more than five percent of such regularly traded common stock at any time during the applicable period
described above.
If
you are a non-U.S. holder described in the first bullet above, you will generally be required to pay tax on the gain derived from the sale (net of certain deductions or credits) under
regular graduated U.S. federal income tax rates, and corporate non-U.S.
holders described in the first bullet above may be subject to branch profits tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty. If you are an individual
non-U.S. holder described in the second bullet above, you will be required to pay a flat 30% tax on the gain derived from the sale, which tax may be offset by U.S. source capital losses
(even though you are not considered a resident of the United States). You should consult any applicable income tax or other treaties that may provide for different rules.
Federal estate tax
Our common stock beneficially owned by an individual who is not a citizen or resident of the United States (as defined for United
States federal estate tax purposes) at the time of death will generally be includable in the decedent's gross estate for United States federal estate tax purposes, unless an applicable estate tax
treaty provides otherwise.
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Backup withholding and information reporting
Generally, we must report annually to the IRS the amount of dividends paid to you, your name and address, and the amount of tax
withheld, if any. A similar report will be sent to you. Pursuant to applicable income tax treaties or other agreements, the IRS may make these reports available to tax authorities in your country of
residence.
Payments
of dividends or of proceeds on the disposition of stock made to you may be subject to additional information reporting and backup withholding at a current rate of 28% unless you establish an
exemption, for example by properly certifying your non-U.S. status on a Form W-8BEN or another appropriate version of IRS Form W-8. Notwithstanding
the foregoing, backup withholding and information
reporting may apply if either we or our paying agent has actual knowledge, or reason to know, that you are a U.S. person.
Backup
withholding is not an additional tax; rather, the U.S. income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund or credit may generally be obtained from the IRS, provided that the required information is furnished to the IRS in a timely manner.
Additional withholding requirement
Recently enacted legislation generally will impose a U.S. federal withholding tax of 30% on dividends and the gross proceeds of a
disposition of our common stock paid to a "foreign financial institution" (as specially defined under these rules) unless such institution enters into an agreement with the U.S. government to withhold
on certain payments and to collect and provide to the U.S. tax authorities substantial information regarding U.S. account holders of such institution (which includes certain equity and debt holders of
such institution, as well as certain account holders that are foreign entities with U.S. owners). The legislation also will generally impose a U.S. federal withholding tax of 30% on dividends and the
gross proceeds of a disposition of our common stock paid to a non-financial foreign entity unless such entity provides the withholding agent with a certification identifying the direct and
indirect U.S. owners of the entity. Under certain transition rules, any obligation to withhold under this new legislation with respect to dividends on our common stock will not begin until
January 1, 2014 and with respect to gross proceeds on a disposition of our common stock will not begin until January 1, 2015. Under certain circumstances, a non-U.S. holder
might be eligible for refunds or credits of such taxes. Prospective investors are encouraged to consult with their own tax advisors regarding the possible implications of this legislation on their
investment in our common stock.
THE PRECEDING DISCUSSION OF UNITED STATES FEDERAL TAX CONSIDERATIONS IS FOR GENERAL INFORMATION ONLY. IT IS NOT TAX ADVICE. EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN TAX
ADVISOR REGARDING THE PARTICULAR UNITED STATES FEDERAL, STATE AND LOCAL AND NON-U.S. TAX CONSEQUENCES OF PURCHASING, HOLDING AND DISPOSING OF OUR COMMON STOCK, INCLUDING THE CONSEQUENCES
OF ANY PROPOSED CHANGE IN APPLICABLE LAWS.
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Underwriting
J.P. Morgan Securities LLC and Barclays Capital Inc., or the Representatives, are acting as the representatives of the
underwriters and joint book-running managers in connection with this offering. Under the terms of an underwriting agreement, the form of which will be filed as an exhibit to the
registration statement of which this prospectus forms a part, each of the underwriters named below has severally agreed to purchase from us, and have agreed to sell, the respective number of
shares of common stock shown opposite its name below:
Name
Number of shares
J.P. Morgan Securities LLC
Barclays Capital Inc.
Oppenheimer & Co. Inc.
Raymond James & Associates, Inc.
Roth Capital Partners, LLC
Total
The underwriting agreement provides that the underwriters' obligation to purchase shares of common stock depends on the satisfaction of the conditions contained in the underwriting
agreement, including:
•
the obligation to purchase all of the shares of common stock offered hereby (other than those shares of common stock
covered by their option to purchase additional shares as described below), if any of the shares are purchased;
•
the representations and warranties made by us to the underwriters are true;
•
there is no material adverse change in our business or in the financial markets; and
•
we deliver customary closing documents to the underwriters.
Commissions and expenses
The following table summarizes the underwriting discounts and commissions we will pay to the underwriters. These amounts are shown
assuming both no exercise and full exercise of the underwriters' option to purchase up
to                           additional shares from us. The underwriting fee is the difference between the initial
price to
the public and the amount the underwriters pay to us, and we have severally agreed to sell, for the shares.
Paid by us
No exercise
Full exercise
Per Share
$
$
Total
$
$
The Representatives have advised us that the underwriters propose to offer the shares of common stock directly to the public at the public offering price on the cover of this
prospectus and to selected dealers, which may include the underwriters, at such offering price less a selling concession not in excess of $             per share. After the offering,
the
Representatives may change the offering price and other selling terms.
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The
expenses of this offering, which are payable by us, are estimated to be approximately $              million (excluding underwriting discounts and commissions).
Option to purchase additional shares
We have granted the underwriters an option exercisable for 30 days after the date of this prospectus to purchase, from time to
time, in whole or in part, up to an aggregate of                           shares of common stock at the public
offering price less underwriting discounts and commissions. This option may be exercised by the
underwriters to cover over-allotments, if any, in connection with this offering. To the extent that the
underwriters exercise this option, each underwriter will be committed, so long as the conditions of the underwriting agreement are satisfied, to purchase a number of additional shares of common stock
proportionate to that underwriter's initial commitment as indicated in the table above, and we will be obligated to sell the additional shares of common stock to the underwriters.
Lock-up agreements
We, all of our directors and executive officers and holders of substantially all of our outstanding stock, have agreed that, subject
to certain exceptions, we and they will not directly or indirectly, without the prior written consent of the Representatives (1) offer, sell, pledge, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise dispose of (or enter into any transaction or device that is designed to, or
could be expected to, result in the disposition by any person at any time in the future of) any shares of our common stock or securities convertible into or exercisable or exchangeable for our common
stock (including, without limitation, shares of common stock that may be deemed to be beneficially owned in accordance with the rules and regulations of the SEC and shares of common stock that may be
issued upon exercise of any stock options), or publicly disclose the intention to make any offer, pledge, sale disposition, (2) enter into any swap or other derivatives transaction that
transfers to another, in whole or in part, any of the economic benefits or risks of ownership of shares of common stock or such securities, whether any such transaction described in clause (1)
or (2) above is to be settled by delivery of common stock or other securities, in cash or otherwise or (3) solely with respect to such directors, executive officers and stockholders,
make any demand for or exercise any right or cause to be filed with respect to the registration of any shares of common stock or securities convertible into or exercisable or exchangeable for common
stock or any other securities for a period of 180 days after the date of this prospectus.
The
180-day restricted period described in the preceding paragraph will be extended if:
(1)
during
the last 17 days of the 180-day restricted period, we issue an earnings release or material news or a material event relating to
us occurs; or
(2)
prior
to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 16-day period
beginning on the last day of the 180-day period,
in
which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or
the announcement of the material news or occurrence of the material event, unless such extension is waived in writing by the Representatives.
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The
Representatives, in their sole discretion, may release the common stock and other securities subject to the lock-up agreements described above in whole or in part at any time with or
without notice. At least three business days before the effectiveness of any release or waiver of the restrictions described above in connection with any transfer of shares of common stock by an
officer or director, the Representatives will notify us of the impending release or waiver of any restriction and we have agreed to announce the impending release or waiver by press release through a
major news service at least two business days before the effective date of the release or waiver, except where the release or waiver is effected solely to permit a transfer of common stock that is not
for consideration and where the transferee has agreed in writing to be bound by the same terms as the lock-up agreements described above to the extent and for the duration that such terms remain in
effect at the time of transfer.
Offering price determination
Prior to this offering, there has been no public market for our common stock. The initial public offering price will be negotiated
between the Representatives and us. In determining the initial public offering price of our common stock, the Representatives will consider:
•
the history and prospects for the industry in which we compete;
•
our financial information;
•
an assessment of management and our business potential and earning prospects;
•
the prevailing securities market conditions at the time of this offering; and
•
the recent market prices of, and the demand for, publicly traded shares of generally comparable companies.
Indemnification
We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act and
liabilities arising from breaches of the representations and warranties contained in the underwriting agreement, and to contribute to payments that the underwriters may be required to make for these
liabilities.
Stabilization, short positions and penalty bids
The underwriters may engage in stabilizing transactions, short sales and purchases to cover positions created by short sales, and
penalty bids or purchases for the purpose of pegging, fixing or maintaining the price of our common stock, in accordance with Regulation M under the Securities Exchange Act of
1934:
•
Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a
specified maximum
•
A short position involves a sale by the underwriters of shares in excess of the number of shares the underwriters are
obligated to purchase in the offering, which creates the syndicate short position. This short position may be either a covered short position or a naked short position. In a covered short position,
the number of shares involved in the sales made by the underwriters in excess of the number of shares they are obligated to purchase
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is
not greater than the number of shares that they may purchase by exercising their option to purchase additional shares. In a naked short position, the number of shares involved is greater than the
number of shares in their option to purchase additional shares. The underwriters may close out any short position by either exercising their option to purchase additional shares and/or purchasing
shares in the open market. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the
open market as compared to the price at which they may purchase shares through their option to purchase additional shares. A naked short position is more likely to be created if the underwriters are
concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering.
•
Syndicate covering transactions involve purchases of the common stock in the open market after the distribution has been
completed in order to cover syndicate short positions.
•
Penalty bids permit the Representatives to reclaim a selling concession from a syndicate member when the common stock
originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.
These
stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline
in the market price of the common stock. As a result, the price of the common stock may be higher than the price that may otherwise exist in the open market. These transactions may be effected on
                           or otherwise and, if commenced, may be discontinued at any time.
Neither
we nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of our common
stock. In addition, neither we nor any of the underwriters make representation that the Representatives will engage in these stabilizing transactions or that any transaction, once commenced, will not
be discontinued without notice.
Electronic distribution
A prospectus in electronic format may be made available on Internet sites or through other online services maintained by one or more
of the underwriters and/or selling group members participating in this offering, or by their affiliates. In those cases, prospective investors may view offering terms online and, depending upon the
particular underwriter or selling group member, prospective investors may be allowed to place orders online. The underwriters may agree with us to allocate a specific number of shares for sale to
online brokerage account holders. Any such allocation for online distributions will be made by the Representatives on the same basis as other allocations.
Other
than the prospectus in electronic format, the information on any underwriter's or selling group member's website and any information contained in any other website maintained by an underwriter
or selling group member is not part of the prospectus or the registration statement of which this prospectus forms a part, has not been approved and/or endorsed by us or any underwriter or
selling group member in its capacity as underwriter or selling group
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member
and should not be relied upon by investors in deciding whether to purchase any shares of common stock.
Stock exchange
We intend to apply to have our common stock listed on The NASDAQ Global Select Market under the symbol "CYOP."
Discretionary sales
The underwriters have informed us that they do not intend to confirm sales to discretionary accounts that exceed 5% of the total
number of shares offered by them.
Stamp taxes
If you purchase shares of common stock offered in this prospectus, you may be required to pay stamp taxes and other charges under the
laws and practices of the country of purchase, in addition to the offering price listed on the cover page of this prospectus.
Relationships
The underwriters and certain of their respective affiliates are financial institutions engaged in various activities, which may
include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities.
Certain of the underwriters and their respective affiliates may in the future perform, investment banking and advisory services for us from time to time, for which they may in the future receive
customary fees and expenses. The underwriters and their respective affiliates may, from time to time, engage in transactions with or perform services for us in the ordinary course of their business.
In
the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity
securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities
activities may involve our securities and/or instruments. The underwriters and their respective affiliates may also make investment recommendations and/or publish or express independent research views
in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.
Selling restrictions
The common stock is being offered for sale in those jurisdictions in the United States, Europe and elsewhere where it is lawful to
make such offers.
European economic area
In relation to each member state of the European Economic Area which has implemented the Prospectus Directive (each, a "Relevant
Member State"), including each Relevant Member State that has implemented the 2010 PD Amending Directive with regard to persons to whom an
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offer
of securities is addressed and the denomination per unit of the offer of securities (each, an "Early Implementing Member State"), with effect from and including the date on which the Prospectus
Directive is implemented in that Relevant Member State (the "Relevant Implementation Date"), no offer of ordinary shares will be made to the public in that Relevant Member State (other than offers
(the "Permitted Public Offers") where a prospectus will be published in relation to the ordinary shares that has been approved by the competent authority in a Relevant Member State or, where
appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive), except that with effect
from and including that
Relevant Implementation Date, offers of ordinary shares may be made to the public in that Relevant Member State at any time:
(a)
to
"qualified investors" as defined in the Prospectus Directive, including:
A.
(in
the case of Relevant Member States other than Early Implementing Member States), legal entities which are authorized or regulated to operate in the
financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities, or any legal entity which has two or more of (i) an average of at least 250
employees during the last financial year; (ii) a total balance sheet of more than €43.0 million and (iii) an annual turnover of more than
€50.0 million as shown in its last annual or consolidated accounts; or
B.
(in
the case of Early Implementing Member States), persons or entities that are described in points (1) to (4) of Section I of
Annex II to Directive 2004/39/EC, and those who are treated on request as professional clients in accordance with Annex II to Directive 2004/39/EC, or recognized as eligible
counterparties in accordance with Article 24 of Directive 2004/39/EC unless they have requested that they be treated as non-professional clients; or
(b)
to
fewer than 100 (or, in the case of Early Implementing Member States, 150) natural or legal persons (other than "qualified investors" as defined in the
Prospectus Directive), as permitted in the Prospectus Directive, subject to obtaining the prior consent of the representatives for any such offer; or
(c)
in
any other circumstances falling within Article 3(2) of the Prospectus Directive,
provided
that no such offer of ordinary shares shall result in a requirement for the publication of a prospectus pursuant to Article 3 of the Prospectus Directive or of a supplement to a
prospectus pursuant to Article 16 of the Prospectus Directive.
Each
person in a Relevant Member State (other than a Relevant Member State where there is a Permitted Public Offer) who initially acquires any ordinary shares or to whom any offer is made will be
deemed to have represented, acknowledged and agreed that (A) it is a "qualified investor," and (B) in the case of any ordinary shares acquired by it as a financial intermediary, as that
term is used in Article 3(2) of the Prospectus Directive, (x) the ordinary shares acquired by it in the offering have not been acquired on behalf of, nor have they been acquired with a
view to their offer or resale to, persons in any Relevant Member State other than "qualified investors" as defined in the Prospectus Directive, or in circumstances in which the prior consent of the
Subscribers has been given to the offer or resale, or (y) where ordinary shares have been acquired by it on behalf of persons in any Relevant Member State other than "qualified
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investors"
as defined in the Prospectus Directive, the offer of those ordinary shares to it is not treated under the Prospectus Directive as having been made to such persons.
For
the purpose of the above provisions, the expression "an offer to the public" in relation to any ordinary shares in any Relevant Member State means the communication in any form and by any means of
sufficient information on the terms of the offer of any ordinary shares to be offered so as to enable an investor to decide to purchase any ordinary shares, as the same may be varied in the Relevant
Member State by any measure implementing the Prospectus Directive in the Relevant Member State and the expression "Prospectus Directive" means Directive 2003/71 EC (including the 2010 PD Amending
Directive, in the case of Early Implementing Member States) and includes any relevant implementing measure in each Relevant Member State and the expression "2010 PD Amending Directive" means Directive
2010/73/EU.
United Kingdom
This document is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or
(ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (iii) high net worth
entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant
persons"). The securities are only available to and any invitation, offer or agreement to subscribe purchase or otherwise acquire such securities will be enjoyed in only with relevant persons. Any
person in the United Kingdom that is not a relevant persons should not act or rely on this document or any of its contents.
Australia
This prospectus is not a formal disclosure document and has not been lodged with the Australian Securities and Investments
Commission, or ASIC. It does not purport to contain all information that an investor or their professional advisers would expect to find in a prospectus for the purposes of Chapter 6D.2 of the
Australian Corporations Act 2001, or the Act, in relation to the securities or our company.
This
prospectus is not an offer to retail investors in Australia generally. Any offer of securities in Australia is made on the condition that the recipient is a "sophisticated investor" within the
meaning of section 708(8) of the Act or a "professional investor" within the meaning of section 708(11) of the Act, or on condition that the offer to that recipient can be brought within
the exemption for 'Small-Scale Offerings' (within the meaning of section 708(1) of the Act). If any recipient does not satisfy the criteria for these exemptions, no applications for securities
will be accepted from that recipient. Any offer to a recipient in Australia any agreement arising from acceptance of the offer, is personal and may only he accepted by the recipient.
If
a recipient on-sells their securities within 12 months of their issue, that person will be required to lodge a disclosure document with ASIC unless
either:
•
the sale is pursuant to an offer received outside Australia or is made to a "sophisticated investor" within the meaning of
708(8) of the Act or a "professional investor" within the meaning of section 708(11) of the Act; or
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•
it can be established that our company issued, and the recipient subscribed for, the securities without the purpose of the
recipient on-selling them or granting, issuing or transferring interests in, or options or warrants over them.
Hong Kong
The shares may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an
offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), or (ii) to "professional investors" within the meaning of the Securities and Futures Ordinance
(Cap. 571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a "prospectus" within the meaning of the Companies
Ordinance (Cap. 32, Laws of Hong Kong) and no advertisement, invitation or document relating to the shares may be issued or may be in the possession of any person for the purpose of the issue (in each
case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of
Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning of the Securities and
Futures Ordinance (Cap. 571, Laws of Hong Kong) or any rules made thereunder.
India
This prospectus has not been and will not be registered as a prospectus with the Registrar of Companies in India. This prospectus or
any other material relating to these securities may not be circulated or distributed, directly or indirectly, to the public or any members of the public in India. Further, persons into whose
possession this prospectus comes are required to inform themselves about and to observe any such restrictions. Each prospective investor is advised to consult its advisors about the particular
consequences to it of an investment in these securities. Each prospective investor is also advised that any investment in these securities by it is subject to the regulations prescribed by the Reserve
Bank of India and the Foreign Exchange Management Act and any regulations framed thereunder.
Japan
No registration has been made under Article 4, Paragraph 1 of the Financial Instruments and Exchange Law of Japan (Law
No. 25 of 1948, as amended), which we refer to as the FIEL, in relation to the offering of the shares. The shares are being offered in a private placement to up to 49 investors under
Article 2, Paragraph 3, Item 2 iii of the FIEL.
Korea
Our securities may not be offered, sold and delivered directly or indirectly, or offered or sold to any person for reoffering or
resale, directly or indirectly, in Korea or to any resident of Korea except pursuant to the applicable laws and regulations of Korea, including the Securities and Exchange Act and the Foreign Exchange
Transaction Law and the decrees and regulations thereunder. Our securities have not been registered with the Financial Supervisory Commission of Korea for public offering in Korea. Furthermore, our
securities may not be resold to Korean residents unless the purchaser of our securities complies with all applicable regulatory
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requirements
(including but not limited to government approval requirements under the Foreign Exchange Transaction Law and its subordinate decrees and regulations) in connection with the purchase of
our securities.
Singapore
This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and
any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or
sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under
Section 274 of the
Securities and Futures Act, Chapter 289 of Singapore (the "SFA"), (ii) to a relevant person, or any person pursuant to Section 275 (1A), and in accordance with the conditions,
specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.
Where
the shares are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to
hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited
investor) whose sole whole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the
beneficiaries' rights and interest in that trust shall not be transferable for six months after that corporation or that trust has acquired the shares under Section 275 except: (i) to an
institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275 (1A), and in accordance with the conditions, specified in
Section 275 of the SEA; (ii) where no consideration is given for the transfer; or (iii) by operation of law.
By
accepting this prospectus, the recipient hereof represents and warrants that he is entitled to receive it in accordance with the restrictions set forth above and agrees to be bound by limitations
contained herein. Any failure to comply with these limitations may constitute a violation of law.
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Legal matters
The validity of the shares of common stock offered hereby will be passed upon for us by Goodwin Procter LLP, Menlo Park,
California. Certain members of, investment partnerships comprised of members of, and persons associated with, Goodwin Procter beneficially holds an aggregate of 186 shares of our common stock, which
represents less than 0.01% of our outstanding shares of common stock. Certain legal matters in connection with the offering will be passed upon for the underwriters by Wilson Sonsini Goodrich &
Rosati, Professional Corporation, Washington, D.C. Certain members of and persons associated with Wilson Sonsini Goodrich & Rosati, Professional Corporation, beneficially hold an
aggregate of 781 shares of our common stock, which represents less than 0.01% of our outstanding shares of common stock.
Experts
The consolidated financial statements of CyOptics, Inc. as of December 31, 2010 and 2009, and for each of the three
years in the period ended December 31, 2010, appearing in this prospectus and the related registration statement have been audited by Ernst & Young LLP, independent registered
public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and
auditing.
Where you can find more information
We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the
shares of common stock we are offering. The registration statement, including the attached exhibits and schedules, contains additional relevant information about us and our common stock. This
prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules thereto. The rules and regulations of the SEC allow us to omit from this
prospectus certain information included in the registration statement.
For
further information about us and our common stock, you may inspect a copy of the registration statement and the exhibits and schedules to the registration statement without charge at the offices
of the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may obtain copies of all or any part of the registration statement from the Public Reference Section of the SEC, 100 F
Street, N.E., Washington, D.C. 20549 upon the payment of the prescribed fees.
You
may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a website at www.sec.gov that
contains reports, proxy and information statements and other information
regarding registrants like us that file electronically with the SEC. You can also inspect our registration statement on this website.
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CyOptics, Inc.
Consolidated financial statements
Contents
Page
Consolidated financial statements for the years ended December 31, 2010, 2009 and 2008
Report of independent registered public accounting firm
F-2
Consolidated balance sheets
F-3
Consolidated statements of
operations
F-4
Consolidated statements of convertible preferred stock and
stockholders' equity (deficit)
F-5
Consolidated statements of cash
flows
F-6
Notes to consolidated financial statements
F-7
Unaudited condensed consolidated financial statements for the three-months ended March 31, 2011 and 2010
Condensed consolidated balance sheets
F-32
Condensed consolidated statements of operations
F-33
Condensed consolidated statements of convertible preferred stock
and stockholders' equity (deficit)
F-34
Condensed consolidated statements of cash flows
F-35
Notes to condensed consolidated financial
statements
F-36
F-1
Table of Contents
Report of independent registered public accounting firm
The Board of Directors and Stockholders of CyOptics, Inc.
We
have audited the accompanying consolidated balance sheets of CyOptics, Inc. as of December 31, 2010 and 2009, and the related consolidated statements of operations, convertible
preferred stock and stockholders' equity (deficit), and cash flows for each of the three years in the period ended December 31, 2010. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our
audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
In
our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of CyOptics, Inc. as of December 31, 2010 and
2009, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2010, in conformity with U.S. generally accepted accounting
principles.
/s/ Ernst & Young LLP
Philadelphia,
Pennsylvania
August 12, 2011
F-2
Table of Contents
CyOptics, Inc.
Consolidated balance sheets
December 31,
(in thousands, except for share and per share data)
2010
2009
Assets
Current assets:
Cash and cash equivalents
$
12,397
$
9,122
Restricted cash
100
—
Accounts receivable, net of allowance for doubtful accounts of $77 and $87 at December 31, 2010 and 2009, respectively
26,894
17,591
Inventories, net
19,526
11,070
Prepaid expenses and other current assets
892
995
Total current assets
59,809
38,778
Property and equipment, net
8,337
8,245
Intangible assets, net
6,165
8,310
Long-term restricted cash
—
100
Total assets
$
74,311
$
55,433
Liabilities, convertible preferred stock, and stockholders' equity (deficit)
Current liabilities:
Current portion of long-term loans
$
667
$
733
Current portion of related-party loan
1,283
1,217
Accounts payable
18,258
7,152
Accrued and other current liabilities
4,623
4,044
Total current liabilities
24,831
13,146
Long-term liabilities:
Long-term loans
278
944
Credit line
10,200
10,200
Related-party loan
366
1,656
Preferred stock warrant liability
239
—
Total liabilities
35,914
25,946
Commitments and contingencies
Convertible preferred stock:
Convertible preferred stock, $0.001 par value per share, 11,061,237 shares authorized; 10,620,038 issued and outstanding (liquidation preference of
$210,733 at December 31, 2010)
122,958
122,958
Stockholders' equity (deficit):
Common stock, $0.001 par value per share, 14,807,692 shares authorized; 1,485,178 and 1,521,310 issued and outstanding at December 31, 2010 and 2009,
 respectively
1
2
Additional paid-in capital
45,114
45,092
Accumulated deficit
(129,676
)
(138,565
)
Total stockholders' equity (deficit)
(84,561
)
(93,471
)
Total liabilities, convertible preferred stock and stockholders' equity (deficit)
$
74,311
$
55,433
The accompanying notes are an integral part of these consolidated financial statements.
F-3
Table of Contents
CyOptics, Inc.
Consolidated statements of operations
Year ended December 31,
(in thousands, except for share and per share data)
2010
2009
2008
Total revenues
$
108,336
$
65,730
$
67,211
Cost of revenues
79,375
57,846
63,157
Gross profit
28,961
7,884
4,054
Operating expenses:
Research and development
12,010
19,540
19,031
Sales and marketing
2,671
3,181
3,888
General and administrative
3,270
7,372
5,904
Severance and liquidation expenses
—
6,465
—
Asset impairment
—
6,621
9,841
Total operating expenses
17,951
43,179
38,664
Income (loss) from operations
11,010
(35,295
)
(34,610
)
Other (expense) income:
Interest expense, net
(1,328
)
(1,617
)
(2,148
)
Other (expense) income, net
(292
)
1,574
4,711
Total other income (expense)
(1,620
)
(43
)
2,563
Income (loss) before provision for income taxes
9,390
(35,338
)
(32,047
)
Provision for income taxes
501
128
177
Net income (loss)
$
8,889
$
(35,466
)
$
(32,224
)
Net income attributable to common stockholders
$
1,115
$
(35,466
)
$
(32,224
)
Net income (loss) per common share:
Basic
$
0.73
$
(23.74
)
$
(22.68
)
Diluted
$
0.73
$
(23.74
)
$
(22.68
)
Weighted average number of common shares:
Basic
1,519,124
1,494,124
1,420,786
Diluted
1,523,183
1,494,124
1,420,786
The accompanying notes are an integral part of these consolidated financial statements.
F-4
Table of Contents
CyOptics, Inc.
Consolidated statements of convertible preferred stock,
and stockholders' equity (deficit)
Convertible preferred stock
Stockholders' equity (deficit)
Accumulated
other
comprehensive
income
(loss)
Preferred stock
Common stock
Additional
paid-in
capital
Accumulated
deficit
(in thousands, except for share data)
Shares
Amount
Shares
Amount
Total
Balance at January 1, 2008
6,085,578
$
49,582
1,005,238
$
1
$
82,968
$
(113,069
)
$
—
$
(30,100
)
Exercise of stock options
—
—
5,051
—
3
—
—
3
Stock-based compensation expense
—
—
—
—
54
—
—
54
Issuance of preferred stock
4,180,931
67,228
—
—
—
—
—
—
Issuance of preferred stock as a result of debt conversion to equity
833,320
10,044
—
—
—
—
—
—
Beneficial conversion feature on issuance of convertible debt
—
—
—
—
330
—
—
330
Conversion of preferred stock in to common stock
(479,791
)
(3,896
)
479,791
—
3,896
—
—
3,896
Comprehensive loss:
—
Foreign currency translation adjustment
—
—
—
—
—
—
(2,998
)
(2,998
)
Net loss
—
—
—
—
—
(32,224
)
—
(32,224
)
Total comprehensive loss:
(35,222
)
Balance at December 31, 2008
10,620,038
122,958
1,490,080
1
87,251
(145,293
)
(2,998
)
(61,039
)
Exercise of stock options
—
—
31,230
1
21
—
—
22
Stock-based compensation expense
—
—
—
—
25
—
—
25
Effect of deconsolidation of subsidiary
—
—
—
—
(42,205
)
42,194
3,036
3,025
Comprehensive loss:
Foreign currency translation adjustment
—
—
—
—
—
—
(38
)
(38
)
Net loss:
—
—
—
—
—
(35,466
)
—
(35,466
)
Total comprehensive loss:
(35,504
)
Balance at December 31, 2009
10,620,038
122,958
1,521,310
2
45,092
(138,565
)
—
(93,471
)
Exercise of stock options
—
—
953
—
1
—
—
1
Stock-based compensation expense
—
—
—
—
20
—
—
20
Repurchase of common stock
—
—
(37,085
)
(1
)
1
—
—
—
Net income and comprehensive income
—
—
—
—
—
8,889
—
8,889
Balance at December 31, 2010
10,620,038
$
122,958
1,485,178
$
1
$
45,114
$
(129,676
)
$
—
$
(84,561
)
The accompanying notes are an integral part of these consolidated financial statements.
F-5
Table of Contents
CyOptics, Inc.
Consolidated statements of cash flows
Year ended December 31,
(in thousands)
2010
2009
2008
Cash flows from operating activities
Net income (loss)
$
8,889
$
(35,466
)
$
(32,224
)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization
4,976
8,554
6,971
Acquired in-process research and development
—
—
510
Stock based compensation expense
20
25
54
Other non-cash expense
—
—
42
Preferred stock warrant expense
239
—
—
(Gain) loss on disposal of property and equipment
(68
)
37
(8
)
Non-cash interest on long term loans
149
149
149
Asset impairment charges
—
6,621
9,841
(Recovery) provision for excess and obsolete inventory
(150
)
923
2,048
Changes in assets and liabilities:
(Increase) in accounts receivable, net
(9,303
)
(5,588
)
(2,638
)
(Increase) decrease in inventory
(8,306
)
2,625
(3,537
)
Decrease (increase) in other current assets
103
3,281
(3,302
)
Increase (decrease) in accounts payable
11,106
(1,846
)
(352
)
Increase (decrease) in accrued and other current liabilities
578
5,919
(730
)
Net cash provided by (used in) operating activities
8,233
(14,766
)
(23,176
)
Cash flows from investing activities
Proceeds from sale of property and equipment
73
12
114
Purchase of property and equipment
(2,927
)
(3,451
)
(1,839
)
Cash acquired in PGT Photonics acquisition
—
—
28,111
Cash used in dissolution of PGT Photonics
—
(6,906
)
—
Change in restricted cash
—
7
1,502
Net cash (used in) provided by investing activities
(2,854
)
(10,338
)
27,888
Cash flows from financing activities
Proceeds from long-term debt and credit line
—
—
16,673
Payments on revolving credit facility and long-term debt
(2,105
)
(1,685
)
(8,339
)
Proceeds from exercise of stock options
1
21
3
Proceeds from issuance of preferred stock
—
—
20,037
Net cash (used in) provided by financing activities
(2,104
)
(1,664
)
28,374
Effect of exchange rates on cash
—
(39
)
(3,190
)
Net increase (decrease) in cash and cash equivalents
3,275
(26,807
)
29,896
Cash and cash equivalents at beginning of year
9,122
35,929
6,033
Cash and cash equivalents at end of year
$
12,397
$
9,122
$
35,929
Supplemental cash flow information
Cash paid for interest
$
1,223
$
1,580
$
1,251
Cash paid for income taxes
$
173
$
128
$
177
The accompanying notes are an integral part of these consolidated financial statements.
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Table of Contents
CyOptics, Inc.
Notes to consolidated financial statements
(in thousands, except for share and per share data)
(1)   Description of business
CyOptics Inc. (the Company) was incorporated in January 1999 under the laws of the State of Delaware. The Company is a platform-based provider of core
optical technologies enabling
bandwith for high-speed networks. The Company serves customers on a global basis.
The
Company has expanded its operations through a number of acquisitions in recent years. PGT Photonics S.p.A. (PGT) was acquired on July 24, 2008. This operation was based in Italy and
supported the design, manufacture and sale of optical components, modules and systems. CyOptics International Holding Co. and CyOptics International Holding LLC were formed in 2005 to
acquire the entire equity interest in the Company's operations in Matamoros, Mexico, CyOptics de Mexico. This operation supports the Company's assembly and test manufacturing operations.
The
board of directors of PGT approved the dissolution of PGT effective September 22, 2009. For further discussion of the PGT dissolution, see Note 3 of these consolidated financial
statements.
(2)   Significant accounting policies
Basis of presentation
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All material intercompany
balances and transactions have been eliminated. Due to dissolution proceedings commenced on September 22, 2009, PGT was deconsolidated from the Company's consolidated financial statements
effective September 22, 2009. As such, the consolidated balance sheets as of December 31, 2010 and 2009, and the consolidated statements of operations, statements of convertible
preferred stock and stockholders' equity (deficit), and cash flows for the years ended December 31, 2010 and 2009, do not consolidate the financial statements of PGT after commencement of
dissolution.
Use of estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
On
an ongoing basis, the Company evaluates its estimates, including those related to the accounts receivable allowance, the reserve for excess and obsolete inventory, the warranty reserve, the useful
lives of long-lived assets and other intangible assets, the value of common stock and assumptions used for the purpose of determining stock-based compensation, the value of Preferred stock
warrants, and income taxes, among others. The Company bases its
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estimates
on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying value of assets and
liabilities as well as reported revenue and expenses during the periods presented.
Foreign currency translation
For operations in Mexico, the functional currency is the U.S. dollar. Assets and liabilities of those operations are translated into U.S. dollars
using year-end exchange rates; income and expenses are translated using the average exchange rates for the reporting period. Translation adjustments for the operations in Mexico are
included in other (expense) income and were immaterial for all years presented. Realized foreign currency transaction gains and losses are included in other (expense) income and were immaterial for
all years presented.
For
PGT operations in Italy, the functional currency was the euro. Income and expenses were translated using the average exchange rates for the year ended December 31, 2008 and for the
period ended September 22, 2009. Translation adjustments were included in stockholders' equity (deficit) as other comprehensive income (loss).
Cash and cash equivalents
The Company considers all highly liquid investments having an original maturity of three months or less when purchased to be cash equivalents. The
Company maintains deposits with financial institutions, the balances of which from time to time exceed the federally insured amount.
Fair value of financial instruments
The estimated fair value of financial instruments has been determined by the Company using available market information and valuation methodologies.
Considerable judgment is required in estimating fair values. Accordingly, the estimates may not be indicative of the amounts the Company could realize in a current market exchange.
The
carrying amounts of cash and cash equivalents, accounts receivable, other current assets, accounts payable, and accrued expenses approximate their fair values due to the short-term
maturity of these instruments.
The
carrying amounts of the Company's long-term liabilities approximate their fair value because the interest rate is reflective of rates that the Company could currently obtain on debt
with similar terms and conditions. The carrying value of the Preferred stock warrant liability is the estimated fair value of the liability (Note 7).
Accounts receivable
The Company makes estimates regarding the collectability of accounts receivable. When the Company evaluates the adequacy of its allowance for
doubtful accounts, it considers multiple factors, including historical write-off experience, the need for specific customer reserves, the aging of receivables, customer creditworthiness
and changes in customer payment cycles. Historically, the allowance for doubtful accounts has been adequate based on actual results. If any of the factors used to calculate the allowance for doubtful
accounts change or if the allowance does not reflect the Company's future ability to collect outstanding receivables, additional provisions for doubtful accounts may be needed, and future results of
operations could be materially affected.
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Table of Contents
The
following table summarizes the changes in the Company's allowance for doubtful accounts for the period indicated:
Year ended December 31,
2010
2009
2008
Balance at the beginning of the period
$
87
$
86
$
70
Amounts to expense
—
10
41
Accounts written off
(10
)
(9
)
(25
)
Balance at the end of the period
$
77
$
87
$
86
Inventory
Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method. Inventory
reserves are provided to cover risks arising from slow-moving items, technological obsolescence, and excess inventories according to revenue forecasts.
Concentration of credit risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, and
trade receivables.
Cash
and cash equivalents are invested in major financial institutions in the United States and Mexico. Such deposits in the United States may be in excess of insured limits and are not insured in
other jurisdictions. Management believes that the financial institutions that hold the Company's investments are financially sound and, accordingly, minimal credit risk exists with respect to these
investments. Concentration of credit risk with respect to trade accounts receivable exists due to the significance of several large telecommunication industry customers. Five customers make up 60% and
57% of trade receivables as of December 31, 2010 and 2009, respectively.
The
Company has no foreign exchange contracts, option contracts, or other hedging arrangements.
The
Company's operations in Matamoros, Mexico, CyOptics de Mexico, currently operate under a collective bargaining agreement, with an effective date of January 10 of each year. 65% of the labor
force is covered by this collective bargaining agreement, which will expire within one year.
Customer, product and supplier concentration
—The Company primarily sells its products directly to module manufacturers and systems providers, including original
equipment manufacturers (OEMs). During the years ended December 31, 2010, and 2009, there was one customer who accounted for 15.3% and 16.6% of the Company's total revenues, respectively.
During the year ended December 31, 2008, there were two customers who, combined, represented 22.6% of total revenues.
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Table of Contents
The
Company derives a majority of its total revenues from a limited number of products. Products that accounted for 10% or more of our total revenues during the years ended December 31 were as
follows:
2010
2009
2008
Devices
35%
38%
41%
Small Form Factor Components
28%
22%
18%
Large Form Factor Components
19%
27%
41%
Components on Board
11%
11%
—
The Company obtains a number of components from single source suppliers due to technology, availability, price, quality or other considerations. The loss of a
single source supplier, the deterioration of its relationship with a single source supplier, or any unilateral modification to
the contractual terms under which the Company is supplied components by a single source supplier could adversely affect the Company's total revenues and gross margins.
Property and equipment
Property and equipment are stated at cost, net of accumulated depreciation. Maintenance and repairs are expensed as incurred. Depreciation is
calculated using the straight-line method over the estimated useful lives of the assets at the following annual rates:
Computers and related equipment
3 years
Office and lab furniture
5 to 10 years
Equipment and machinery
5 to 10 years
Vehicles
4 to 5 years
Leasehold improvements
Over the shorter of term of the lease or the life of the assets
Upon retirement or other disposition of property and equipment, the applicable cost and accumulated depreciation are removed from the accounts and any resulting
gains or losses are included in the results of operations.
Impairment of long-lived assets
The Company's long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be
generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of
the assets.
In
September 2009, prior to dissolution of PGT, an asset impairment charge of $6,621 was recognized for the impairment of PGT property and equipment, inventory, and receivables.
The
Company recognized an impairment charge of $2,320 related to certain of the acquired assets of PGT. This amount includes a $530 impairment charge related to property and
equipment, and a $1,790 impairment charge related to intangible assets associated with the Company's 2008 acquisition of PGT. Refer to Footnote 3 for further details.
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Table of Contents
Intangible assets
The Company amortizes intangible assets on a straight line basis over their estimated useful lives, generally as follows: four to nine years for
technology, six to ten years for customer relationships, and one to five years for other intangible assets.
Revenue recognition
The Company generates revenues principally from the sale of hardware products to customers. Revenues from product sales are recognized when delivery
has occurred, persuasive evidence of an agreement exists, the vendor's fee is fixed or determinable, no further obligation exists, and collectability is reasonably assured. Delivery is generally
considered to have occurred upon shipment of products. Contracts and/or customer purchase orders are used to determine the existence of an arrangement. The Company assesses whether the price is fixed
or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. The Company generally does not grant a right of return to its
customers. In transactions where a customer's contractual terms include a provision for customer acceptance, revenues are recognized either when such acceptance has been obtained or the acceptance
provision has lapsed. The Company assesses collectability based primarily on the creditworthiness of the customer as determined by credit checks and the customer's payment history.
The
Company bears all costs and risks of loss or damage to the goods up to the point that revenue is recognized. Our terms of sale generally provide that title passes to the buyer upon shipment by us.
Amounts billed to clients for shipping and handling of products are classified as total revenues in the consolidated statements of operations.
Product warranties
For the majority of the Company's products, a product warranty is provided for one year or less from date of shipment. The Company estimates the
costs of its warranty obligations based on its historical experience and expectations and expected future conditions. To the extent the Company experiences increased warranty claim activity or
increased costs associated with servicing those claims, the Company's warranty costs will increase resulting in decreases to gross profit. The Company periodically assesses the adequacy of its
recorded warranty liabilities and adjusts the amounts as necessary.
The
following table summarizes the changes in the Company's warranty reserves for the period indicated:
Year ended December 31,
2010
2009
2008
Balance at the beginning of the period
$
310
$
171
$
72
Warranty accruals
—
139
99
Settlements and adjustments
(161
)
—
—
Balance at the end of the period
$
149
$
310
$
171
Research and development
Research and development activities are generally charged to operations as incurred. Property and equipment that are acquired or constructed for
research and development activities and
F-11
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that
have alternate future uses are capitalized and depreciated over their estimated useful lives on a straight-line basis.
In
September 2007, the Company entered into a three-year cooperative agreement with the U.S. Department of Commerce as part of its Advanced Technology Program ("ATP"). The ATP award
provided three years of partial funding to jointly develop with another supplier next generation technology. Funding amounts received from ATP were $706, $1,326 and $1,062 for the years ended
December 31, 2010, 2009 and 2008, respectively, and were treated as research and development cost recovery (contra-expense) by the Company.
Advertising
Advertising costs are expensed as incurred and, to date, have not been significant. Advertising costs include direct marketing, events, public
relations, sales collateral materials and partner programs.
Income taxes
Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting bases and the tax bases of assets
and liabilities. Deferred tax assets are also recognized for tax net operating loss carryforwards. These deferred tax assets and liabilities are measured using the enacted tax rates and laws that will
be in effect when such amounts are expected to reverse or be utilized. The realization of
total deferred tax assets is contingent upon the generation of future taxable income. Valuation allowances are provided to reduce such deferred tax assets to amounts more likely than not to be
ultimately realized.
The
Company uses a more-likely-than-not recognition threshold based on the technical merits of tax positions taken. Tax positions that meet the
more-likely-than-not recognition threshold are measured as the largest amount of the tax benefits, determined on a cumulative probability basis, which is more
likely than not to be realized upon ultimate settlement. The Company recognizes interest and penalties related to income tax matters in income tax expense.
Stock-based compensation
The Company recognizes the cost of stock-based compensation to employees, including grants of employee stock options, in the consolidated statement
of operations based on fair value of those awards at the date of grant over the requisite service period. The Company uses the Black-Scholes option pricing model to determine the fair value of the
stock-based compensation awards. The estimated fair value of stock-based compensation awards on the date of grant is amortized on a straight-line basis over the requisite service period.
Stock-based compensation expense totaled $20, $25 and $54 for the years ended December 31, 2010, 2009 and 2008, respectively.
Net income (loss) per common share
The Company uses the two-class method to compute net income (loss) per common share because the Company has issued securities, other than
common stock, that contractually entitle the holders to participate in dividends and earnings of the Company. The two class method requires earnings for the period to be allocated between common and
participating securities based upon their respective rights to receive distributed and undistributed earnings. The Company's Series A, Series B, Series B-1,
Series B-2, Series B-3, Series C, Series C-1, Series E, Series F, Series F-1 and
Series F-2 preferred stock (hereinafter referred to as "Preferred Stock")
F-12
Table of Contents
are
each entitled to participate in distributions that are made to common stock shareholders on an as converted basis, when and if declared by the Board of Directors.
For
periods with net income, net income per common share information is computed using the two-class method. Under the two-class method, basic net income per common share is
computed by dividing the net income attributable to common stockholders by the weighted average number of shares of Common stock outstanding during the period. Basic net income attributable to common
stockholders is computed by subtracting from net income the portion of current year earnings that the Preferred shareholders would have been entitled to receive pursuant to their dividend rights had
all of the year's earnings been distributed. No such adjustment to earnings is made during periods with a net loss, as the holders of the convertible Preferred shares have no obligation to fund
losses. Diluted net income (loss) per common share is computed under the two class method by using the weighted-average number of shares of Common stock outstanding, plus, for periods with net income
attributable to common stock, the potential dilutive effects of stock options and warrants. In addition, the Company analyzes the potential dilutive effect of the outstanding Preferred stock under the
"if-converted" method when calculating diluted earnings per share, in which it is assumed that the outstanding Preferred stock converts into Common stock at the beginning of the period.
The Company reports the more dilutive of the approaches (two class or "if-converted") as their diluted net income per share during the period.
F-13
Table of Contents
The
following table sets forth the computation of basic and diluted net income (loss) per share for the periods indicated:
Year ended December 31,
2010
2009
2008
2010
(Pro forma)
(unaudited)
Basic net income (loss) per common share calculation:
Net income (loss)
$
8,889
$
(35,466
)
$
(32,224
)
8,889
Less: Undistributed earnings allocated to participating securities
(7,774
)
—
—
—
Plus: Charges related to preferred stock warrant liability
—
—
—
239
Net income (loss) attributable to common shareholders—basic
1,115
(35,466
)
(32,224
)
9,128
Basic weighted average common shares
1,519,124
1,494,124
1,420,786
12,370,295
Basic net income (loss) per share
$
0.73
$
(23.74
)
$
(22.68
)
$
0.74
Diluted net income (loss) per common share calculation:
Net income (loss)
$
8,889
$
(35,466
)
$
(32,224
)
$
8,889
Less: Undistributed earnings allocated to participating securities
(7,774
)
—
—
—
Plus: Charges related to preferred stock warrant liability
—
—
—
239
Net income (loss) attributable to common shareholders—diluted
1,115
(35,466
)
(32,224
)
9,128
Weighted average shares used to compute basic net income (loss) per share
1,519,124
1,494,124
1,420,786
12,370,295
Effect of potentially dilutive securities:
Employee stock options
4,059
—
—
4,059
Weighted average shares used to compute diluted net income per share
1,523,183
1,494,124
1,420,786
12,374,354
Diluted net income (loss) per share
$
0.73
$
(23.74
)
$
(22.68
)
$
0.74
For the year ended December 31, 2010, the Company presented diluted net income per common share using the two-class method, which results in the same diluted net
income per share value as calculated using the "if-converted" method. For the years ended December 31, 2009 and 2008 in which we reported net losses, there is no dilutive effect
under either the two-class or "if-converted" method.
Diluted
net (loss) income per share for the years presented do not reflect the following potential common shares, as the effect would be antidilutive:
December 31,
Pro forma
December 31,
2010
2010
2009
2008
(unaudited)
Stock options and warrants
410,302
442,351
486,731
410,302
Convertible preferred stock
—
10,620,038
7,882,879
—
Total
410,302
11,062,389
8,369,610
410,302
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Table of Contents
The unaudited pro forma net income per share is computed using the weighted-average number of shares of Common stock outstanding and assumes the conversion of all outstanding
shares of Preferred stock into an aggregate of 10,851,171 shares of Common stock upon completion of the Company's planned initial public offering (IPO), as if such conversion had occurred at the
beginning of the period. The pro forma effect of the conversion of the Preferred shares is higher than the Preferred shares outstanding during the period, as the Series B-1 Preferred shares
convert into Common shares at a ratio of one to 1.16 upon an IPO. In addition, pro forma net income per share assumes that the Preferred stock warrants have been automatically converted to Common
stock warrants at the beginning of the period. Accordingly, the amounts recorded to mark the Preferred stock warrants to market have been added back to net income to arrive at net income attributable
to common shares—pro forma. The Company believes the unaudited pro forma net income per share provides material information to investors, as the conversion of the Company's Preferred stock
to Common stock is expected to occur upon the closing of an IPO and the Preferred stock warrants will be converted to Common stock warrants upon the closing of an IPO, and therefore the disclosure of
pro forma net income per share thus provides a measure of net income per share that is comparable to what will be reported by the Company as a public company.
Reverse stock split
During the quarter ended March 31, 2011, the Company effected a 1:52 reverse stock split of its Common stock and Preferred stock. All shares,
stock options, warrants to purchase common stock and per share information presented in the consolidated financial statements have been adjusted to reflect the reverse stock split on a retroactive
basis for all periods presented.
Recent Accounting Pronouncements
In January 2010, the Financial Accounting Standards Board ("FASB") issued updated guidance related to fair value measurements and
disclosures, which requires a reporting entity to disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and to describe the
reasons for the transfers. In addition, in the reconciliation for fair value measurements using significant unobservable inputs, or Level 3, a reporting entity should disclose separately
information about purchases, sales, issuances, and settlements (that is, on a gross basis rather than on a net basis). The updated guidance also requires that an entity should provide fair value
measurement disclosures for each class of assets and liabilities and disclosures about the valuation techniques and inputs used to measure fair value for both recurring and non-recurring
fair value measurements for Level 2 and Level 3 fair value measurements. The updated guidance is effective for interim or annual financial reporting periods beginning after
December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll-forward activity in Level 3 fair value measurements, which are
effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. The Company adopted the updated guidance in the first quarter of 2010, and the
impact on the consolidated financial statements was not material.
(3)   Acquisition and dissolution of PGT Photonics, S.p.A.
On July 24, 2008, the Company purchased PGT for an aggregate purchase price of $47,729. The acquisition was accounted for using the purchase method of
accounting and accordingly, the
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Table of Contents
purchase
price has been allocated to the assets acquired and the liabilities assumed, based on their estimated fair values at the date of acquisition. Based upon the valuation of the tangible and
intangible acquired assets and assumed liabilities, the Company allocated the total cost of the acquisition as of July 24, 2008 as follows:
Assets acquired
Current assets (including cash of $28,111)
$
38,670
Property and equipment
15,200
Intangible assets:
In-process research and development
510
Customer relationships
4,980
Current technology
4,300
Trade name
200
Goodwill
7,356
Other assets
1
Total assets acquired
71,217
Current liabilities
23,488
Net assets acquired
$
47,729
As of December 31, 2008, due to the deterioration and continued uncertainty of the overall economic and industry conditions, the Company's annual
impairment test for goodwill determined that the fair value of the Company was less than its carrying value, and the Company concluded that goodwill was impaired, resulting in a goodwill impairment
charge of $7,521 during 2008. In addition, the Company recognized an impairment charge of $2,320 during 2008 related to certain property and equipment and intangible assets associated with PGT.
In
September 2009, the Company commenced dissolution of PGT. The Company synergized certain products, technology development and manufacturing infrastructure into its ongoing operations. A liquidator
was assigned to settle PGT claims with the remaining PGT assets. The assignment of the liquidator effectively marked the Company's loss of control of PGT. As a result of this loss of control, the
Company was required to deconsolidate the subsidiary. Due to the Italian liquidation of PGT, the Company retained no interest with value in PGT. While the Company believes it has satisfied all
outstanding PGT-related liabilities and has no material continuing obligations or commitments to PGT, it is possible that the Company may be subject to liabilities which, if substantial, could harm
operating results.
During
the third quarter of 2009, an asset impairment charge of $6,621 was recorded related to the impairment of certain property and equipment, inventory and receivables of PGT. Also in 2009, prior
to deconsolidation, PGT incurred expenses totaling $6,465 related to severance and liquidation expenses incurred related to the down-sizing and dissolution of PGT. There were no assets and liabilities
of PGT presented in the consolidated balance sheet as of December 31, 2010 or 2009. Included in the Company's consolidated statement of operations for 2009 and 2008 were revenues of $3,384 and
$3,487 and a net loss of $(24,747) and $(17,447), respectively, for PGT, including impairment charges. The Company's consolidated statement of cash flows for 2009 reflects the use of cash in the
amount of $14,855 related to PGT, including $6,906 in support of severance and liquidation activities.
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Table of Contents
PGT
has not been classified as a discontinued operation within the consolidated financial statements due to the migration of significant cash flows to the Company's ongoing operations.
(4)   Inventories
The following is a summary of inventories, net:
December 31,
2010
2009
Raw materials
$
9,359
$
6,621
Work in progress
9,707
5,644
Finished products
2,972
3,457
Reserve for excess and obsolete inventory
(2,512
)
(4,652
)
Total
$
19,526
$
11,070
The following table summarizes the changes in the Company's inventory reserves for excess and obsolete inventory for the period indicated:
Year ended December 31,
2010
2009
2008
Balance at the beginning of the period
$
4,652
$
4,111
$
4,664
Amounts to recover (expense)
(150
)
923
2,048
Amounts written off
(1,990
)
(382
)
(2,601
)
Balance at the end of the period
$
2,512
$
4,652
$
4,111
(5)   Property and equipment
The following is a summary of property and equipment, net:
December 31,
2010
2009
Computers and related equipment
$
903
$
736
Office and lab furniture
893
893
Equipment and machinery
21,809
18,970
Vehicles
20
20
Leasehold improvements
724
718
Construction in progress
2,176
2,323
26,525
23,660
Less accumulated depreciation
(18,188
)
(15,415
)
Total
$
8,337
$
8,245
Depreciation expense totaled $2,831, $6,034 and $4,980 for the years ended December 31, 2010, 2009 and 2008, respectively.
F-17
Table of Contents
(6)   Intangible assets
Intangible assets consist of the following:
December 31, 2010
December 31, 2009
Gross
amount
Accumulated
amortization
Net
amount
Gross
amount
Accumulated
amortization
Net
amount
Technology
$
8,829
$
(5,675
)
$
3,154
$
8,829
$
(4,153
)
$
4,676
Customer relationships
4,826
(1,815
)
3,011
4,826
(1,192
)
3,634
Other
944
(944
)
—
944
(944
)
—
Total
$
14,599
$
(8,434
)
$
6,165
$
14,599
$
(6,289
)
$
8,310
Amortization expense amounted to $2,145, $2,520 and $1,991 for the years ended December 31, 2010, 2009 and 2008, respectively.
The
following represents the Company's expected amortization expense for the years ending December 31:
2011
$
1,233
2012
1,079
2013
1,079
2014
1,079
2015
844
Thereafter
851
$
6,165
(7)   Fair value measurements
Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or
most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. The Company evaluates the fair value of certain
assets and liabilities using the following fair value hierarchy which ranks the quality and reliability of inputs, or assumptions, used in the determination of fair value:
•
Level 1—quoted prices in active markets for identical assets and liabilities
•
Level 2—inputs other than
Level 1 quoted prices that are directly or indirectly observable
•
Level 3—unobservable inputs that are not corroborated by market data
The
Company evaluates assets and liabilities subject to fair value measurements on a recurring and nonrecurring basis to determine the appropriate level to classify them for each reporting period.
This determination requires significant judgments to be made by the Company. The
F-18
Table of Contents
following
table sets forth the Company's assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2010 and 2009, by level within the fair value hierarchy:
Fair value
measurement
using
Amounts at
fair value
Level 1
Level 2
Level 3
As of December 31, 2010
Assets
Money market funds
$
1,047
$
1,047
$
—
$
—
Liabilities
Preferred stock warrant liability
$
239
$
—
$
—
$
239
As of December 31, 2009
Assets
Money market funds
$
4,048
$
4,048
$
—
$
—
Liabilities
Preferred stock warrant liability
$
—
$
—
$
—
$
—
The carrying amounts of the Company's long-term liabilities approximate their fair value because the interest rate is reflective of rates that the
Company could currently obtain on debt with similar terms and conditions.
The
Preferred stock warrants are classified as liabilities in the accompanying balance sheets as the warrant entitles the holder to purchase Preferred stock which is considered contingently
redeemable. The fair value of the Preferred stock warrant liability is based on Level 3 inputs. The Company's estimate of the fair value of its Preferred stock warrant liability was determined
by utilizing a Black-Scholes based option pricing model, which considered the estimated fair value of these preferred stock warrants in both an IPO scenario, in which the warrants have attributes of
Common stock warrants and a merger and acquisitions scenario, in which the warrants have attributes of Preferred stock warrants.
As
of December 31, 2010, the fair value of the Preferred stock warrants was $239. At December 31, 2009, the fair value of the Preferred stock warrants was de minimis. For the year ended
December 31, 2010, the Company recorded a charge for $239 in other expenses to recognize the change in the fair value of the Preferred stock warrants.
(8)   Accrued and other current liabilities
Accrued and other current liabilities consist of the following:
December 31,
2010
2009
Employee related
$
2,939
$
1,602
Deferred revenue
583
1,722
Other accrued liabilities
1,101
720
$
4,623
$
4,044
F-19
Table of Contents
(9)   Borrowings
The Company's borrowings consist of the following:
Interest rate %
December 31
2010
2009
2010
2009
Credit line
Greater of Bank Prime + 1.5% or 6.5%
Greater of Bank Prime + 1.5% or 6.5%
$
10,200
$
10,200
Long-term loan
Greater of Bank Prime + 1.5% or 7.5%
Greater of Bank Prime + 1.5% or 7.5%
945
1,611
Long-term loan
6%
6%
—
66
Related-party long-term loan
Lesser of 1 year LIBOR + 3% or 8.5%
Lesser of 1 year LIBOR + 3% or 8.5%
1,798
3,170
Total borrowings
12,943
15,047
Less current portion
(1,950
)
(1,950
)
Less unaccreted discounts
(149
)
(297
)
Noncurrent portion
$
10,844
$
12,800
In May 2008, the Company entered into a loan and security agreement with Silicon Valley Bank that includes a revolving credit facility in the aggregate amount
of up to $14,000 and a term loan commitment of up to $2,000. All of the Company's property, including all cash accounts, outstanding trade receivables, inventory, fixed assets, and any intellectual
property serve as collateral. The credit facility restricts the Company's ability to declare or pay cash dividends on capital stock. The term loan shall be repaid by monthly installment payments of
interest only in the first year, and thereafter by monthly installments of principal and interest payments for a period of 36 months. Interest is payable monthly during the term. Interest
expense on this bank debt amounted to $1,096, $1,356 and $849 for the years ended December 31, 2010, 2009 and 2008, respectively. In December 2009, the Company amended the existing loan and
security agreement with the bank. The amendment extended the maturity date on the revolving credit facility to December 29, 2011, and reduced the interest rate on this facility by 1%. The
amendment did not change the existing terms or rate of interest and expiration date on the term loan. On June 20, 2011, the Company amended its existing loan and security agreement with Silicon
Valley Bank. The amendment increased the amount of the credit facility to the aggregate amount of up to $20,000. The amendment extended the maturity date on the revolving credit facility to
December 26, 2013, and reduced the interest rate on this facility to Prime Rate plus three-quarters of one percent (4% currently). The Company has classified the outstanding credit line amount
of $10,200 under the loan and security agreement as long-term on its balance sheet as of December 31, 2010 as the Company had the intent and ability to refinance such borrowings on
a long-term basis.
As
part of a previous acquisition in 2005, the Company received a loan from a related party in the amount of $5,633. Interest accrued for the initial 23-month period, with total accrued
interest as of April 1, 2006 and 2007 added to the principal balance of the loan. Principal and interest payments commenced on April 1, 2007, and are payable over 60 equal monthly
installments, through March 1, 2012. The loan was recorded based on its estimated fair value at the date of acquisition, in the amount of $4,640, which represented a discount of $993. This
discount is being accreted to interest expense over the term of the loan. Interest expense on
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this
debt amounted to $249, $339 and $450 for the years ended December 31, 2010, 2009 and 2008, respectively.
The
following summarizes the Company's required debt payments subsequent to December 31, 2010:
2011
$
2,099
2012
644
2013
10,200
$
12,943
(10) Income taxes
The effective tax rates for the years ended December 31, 2010, 2009 and 2008 were 5.3%, (0.4)%, and (0.6)%, respectively.
Income
(loss) before provision for income taxes is allocated as follows for the years ended December 31:
2010
2009
2008
U.S. operations
$
8,836
$
(11,061
)
$
(14,335
)
Foreign operations
554
(24,277
)
(17,712
)
$
9,390
$
(35,338
)
$
(32,047
)
Provision for income taxes is comprised of the following:
Year ended
December 31
2010
2009
2008
Federal:
Current
$
2,039
$
—
$
—
Deferred
(2,039
)
—
—
Total federal
—
—
—
State:
Current
490
—
—
Deferred
(123
)
—
—
Total state
367
—
—
Foreign:
Current
134
128
177
Total foreign
134
128
177
Provision for income taxes
$
501
$
128
$
177
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Table of Contents
The provision for income taxes differs from the amount of taxes determined by applying the U.S. federal statutory rate (34%) to income (loss) before provision
for income taxes as a result of the following for the years ended December 31:
2010
2009
2008
Statutory federal income tax
$
3,193
$
(12,015
)
$
(10,956
)
Increase (reduction) in income taxes resulting from:
Foreign income taxes
88
84
117
Change in the valuation allowance
(2,742
)
6,603
6,736
State and local income taxes, net of federal income tax benefit
242
—
—
Permanent differences—other
61
7
7
Other, including loss from PGT operations in 2009 and 2008
(341
)
5,449
4,273
Total
$
501
$
128
$
177
Deferred tax assets and liabilities reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows as of December 31:
2010
2009
Deferred tax assets:
Inventories
$
1,383
$
2,204
Property and equipment
—
1,742
Intangible assets
386
61
Accrued expense
171
154
General business credit
3,166
2,724
Other
226
123
Net operating loss carryforwards
22,663
24,967
Total gross deferred tax assets
27,995
31,975
Less: valuation allowance
(27,387
)
(31,975
)
Net deferred tax assets
608
—
Deferred tax liabilities:
Property and equipment
(608
)
—
Net deferred tax liabilities
(608
)
—
Total net deferred tax assets
$
—
$
—
Valuation allowances are established when necessary to reduce deferred tax assets to amounts expected to be realized. As of December 31, 2010 and 2009,
the Company has recorded a full valuation allowance for all net deferred tax assets as management does not believe they have sufficient positive evidence to recognize such deferred tax assets at this
time. However, if the Company demonstrates a more consistent history of profitability going forward, the Company may release some or all of its valuation allowance.
F-22
Table of Contents
As of December 31, 2010, the Company has U.S. federal net operating loss carryforwards of $186,920 and state net operating loss carryforwards of $64,763 which expire in
2022 through 2029. The Tax Reform Act of 1986 ("the Act") provides for a limitation of the annual use of net operating loss and research and development tax credit carryforwards following certain
ownership changes (as defined by the Act) that limit the Company's ability to utilize carryforwards. As such, the Company is in the process of completing a study to assess ownership changes that have
occurred since its formation and their impact on the value of the NOLs. As a result, we expect that the federal and state net operating loss carryforwards will be limited, and the Company has
disclosed its deferred tax asset related to net operating losses carryforwards based on its best estimate of useable net operating loss carryforwards of approximately $48 million for federal
purposes and $46 million for state purposes. Subsequent to December 31, 2010, as a consequence of equity transactions in January 2011, the Company anticipates further limitation on the
use of its net operating loss carryforwards. The Company's current estimate is that the total available net operating loss carryforwards are approximately $19 million for federal purposes and
approximately $18 million for state purposes. The limitations could change upon completion of the study. In addition, the Company has concluded that there are sufficient net operating loss
carryforwards from a federal tax perspective to offset the 2010 federal tax liability.
The
Company has made no provision for United States taxes on cumulative earnings of $1,796 of foreign subsidiaries as those earnings are intended to be reinvested for an indefinite period of time.
Upon distribution of these earnings in the form of dividends or otherwise, the Company may be subject to United States income taxes and foreign withholding taxes. It is not practical, however, to
estimate the amount of taxes that may be payable on the eventual repatriation of these earnings.
As
of December 31, 2010 and 2009, the Company has analyzed its tax positions in all jurisdictions where it is required to file an income tax return and has concluded that the Company does not
have any material unrecognized tax benefits. The Company has filed a U.S. income tax return as well as returns for various state jurisdictions. The Company's policy is to recognize interest and
penalties accrued on any unrecognized tax benefit within the provision for income taxes on the consolidated statement of operations. As of December 31, 2010 and 2009, the Company did not have
interest or penalties accrued for any unrecognized tax benefits, and there was no interest expense recognized during 2010, 2009 or 2008. The tax years that remain open to examination for significant
jurisdictions include 2007-2009.
(11) Commitments and contingencies
Litigation
From time to time, the Company is involved in disputes or legal actions arising in the ordinary course of business. Management does not believe the
outcome of such legal actions will have a material adverse effect on the Company's financial position, results of operations or cash flows.
Leases
The Company rents their facilities and certain related infrastructure under various operating lease agreements, which expire on various dates, the
latest of which is
in 2017. Total rent expense for the years ended December 31, 2010, 2009 and 2008 was $2,196, $3,253 and $5,470, respectively.
F-23
Table of Contents
The
future minimum lease payments under noncancelable operating leases are as follows:
Year ending December 31:
2011
$
2,330
2012
1,847
2013
1,838
2014
1,687
2015 and thereafter
3,536
Total future minimum lease payments
$
11,238
The Breinigsville, Pennsylvania facility has renewal options for two additional five-year periods effective November 2017. The Matamoros, Mexico
facility has renewal options for two five-year periods effective December 2011. The South Plainfield, New Jersey facility has a renewal option for one two-year period effective
July 2014.
(12) Capital structure
Composition of share capital:
Authorized
Issued and outstanding
December 31
December 31
2010
2009
2010
2009
Shares of $0.001 par value per share:
Common stock
14,807,692
14,807,692
1,485,178
1,521,310
Series A Preferred stock
1,144,520
1,144,520
1,144,520
1,144,520
Series B Preferred stock
2,752,408
2,752,408
2,733,717
2,733,717
Series B-1 Preferred stock
1,450,879
1,450,879
1,444,578
1,444,578
Series B-2 Preferred stock
282,972
282,972
282,972
282,972
Series B-3 Preferred stock
2,785,585
2,785,585
2,785,585
2,785,585
Series C Preferred stock
2,644,873
2,644,873
2,228,666
2,228,666
Total Convertible Preferred stock
11,061,237
11,061,237
10,620,038
10,620,038
Total
25,868,929
25,868,929
12,105,216
12,141,348
Common stock
Common stock confers upon its holders voting rights, the right to receive cash and stock dividends, if declared, and the right to share in excess
assets upon liquidation of the Company. The holders of Common stock are entitled to one vote per share.
Convertible preferred stock
Each share of Preferred stock is convertible into Common stock at each holder's option, or automatically, at any time after the date of issuance
until the earlier of an initial public offering, which yields a minimum of $30,000 in net proceeds to the Company, or upon the affirmative vote of at least two-thirds of the holders of the
Preferred stock. The conversion ratio is stipulated in the Company's certificate of incorporation. As of December 31, 2010, the Preferred stock was convertible to Common stock on a one for one
basis. In addition, upon the occurrence of an IPO the Series B-1 Preferred shares convert into Common shares at a ratio of
F-24
Table of Contents
one
to 1.16. Each share of Preferred stock shall have the right to one vote for each share of Common stock into which such share of Preferred stock could then be converted.
The
holders of the Preferred stock shall be entitled to receive, on an as-converted basis, when and as declared by the Company's board of directors (the "Board of Directors"), out of any
assets of the Company legally available therefore, such dividends as may be declared from time to time by the Board of Directors; provided, however, that the Board of Directors may not declare
dividends on the Series A Preferred stock in amounts per share greater than dividends declared per share in respect of the Series B Preferred stock.
The
following is the activity of the Company's convertible Preferred stock for the years ended December 31, 2010, 2009 and 2008:
January 1, 2008
Issuance of
Preferred stock
Issuance of
Preferred stock
as a result of
debt conversion
to equity
Conversion of
Preferred stock
into Common
stock
Conversion of
Preferred stock
into Preferred
stock
December 31, 2008(1)
Series A
Shares
—
—
—
1,144,520
1,144,520
Amount
$
—
—
—
9,185
$
9,185
Series B
Shares
—
—
—
2,733,717
2,733,717
Amount
$
—
—
—
21,496
$
21,496
Series B-1
Shares
—
—
—
1,444,578
1,444,578
Amount
$
—
—
—
12,552
$
12,552
Series B-2
Shares
—
—
—
282,972
282,972
Amount
$
—
—
—
2,453
$
2,453
Series B-3
Shares
—
2,785,585
—
—
2,785,585
Amount
$
—
34,778
—
—
$
34,778
Series C
Shares
—
1,395,346
833,320
—
2,228,666
Amount
$
—
32,450
10,044
—
$
42,494
Series E
Shares
1,262,882
—
—
(118,362
)
(1,144,520
)
—
Amount
$
10,135
—
—
(950
)
(9,185
)
$
—
Series F
Shares
3,014,097
—
—
(280,380
)
(2,733,717
)
—
Amount
$
23,740
—
—
(2,244
)
(21,496
)
$
—
Series F-1
Shares
1,444,578
—
—
—
(1,444,578
)
—
Amount
$
12,552
—
—
—
(12,552
)
$
—
Series F-2
Shares
364,021
—
—
(81,049
)
(282,972
)
—
Amount
$
3,155
—
—
(702
)
(2,453
)
$
—
Total
Shares
6,085,578
4,180,931
833,320
(479,791
)
—
10,620,038
Amount
$
49,582
$
67,228
$
10,044
$
(3,896
)
$
—
$
122,958
(1)
There
was no activity in the Company's Convertible Preferred stock during the years ended December 31, 2010 and 2009. Therefore, those tables have
been omitted.
F-25
Table of Contents
Liquidation preference
In the event of any liquidation or winding up of the Company, either voluntary or involuntary, the holders of the Series C Preferred stock
shall be entitled to receive, prior and in preference to the distribution of any assets of the Company to holders of any other capital stock of the Company, an amount equal to one and
one-half times the $14.36 original Series C Preferred per share purchase price, plus any declared but unpaid dividends thereon.
After
full payment of the foregoing Series C Preferred stock liquidation preference, the holders of the Series B, B-1, B-2 and B-3 Preferred stock
shall be
entitled to receive, prior and in preference to the distribution of any assets of the Company to holders of the Series A Preferred stock and Common stock, an amount equal to a range of one and
one-tenth to three times either the $14.36 original Series B-3 Preferred or the $8.02 original Series B Preferred per share purchase price, plus any declared but
unpaid dividends thereon.
After
full payment of the foregoing Series C Preferred stock and Series B-1, B-2 and B-3 Preferred stock liquidation preferences, the holders of the
Series A Preferred stock shall be entitled to receive, prior and in preference to the distribution of any assets of the Company to holders of Common stock, an amount equal to two and
one-half times the $8.02 original Series A Preferred per share purchase price, plus any declared but unpaid dividends thereon.
After
full payment of each of the foregoing liquidation preferences, the remaining assets of the Company will be distributed among the holders of Preferred stock and Common stock on an
as-converted to Common stock basis.
Redemption rights
The convertible Preferred stock is subject to redemption under certain "deemed liquidation" events, as defined, and as such, the Preferred stock is
considered contingently redeemable for accounting purposes.
Preferred stock warrants
The Company has outstanding a warrant to purchase 18,691 shares of Series B Preferred stock of the Company at an exercise price of $8.02 per
share. The warrant expires on April 29, 2012, at which point the warrant is automatically exercised.
The
Company also has outstanding warrants to purchase 6,301 shares of Series B-1 Preferred stock of the Company at an exercise price of $16.00 per share. The warrants expire
in 2013 and 2014.
The
Preferred stock warrants are classified as liabilities in the accompanying balance sheets as the warrant entitles the holder to purchase Preferred Stock which is considered contingently
redeemable.
Repurchase of Common stock
In December 2010, the Company repurchased 37,085 shares of outstanding Common stock from a single shareholder for a de minimis amount.
Commercial agreement
As a condition to the Series B Preferred stock purchase agreement, the Company signed a commercial agreement with a certain investor (the
"Investor") which provides the Investor the right of first refusal with respect to any proposed offer from a non-affiliated third party that
F-26
Table of Contents
would
result in a change of control. The Investor will have 10 days following receipt of a third-party offer notice to submit to the Company a written offer to acquire the Company in a sale
transaction on terms and conditions at least as favorable to the Company and its stockholders as those proposed by the third-party offer. In addition, the Investor has a right of first offer in the
event the Company seeks to initiate a sale process with one or more non-affiliated prospective third party purchasers. The Investor will have 7 days following receipt of a notice
from the Company to determine whether it wants to enter into a 37-day exclusive negotiation period to discuss acquiring the Company in a sale transaction. The parties would need to
negotiate in good faith. If no deal is reached, any sale transaction by a third party would remain subject to the Investor's right of first refusal. Both the right of first refusal and right of first
offer shall terminate and cease to be of further force and effect immediately upon the earliest to occur of (i) a change of control or (ii) an initial public offering.
In
addition, under the agreement, the Investor has a right of first negotiation in the event the Company seeks to solicit, encourage, pursue or negotiate an offer from one
non-affiliated third-party purchaser to effect a sale of the Company (a "Targeted Solicitation"). In the event the Company's board of directors has resolved to pursue a Targeted
Solicitation, the Company must deliver to the Investor a notice describing the material terms and conditions of the solicited sale transaction. The Investor then has five days to deliver a negotiation
notice if it desires to initiate a process to make an offer to acquire the Company. If the Investor fails to deliver the notice, the Company may freely proceed towards consummating a Targeted
Solicitation. If the Investor delivers the notice, the Company may not enter into an exclusive negotiating or standstill agreement with any third party and is required to negotiate with the Investor
in good faith towards effecting a sale transaction for 25 days. If the Company is unable to come to an agreement with the Investor during this period, the Company may enter into a sale
transaction in respect of the Targeted Solicitation within the next 12 months, subject to certain extensions. In the event the Company enters into a letter of intent with the Investor regarding
a sale transaction, the agreement must include a reasonable break up fee and reasonable exclusive negotiating or standstill period. For the sake of clarity, the Investor's right of first negotiation
does not compel the Company to accept and offer a sale transaction with the Investor.
Management bonus plan
As part of the stock purchase agreement, the Company adopted a management bonus plan according to which members of the Company's management team, as
designated by the Board of Directors, shall be entitled to receive an amount equal to between 5% and 10% of the consideration above $10,000 from the proceeds eligible for distribution to the Company's
stockholders upon a change in control.
(13) Business and geographic segment information
The Company currently operates in one business segment, namely, the design, fabrication and/or packaging of a broad portfolio of optical components for the
Access, Enterprise/Data Center and Long Haul/Metro segments of the communications network and for other emerging end market, applications, such as defense and avionics, high performance computing,
medical and security. The Company is managed and operated as one business. A single management team that reports to the chief operating decision maker comprehensively manages the entire business. The
Company does not operate any material separate lines of business or separate
F-27
Table of Contents
business
entities with respect to its products or product development. Accordingly, the Company views its business and manages its operations as one reportable segment.
The
Company's revenues, based on shipped to location, were generated in the following geographic regions:
Year ended December 31,
2010
2009
2008
Asia Pacific
$
82,653
$
46,497
$
41,733
North America
18,060
12,723
20,358
Europe, Middle East and rest of world
7,623
6,510
5,120
Consolidated total
$
108,336
$
65,730
$
67,211
Revenues generated in North America were principally from customers in the United States.
During
the years ended December 31, 2010, 2009 and 2008, sales to customers in China (including Hong Kong) were $45,600, $25,497 and $24,469, respectively. During the years ended
December 31, 2010, 2009 and 2008, sales to customers in Taiwan were $15,425, $6,828 and $6,260, respectively. During the years ended December 31, 2010, 2009 and 2008, sales to customers
in Malaysia were $16,101, $8,370 and $5,865, respectively.
Long-lived
assets by geographic area consist of property and equipment and are as follows:
As of December 31,
2010
2009
United States
$
6,116
$
4,495
Mexico
1,752
1,483
Other
469
2,267
Consolidated total
$
8,337
$
8,245
(14) Stock-based compensation
The Company's 1999 Incentive Stock Option Plan (the "1999 Plan") was established for the granting of options to officers, management, other key employees, and
consultants of up to 897,760 shares of Common stock. In January 2011, the 1999 Plan was amended to increase the number of shares available for grant to 2,243,913 shares. The options granted generally
vest over four years and will expire ten years subsequent to the date of grant. Any options that are
canceled or forfeited before expiration become available for future grant. As of December 31, 2010, an aggregate of 399,364 shares of the Company are still available for future grant.
The
Company's 2007 Stock Plan (the "2007 Plan") was established for the granting of options to transitional employees associated with an April 2007 acquisition of up to 93,339 shares of the Company's
Common stock. The options generally vest over one year and will expire ten years subsequent to the date of grant. Any options that are canceled or forfeited before expiration are not available for
future distribution under the 2007 Plan. Through December 31, 2010, 92,291 of these options were forfeited and all but 1% of the remainder were forfeited prior to
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2009.
As a result, the actual forfeiture rate for these options is 99% and the compensation expense related to these options is immaterial.
The
Company offers both nonqualified options and incentive stock options and they both have a ten-year term. Employee awards typically vest 25% a year.
The
Company has recognized compensation expense of $20, $25, and $54 during the years ended December 31, 2010, 2009 and 2008, respectively, based on the estimated grant-date fair
value using the Black-Scholes valuation model. For these awards, the Company has recognized compensation expense using a straight-line amortization method. The Company calculates
stock-based compensation expense based on awards that are ultimately expected to vest. Stock-based compensation for the years ended December 31, 2010 and 2009 has been reduced for estimated
forfeitures. When estimating forfeitures, the Company considers voluntary termination behaviors as well as trends of actual option forfeitures.
Valuation assumptions
The Company calculated the fair value of each option award on the date of grant using the Black-Scholes option-pricing model. The weighted-average
fair value of a common stock option granted during the years ended December 31, 2010, 2009 and 2008 was $ 0.05, $0.03 and $1.84, respectively.
The
following assumptions were used for valuing grants made during the years ended December 31, 2010 and 2009:
2010
2009
2008
Risk-free interest rates
1.14%
1.52%
2.27%-2.77%
Expected life (in years)
7.00
7.00
7.00
Dividend yield
0%
0%
0%
Expected volatility
75%
75%
51%
Due to the lack of trading history, the Company's computation of stock-price volatility is based on the volatility rates of comparable publicly held companies
over a period equal to the estimated useful life of the options granted by the Company. The Company's computation of expected life was determined using the "simplified" method whereby the vesting
period plus the original contractual term is divided by two. The Company has paid no dividends to stockholders. The interest rate for periods within the contractual life of the award is based on the
U.S. Treasury yield curve in effect at the time of the grant. The fair value used for shares of Common stock was based upon management's estimates. If the Company had made different assumptions about
the stock-price volatility rates, expected life, estimated forfeitures or other assumption, the related compensation expense and its net income could have been significantly different.
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Stock-based payment award activity
The following table summarizes activity under the 1999 Plan for the year ended December 31, 2010:
Number
of shares
Weighted-
average
exercise
price
Weighted-
average
remaining
contractual
term (years)
Outstanding at January 1, 2008
453,534
$
5.72
6.85
Granted
8,250
4.16
—
Exercised
(5,051
)
0.42
—
Expired/forfeited/cancelled
(14,255
)
3.28
—
Outstanding at December 31, 2008
442,478
$
5.82
5.96
Granted
16,326
0.52
—
Exercised
(31,230
)
0.36
—
Expired/forfeited/cancelled
(29,466
)
3.90
—
Outstanding at December 31, 2009
398,108
$
6.19
5.26
Granted
30,417
0.52
—
Exercised
(953
)
0.88
—
Expired/forfeited/cancelled
(23,571
)
10.30
—
Outstanding at December 31, 2010
404,001
$
5.51
4.73
Unvested at December 31, 2010
32,518
$
1.30
8.18
Vested and exercisable
372,163
$
5.88
4.41
Vested and expected to vest at December 31, 2010
402,193
$
5.56
4.71
As of December 31, 2010 there was approximately $18 of total unrecognized compensation expense related to unvested stock options issued under the
Company's stock option plans which is expected to be recognized over a remaining weighted-average period of three years. Cash received from option exercises under all share-based payment arrangements
for the year ended December 31, 2010 was not material. The total fair value of stock options vested during the years ended December 31, 2010, 2009 and 2008 was not significant.
(15) Retirement plan
Substantially all domestic employees are eligible to participate in the Company's 401(k) Plan. Under this Plan, the Company may elect to make matching
contributions, at the discretion of the Board of Directors. There were no employer contributions made to the 401(k) Plan for the years ended December 31, 2010, 2009 or 2008.
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(16) Related-party balances and transactions
The Company sold to and purchased from two businesses who are investors of the Company. Amounts were as follows:
Year ended December 31,
2010
2009
2008
Related-party transactions:
Sales to related parties
$
16,544
$
11,092
$
8,048
Purchases from related parties included in cost of revenues
5,394
1,341
1,350
Purchases from related parties included in operating expenses
21
98
—
Receivables from related parties
3,447
1,911
1,136
Payables to related parties
408
124
15
(17) Subsequent events
In January and February 2011, the Company raised approximately $50,000 through an internal round of financing (Series C-1 Preferred stock).
Approximately $30,100 of the proceeds was used to repurchase Common and Preferred stock from investors and to cover the cost associated with the financing. The remaining proceeds will be used for
general corporate and working capital purposes. As a direct result of the stock repurchase, the Company's aggregate liquidation preference on Preferred stock has been reduced to $123,737.
In
connection with the sale of the Series C-1 Preferred stock, the Company effected a 1:52 reverse stock split of its Common stock and Preferred stock. The effect of the split has
been applied retrospectively to all share and per share amounts in the financial statements.
On
April 26, 2011, the Company issued approximately 1.3 million stock options to directors, officers and employees of the Company at an exercise price of $2.37 per share. These options
were issued out of the 1999 Plan and primarily vest over a four-year term.
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CyOptics, Inc.
Condensed consolidated balance sheets
(in thousands, except for share and per share data)
March 31,
2011
December 31,
2010
Proforma
March 31,
2011
(unaudited)
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$
31,059
$
12,397
$
31,059
Restricted cash
—
100
—
Accounts receivable, net of allowance for doubtful accounts of $63 and $77, respectively
26,457
26,894
26,457
Inventories, net
23,829
19,526
23,829
Prepaid expenses and other current assets
650
892
650
Total current assets
81,995
59,809
81,995
Property and equipment, net
9,931
8,337
9,931
Intangible assets, net
5,780
6,165
5,780
Long-term restricted cash
50
—
50
Total assets
$
97,756
$
74,311
$
97,756
Liabilities, convertible preferred stock, and stockholders' equity (deficit)
Current liabilities:
Current portion of long-term loans and credit line
$
667
$
667
$
667
Current portion of related-party loan
1,334
1,283
1,334
Accounts payable
19,279
18,258
19,279
Accrued and other current liabilities
5,297
4,623
5,297
Total current liabilities
26,577
24,831
26,577
Long-term liabilities:
Long-term loans
111
278
111
Credit line
10,200
10,200
10,200
Related-party loan
—
366
—
Preferred stock warrant liability
239
239
—
Total liabilities
37,127
35,914
36,888
Commitments and contingencies
Convertible preferred stock:
Preferred stock, $0.001 par value per share, 18,337,337 shares authorized; 12,972,547 issued and outstanding at March 31, 2011; 11,061,237 shares
authorized; 10,620,038 issued and outstanding at December 31, 2010; no shares issued and outstanding, pro forma
95,404
122,958
—
Stockholders' equity (deficit):
Common stock, $0.001 par value per share, 22,084,428 shares authorized; 1,294,539 shares issued and outstanding at March 31, 2011; 14,807,692 shares
authorized; 1,485,178 shares issued and outstanding at December 31, 2010; 14,359,377 shares issued and outstanding at March 31, 2011, pro forma
1
1
14
Additional paid-in capital
45,140
45,114
140,770
Accumulated deficit
(79,916
)
(129,676
)
(79,916
)
Total stockholders' equity (deficit)
(34,775
)
(84,561
)
60,868
Total liabilities, convertible preferred stock and stockholders' equity (deficit)
$
97,756
$
74,311
$
97,756
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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CyOptics, Inc.
Unaudited condensed consolidated statements of operations
Three months ended
March 31,
(in thousands, except for share and per share data)
2011
2010
Total revenues
$
34,028
$
23,633
Cost of revenues
24,759
17,742
Gross profit
9,269
5,891
Operating expenses:
Research and development
3,518
2,860
Sales and marketing
801
629
General and administrative
863
682
Total operating expenses
5,182
4,171
Income from operations
4,087
1,720
Other (expense) income:
Interest expense, net
(276
)
(349
)
Other (expense) income, net
(145
)
52
Total other income (expense), net
(421
)
(297
)
Income before provision for income taxes
3,666
1,423
Provision for income taxes
1,384
78
Net income
$
2,282
$
1,345
Net income attributable to common stockholders
$
47,678
$
169
Net income per common share:
Basic
$
36.35
$
0.11
Diluted
$
0.15
$
0.11
Weighted average number of common shares:
Basic
1,311,760
1,521,308
Diluted
15,692,812
1,521,308
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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CyOptics, Inc.
Unaudited condensed consolidated statements of
convertible preferred stock and stockholders' equity
Convertible
preferred stock
Stockholders' equity (deficit)
Preferred stock
Common stock
Additional
paid-in
capital
(in thousands, except for
share and per share data)
Accumulated
deficit
Shares
Amount
Shares
Amount
Total
Balance at December 31, 2010
10,620,038
$
122,958
1,485,178
$
1
$
45,114
$
(129,676
)
$
(84,561
)
Issuance of preferred stock, net
7,692,307
49,562
—
—
—
—
—
Redemption of preferred stock at a discount to carrying value
(5,339,798
)
(77,116
)
—
—
—
47,478
47,478
Repurchase and retirement of common stock
—
—
(204,100
)
—
(10
)
—
(10
)
Exercise of stock options
—
—
13,461
—
32
—
32
Stock-based compensation expense
—
—
—
—
4
—
4
Net income and comprehensive income
—
—
—
—
—
2,282
2,282
Balance at March 31, 2011
12,972,547
$
95,404
1,294,539
$
1
$
45,140
$
(79,916
)
$
(34,775
)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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CyOptics, Inc.
Unaudited condensed consolidated statements of cash flows
Three months ended
March 31,
(in thousands)
2011
2010
Cash flows from operating activities
Net income
$
2,282
$
1,345
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
1,015
1,513
Stock-based compensation expense
4
5
Gain on disposal of property and equipment
(3
)
(7
)
Non-cash interest on long term loans
37
37
Changes in assets and liabilities:
Decrease (increase) in accounts receivable, net
437
(2,064
)
(Increase) in inventory
(4,303
)
(546
)
Decrease in other current assets
292
107
Increase in accounts payable
1,021
2,896
Increase (decrease) in accrued and other current liabilities
674
(803
)
Net cash provided by operating activities
1,456
2,483
Cash flows from investing activities
Proceeds from sale of property and equipment
19
8
Purchase of property and equipment
(2,240
)
(257
)
Net cash used in investing activities
(2,221
)
(249
)
Cash flows from financing activities
Payments on revolving credit facility and long-term debt
(519
)
(502
)
Proceeds from exercise of stock options
32
—
Proceeds from issuance of preferred stock, net
49,562
—
Repurchase of stock
(29,648
)
—
Net cash provided by (used in) financing activities
19,427
(502
)
Net increase in cash and cash equivalents
18,662
1,732
Cash and cash equivalents, beginning of period
12,397
9,122
Cash and cash equivalents, end of period
$
31,059
$
10,854
Supplemental cash flow information:
Cash paid during the period for interest
$
263
$
323
Cash paid during the period for income taxes
$
39
$
35
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-35
Table of Contents
CyOptics, Inc.
Notes to unaudited condensed consolidated financial statements
(in thousands, except for share and per share data)
(1)   Description of business
CyOptics, Inc. (the Company) was incorporated in January 1999 under the laws of the State of Delaware. The Company is a platform-based provider of core
optical technologies enabling
bandwith for high-speed networks. The Company serves customers on a global basis.
The
Company has expanded its operations through acquisitions in recent years. PGT Photonics S.p.A. (PGT) was acquired on July 24, 2008. This operation was based in Italy and supported
the design, manufacture and sale of optical components, modules and systems. CyOptics International Holding Co. and CyOptics International Holding LLC were formed in 2005 to acquire the
entire equity interest in the Company's operations in Matamoros, Mexico, CyOptics de Mexico. This operation supports the Company's assembly and test manufacturing operations.
The
board of PGT approved the dissolution of PGT effective September 22, 2009. For further discussion of the PGT dissolution, see Note 3 of these consolidated financial statements.
(2)   Basis of presentation
Basis of presentation and consolidation
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All
material intercompany balances and transactions have been eliminated.
Reverse stock split
In January and February 2011, the Company raised $50,000 through an internal round of financing (Series C-1 Preferred stock).
Approximately $30,100 of the proceeds was used to repurchase Common and Preferred stock from investors and to cover the cost associated with the financing. The existing Preferred stock was redeemed
for $47,478 below its carrying value and, accordingly, this discount was recorded within
stockholder's equity and is reflected as a component of earnings attributable to common stockholders. In connection with the sale of the Series C-1 Preferred stock, the Company
effected a 1:52 reverse stock split of its Common stock and Preferred stock.
All
shares, stock options, warrants to purchase Common stock and per share information presented in the unaudited condensed consolidated financial statements have been adjusted to reflect the reverse
stock split on a retroactive basis for all periods presented.
Foreign currency translation
For operations in Mexico, the functional currency is the U.S. Dollar. Assets and liabilities of those operations are translated into U.S. dollars
using period-end exchange rates; income and expenses are translated using the average exchange rates for the reporting period. Translation adjustments for the operations in Mexico are
included in other (expense) income and were
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Table of Contents
immaterial
for both periods. Realized foreign currency transaction gains and losses are included in other (expense) income and were immaterial for both periods.
Interim financial statements
The accompanying interim unaudited condensed consolidated financial statements and related disclosures are unaudited and have been prepared in
accordance with U.S. generally accepted accounting principles (GAAP) on the same basis as the audited consolidated financial statements for the year ended December 31, 2010 included elsewhere
in this prospectus and, in the opinion of management, include all adjustments of a normal recurring nature considered necessary to present fairly the Company's financial position, results of its
operations, and cash flows for the three months ended March 31, 2011 and 2010. The results of operations for the three months ended March 31, 2011 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2011 or any other future periods. Certain information and note disclosures normally included in the financial statements prepared
in accordance with GAAP have been condensed or omitted under the SEC's rules and regulations. These unaudited interim condensed consolidated financial
statements should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended December 31, 2010.
Significant accounting policies
The Company's significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31,
2010 included elsewhere in this prospectus. Since the date of those financial statements, there have been no changes to the Company's significant accounting policies.
Unaudited pro forma balance sheet presentation
The unaudited pro forma balance sheet as of March 31, 2011, reflects the conversion of 12,972,547 shares of Convertible Preferred stock into
13,064,838 shares of Common stock as though the completion of the initial public offering ("IPO") contemplated by the filing of the Company's prospectus had occurred on March 31, 2011. The pro
forma effect of the conversion of the Preferred shares is higher than the Preferred shares outstanding during the period as the Series B-1 Preferred shares convert into Common shares at a ratio
of one to 1.16 upon an IPO. The shares of common stock issued in the IPO and any related estimated net proceeds are excluded from such pro forma information. In addition, the Company has outstanding
warrants to purchase 18,691 shares of Series B Preferred stock and 7,316 shares of the Company's Series B-1 Preferred stock, which will automatically convert into warrants to
purchase 26,007 shares of common stock. The liability related to these warrants of $239 has been reclassified to additional paid in capital as these warrants will no longer be exercisable for
Preferred shares which are contingently redeemable.
Use of estimates
The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
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On
an ongoing basis, the Company evaluates its estimates, including those related to the accounts receivable allowance, the reserve for excess and obsolete inventory, the warranty reserve, the useful
lives of long-lived assets, the recoverability of intangible assets, the value of common stock and assumptions used for the purpose of determining stock-based compensation, the value of
Preferred stock warrants, and income taxes, among others. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of
which form the basis for making judgments about the carrying value of assets and liabilities as well as reported revenue and expenses during the periods presented.
Concentration of credit risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, and
trade receivables.
Cash
and cash equivalents are invested in major financial institutions in the United States and Mexico. Such deposits in the United States may be in excess of insured limits and are not insured in
other jurisdictions. Management believes that the financial institutions that hold the Company's investments are financially sound and, accordingly, minimal credit risk exists with respect to these
investments. Concentration of credit risk with respect to trade accounts receivable exists due to the significance of several large telecommunication industry customers. Five customers make up 64% and
60% of accounts receivable as of March 31, 2011 and December 31, 2010, respectively.
The
Company has no foreign exchange contracts, option contracts, or other hedging arrangements.
Product warranties
In general, the Company provides a product warranty for one year from date of shipment, except where some products have a shorter warranty life. The
Company estimates the costs of its warranty obligations based on its historical experience and expectations and expected future conditions. To the extent the Company experiences increased warranty
claim activity or increased costs associated with servicing those claims, the Company's warranty costs will increase resulting in decreases to gross profit. The Company periodically assesses the
adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.
Fair value of financial instruments
The carrying amount of cash and cash equivalents, restricted cash, accounts receivable, other current assets, accounts payable and accrued and other
current liabilities approximate fair value, due to their short-term nature. The carrying value of the Preferred stock warrant liability is the estimated fair value of the liability. (See
Note 6 to these unaudited consolidated financial statements).
The
carrying amounts of the Company's long-term liabilities approximate their fair value because the interest rate is reflective of rates that the Company could currently obtain on debt
with similar terms and conditions.
Stock-based compensation
The Company recognizes the cost of stock-based compensation to employees, including grants of employee stock options, in the consolidated statement
of operations based on fair value of
F-38
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those
awards at the date of grant over the requisite service period. The Company uses the Black-Scholes-Merton ("Black-Scholes") option pricing model to determine the fair value of the stock-based
compensation awards. The estimated fair value of stock-based compensation awards on the date of grant is amortized on a straight-line basis over the requisite service period. Stock-based
compensation expense totaled $4 and $5 for the three months ended March 31, 2011 and 2010, respectively. Stock-based compensation plans, related expenses and assumptions used in the
Black-Scholes option pricing are more fully described in Note 10 to these unaudited consolidated financial statements.
Net income attributable to common shares
The following table sets forth the computation of basic and diluted net income per share for the periods indicated:
Three months ended ended March 31,
2011
2010
Pro forma
2011
Basic net income per common share calculation:
Net income
$
2,282
$
1,345
$
2,282
Plus: Redemption of preferred stock at a discount to carrying value
47,478
—
—
Less: Undistributed earnings allocated to participating securities
(2,082
)
(1,176
)
—
Net income attributable to common shareholders—basic
47,678
169
2,282
Basic weighted average common shares
1,311,760
1,521,308
14,376,598
Basic net income per share
$
36.35
$
0.11
$
0.16
Diluted net income per common share calculation:
Net income
$
2,282
$
1,345
$
2,282
Less: Undistributed earnings allocated to participating securities
—
(1,176
)
—
Net income attributable to common shareholders—diluted
2,282
169
2,282
Weighted average shares used to compute basic net income per share
1,311,760
1,521,308
14,376,598
Effect of potentially dilutive securities:
Employee stock options
131,179
—
131,179
Conversion of Preferred stock
14,249,873
—
—
Weighted average shares used to compute diluted net income per share
15,692,812
1,521,308
15,819,537
Diluted net income per share
$
0.15
$
0.11
$
0.14
The Redemption of Preferred stock at a discount to carrying value of $47,478 relates to the repurchase by the Company of 5,339,798 shares of Preferred stock
during the first quarter of 2011 (Note 9).
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Table of Contents
For
the three months ended March 31, 2011, the Company presented diluted net income per common share using the "if-converted method", which results in a more dilutive effect than
using the two-class method, due primarily to the redemption of Preferred stock at a discount described above. For the three months ended March 31, 2010, the Company presented
diluted net income per common share using the two-class method, which results in the same diluted net income per share amount as calculated using the "if-converted" method
during this period.
Diluted
net income per share for the periods presented do not reflect the following potential common shares, as the effect would be antidilutive:
Three months ended March 31,
2011
2010
2011
(Pro forma)
Stock options and warrants
175,758
441,129
175,758
The pro forma net income per share is computed using the weighted-average number of shares of Common stock outstanding and assumes the conversion of all
outstanding shares of Preferred stock into an aggregate of 13,064,838 shares of Common stock upon completion of the Company's planned IPO, as if such conversion had occurred at the beginning of the
period. In addition, pro forma net income per share assumes that the Preferred stock warrants have been automatically converted to Common stock warrants at the beginning of the period. The pro forma
effect of the conversion of the Preferred shares is higher than the Preferred shares outstanding during the period as the Series B-1 Preferred shares convert into Common shares at a ratio of
one to 1.16 upon an IPO. The Company believes the unaudited pro forma net income per share provides material information to investors, as the conversion of the Company's Preferred stock to common
stock is expected to occur upon the closing of an IPO and the Preferred stock warrants will be converted to Common stock warrants upon the closing of an IPO, and therefore the disclosure of pro forma
net income per share thus provides an indication of net income per share that is comparable to what will be reported by the Company as a public company.
(3)   Inventories
The following is a summary of inventories, net:
March 31,
2011
December 31,
2010
Raw materials
$
11,869
$
9,359
Work in progress
10,675
9,707
Finished products
3,853
2,972
Reserve for excess and obsolete inventory
(2,568
)
(2,512
)
Total
$
23,829
$
19,526
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Table of Contents
(4)   Intangible assets
The following table provides information regarding the Company's intangible assets subject to amortization:
March 31, 2011
December 31, 2010
Gross
amount
Accumulated
amortization
Net
amount
Gross
amount
Accumulated
amortization
Net
amount
Technology
$
8,829
$
(5,905
)
$
2,924
$
8,829
$
(5,675
)
$
3,154
Customer relationships
4,826
(1,970
)
2,856
4,826
(1,815
)
3,011
Other
944
(944
)
—
944
(944
)
—
Total
$
14,599
$
(8,819
)
$
5,780
$
14,599
$
(8,434
)
$
6,165
Amortization expense amounted to $386 and $601 for the three months ended March 31, 2011 and 2010, respectively. The estimated aggregate amortization
expense for each of the succeeding years is $848 for the remainder of 2011, $1,079 for 2012, 2013 and 2014; $844 for 2015; and $851 thereafter.
(5)   Fair value measurements
Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or
most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. The Company evaluates the fair value of certain
assets and liabilities using the following fair value hierarchy which ranks the quality and reliability of inputs, or assumptions, used in the determination of fair value:
•
Level 1—quoted prices in active markets for identical assets and liabilities
•
Level 2—inputs other than
Level 1 quoted prices that are directly or indirectly observable
•
Level 3—unobservable inputs that are not corroborated by market data
The
Company evaluates assets and liabilities subject to fair value measurements on a recurring and nonrecurring basis to determine the appropriate level to classify them for each reporting period.
This determination requires significant judgments to be made by the Company. The
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following
table sets forth the Company's assets and liabilities that were measured at fair value as of March 31, 2011 and December 31, 2010, by level within the fair value hierarchy:
Fair value
measurement using
Amounts at
fair value
Level 1
Level 2
Level 3
As of March 31, 2011
Assets
Money market funds
$
1,047
$
1,047
$
—
$
—
Liabilities
Preferred stock warrant liability
$
239
$
—
$
—
$
239
As of December 31, 2010
Assets
Money market funds
$
1,047
$
1,047
$
—
$
—
Liabilities
Preferred stock warrant liability
$
239
$
—
$
—
$
239
The Preferred stock warrants are classified as liabilities in the accompanying balance sheets as the warrant entitles the holder to purchase Preferred stock
which is contingently redeemable. The fair value of the Preferred stock warrant liability is based on Level 3 inputs. The Company's estimate of the fair value of its Preferred stock warrant
liability was determined by utilizing a Black-Scholes based option pricing model, which considered the estimated fair value of these Preferred stock warrants in both an IPO scenario, in which the
warrants have attributes of Common stock warrants and a merger and acquisitions scenario, in which the warrants have attributes of Preferred stock warrants.
As
of March 31, 2011 and December 31, 2010, the fair value of the Preferred stock warrants was $239. For the three-month periods March 31, 2011 and 2010, no charges were recorded
in the unaudited condensed consolidated statements of operations related to the Preferred stock warrants as any change in fair value was de minimis.
(6)   Borrowings
The Company's borrowings consist of the following:
March 31,
2011
December 31,
2010
Credit line
$
10,200
$
10,200
Long-term loan
778
945
Related-party long-term loan
1,446
1,798
Total borrowings
12,424
12,943
Less current portion
(2,001
)
(1,950
)
Less unaccreted discounts
(112
)
(149
)
Noncurrent portion
$
10,311
$
10,844
In May 2008, the Company entered into a loan and security agreement with Silicon Valley Bank that includes a revolving credit facility in the aggregate amount
of up to $14,000 and a term
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loan
commitment of up to $2,000. All of the Company's property, including all cash accounts, outstanding trade receivables, inventory, fixed assets, and any intellectual property serve as collateral.
The credit facility restricts the Company's ability to declare or pay cash dividends on capital stock. The term loan shall be repaid by monthly installment payments of interest only in the first year,
and thereafter by monthly installments of principal and interest payments for a period of 36 months. Interest is payable monthly during the term. In December 2009, the Company amended the
existing loan and security agreement with the bank. The amendment extended the maturity date on the revolving credit facility to December 29, 2011, and reduced the interest rate on this
facility by 1%. The amendment did not change the existing terms or rate of interest and expiration date on the term loan. On June 20, 2011, the Company amended its existing loan and security
agreement with Silicon Valley Bank. The amendment increased the amount of the credit facility to the aggregate amount of up to $20,000. The amendment extended the maturity date on the revolving credit
facility to December 26, 2013, and reduced the interest rate on this facility to Prime Rate plus three-quarters of one percent (4% currently). The Company has classified the outstanding credit
line amount of $10,200 under the loan and security agreement as long-term on its balance sheet as of March 31,
2011 and December 31, 2010 as the Company had the intent and ability to refinance such facility on a long-term basis.
As
part of a previous acquisition in 2005, the Company received a loan from a related party in the amount of $5,633. Interest accrued for the initial 23-month period, with total accrued
interest as of April 1, 2006 and 2007 added to the principal balance of the loan. Principal and interest payments commenced on April 1, 2007, and are payable over 60 equal monthly
installments, through March 1, 2012. The loan was recorded based on its estimated fair value at the date of acquisition, in the amount of $4,640, which represented a discount of $993. This
discount is being accreted to interest expense over the term of the loan.
(7)   Income taxes
The provision for income taxes for the three month periods ended March 31, 2011 and 2010 includes amounts recorded for federal, state and foreign income
taxes. The effective tax rates for the three month periods ended March 31, 2011 and 2010 reflect the Company's estimated annual tax rate on reported income before income tax. The Company
operates in an international environment with operations in locations outside of the United States. Accordingly, the consolidated income tax rate is a composite rate reflecting the Company's income
(losses) and the applicable tax rates in the various locations where the Company operates.
As
a consequence of equity transactions in January 2011, the Company anticipates further limitation on the use of its net operating loss carryforwards. The Company's current estimate is that the total
available net operating loss carryforwards are approximately $19 million for federal purposes and approximately $18 million for state purposes. The limitations could increase upon
completion of an ongoing Section 382 study. As a consequence of these additional limitations on net operating loss carryforwards, the Company does not anticipate having sufficient net operating
loss carryforwards to offset 2011 taxable income, and accordingly, the effective tax rate increased from the prior periods.
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(8)   Business and geographic segment information
The Company currently operates in one business segment, namely, the design, development, and marketing of a full line of optical chips and components for
integration into access, metro, and long haul communication systems. The Company is managed and operated as one business. A single management team that reports to the chief operating decision maker
comprehensively manages the entire business. The Company does not operate any material separate lines of business or separate business entities with respect to its products or product development.
Accordingly, the Company views its business and manages its operations as one reportable segment.
For
the three months end March 31, 2011 and 2010, the Company's revenues, based on shipped to location, were generated in the following geographic regions:
2011
2010
Asia Pacific
$
27,500
$
18,677
North America
4,568
3,067
Europe, Middle East and Rest of World
1,960
1,889
Consolidated total
$
34,028
$
23,633
Revenues generated in North America were principally from customers in the United States.
During
the three months ended March 31, 2011 and 2010, sales from customers in China (including Hong Kong) were $17,751 and $11,522, respectively. During the three months ended March 31,
2011 and 2010, sales from customers in Taiwan were $2,061 and $3,670, respectively. During the three months ended March 31, 2011 and 2010, sales from customers in Malaysia were $5,620 and
$2,069, respectively.
Long-lived
assets by geographic area consist of property and equipment and are as follows:
March 31,
2011
December 31,
2010
United States
$
8,200
$
6,116
Mexico
1,716
1,752
Other
15
469
Consolidated total
$
9,931
$
8,337
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(9)   Capital structure
Composition of share capital:
Authorized
Issued and outstanding
March 31
2011
December 31
2010
March 31
2011
December 31
2010
Shares of $0.001 par value per share:
Common stock
22,084,428
14,807,692
1,294,539
1,485,178
Series A Preferred stock
1,144,520
1,144,520
1,083,833
1,144,520
Series B Preferred stock
2,752,408
2,752,408
2,733,237
2,733,717
Series B-1 Preferred stock
1,450,879
1,450,879
572,722
1,444,578
Series B-2 Preferred stock
282,972
282,972
201,927
282,972
Series B-3 Preferred stock
2,785,585
2,785,585
—
2,785,585
Series C Preferred stock
2,228,666
2,644,873
688,521
2,228,666
Series C-1 Preferred stock
7,692,307
—
7,692,307
—
Total convertible preferred stock
18,337,337
11,061,237
12,972,547
10,620,038
Total
40,421,765
25,868,929
14,267,086
12,105,216
Convertible Preferred stock
On January 13, 2011, the Company authorized the issuance of up to 7,692,307 shares of Series C-1 Preferred stock
(Series C-1), par value $0.001 per share. During January and February 2011, the Company completed four closings of sales of shares of its Series C-1 Preferred
stock, issuing a total of 7,692,307 shares of Series C-1 Preferred stock at a price of $6.50 per share for total gross proceeds of $50,000. These gross proceeds were offset by $438
in issuance costs. The Company used $29,648 of these proceeds to repurchase 5,339,798 shares of the Company's existing Preferred stock and 204,100 shares of Common stock via a formal offer to
repurchase that was extended to all existing holders of Preferred stock. The existing Preferred stock was redeemed for an amount below its carrying value and accordingly, this discount of $47,478 was
recorded as a deemed dividend within stockholders' equity (deficit) and is reflected as a component of net income attributable to common stockholders. In connection with the issuance of the
Series C-1 Preferred stock, certain terms of the Company's Preferred stock were amended as discussed below.
Each
share of Preferred stock is convertible into Common stock, on a one-for-one basis, at each holder's option, or automatically, at any time after the date of issuance until
the earlier of an initial public offering, which yields a minimum of $40,000 in net proceeds to the Company, or upon the affirmative vote of at least a majority of the holders of the Preferred stock.
As of March 31, 2011, all Preferred stock is convertible into Common stock on a one for one basis. In addition, upon the occurrence of an IPO, the Series B-1 Preferred shares convert
into Common shares at a ratio of one to 1.16. The initial conversion price for each series of Preferred stock is stipulated in the Company's certificate of incorporation. Each share of Preferred stock
shall have the right to one vote for each share of Common stock into which such share of Preferred stock could then be converted.
The
holders of the Preferred stock shall be entitled to receive, on an as-converted basis, when and as declared by the Company's board of directors (the "Board of Directors"), out of any
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assets
of the Company legally available therefore, such dividends as may be declared from time to time by the Board of Directors; provided, however, that the Board of Directors may not declare
dividends on the Series A Preferred stock in amounts per share greater than dividends declared per share in respect of the Series B Preferred stock.
In
the event of any liquidation or winding up of the Company, either voluntary or involuntary, the holders of the Series C and C-1 Preferred stock shall be entitled to receive,
prior and in preference to the distribution of any assets of the Company to holders of any other capital stock of the Company, an amount equal to one and two hundred seventy-five one
thousandths times either the $14.36 original Series C Preferred or the $6.50 original Series C-1 Preferred per share purchase price, plus any declared but unpaid dividends
thereon.
After
full payment of the foregoing Series C and C-1 Preferred stock liquidation preference, the holders of the Series B, B-1, B-2 and B-3
Preferred stock shall be entitled to receive, prior and in preference to the distribution of any assets of the Company to holders of the Series A Preferred stock and Common stock, an amount
equal to a range of one and six one hundredths to one and one half times either the $8.02 original Series B, B-1 and B-2 Preferred or the $14.36 original
Series B-3 Preferred per share purchase price, plus any declared but unpaid dividends thereon.
After
full payment of the foregoing Series C and C-1 Preferred stock and Series B, B-1, B-2 and B-3 Preferred stock liquidation
preferences, the holders of the Series A Preferred stock shall be entitled to receive, prior and in preference to the distribution of any assets of the Company to holders of Common stock, an
amount equal to eight hundred seventy-five one thousandths times the $8.02 original Series A Preferred per share purchase price, plus any declared but unpaid dividends thereon.
After
full payment of each of the foregoing liquidation preferences, the remaining assets of the Company will be distributed among the holders of Preferred stock and Common stock on an
as-converted to Common stock basis.
The
Preferred Stock is subject to redemption under certain "deemed liquidation" events, as defined, and as such, the Preferred Stock is considered contingently redeemable for financial accounting
purposes.
(10) Stock-based compensation
The Company's 1999 Incentive Stock Option Plan was established for the granting of options to officers, management, other key employees, and consultants of up
to 2,243,913 shares of the Company's Common stock. The options granted generally vest over four years and will expire ten years subsequent to the date of grant. Any options that are canceled or
forfeited before expiration become available for future grant. As of March 31, 2011, an aggregate of 1,756,625 shares of the Company are still available for future grant.
The
Company offers both nonqualified options and incentive stock options and they both have a ten-year term. Employee awards typically vest 25% a year.
The
Company has recognized compensation expense of $4 and $5 during the three months ended March 31, 2011 and 2010, respectively, based on the estimated grant-date fair value using
the Black-Scholes valuation model. For these awards, the Company has recognized
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compensation
expense using a straight-line amortization method. The Company calculates stock-based compensation expense based on awards that are ultimately expected to vest. Stock-based
compensation for three months ended March 31, 2011 and 2010 has been reduced for estimated forfeitures. When estimating forfeitures, the Company considers voluntary termination behaviors as
well as trends of actual option forfeitures.
Valuation assumptions
The Company did not grant any options for the three months ended March 31, 2011.
The
following table summarizes activity under the 1999 Plan for the three months ended March 31, 2011:
Number of
shares
Weighted-
average
exercise
price
Weighted-
average
remaining
contractual
term (years)
Outstanding as of December 31, 2010
404,001
$
4.73
Granted
—
—
—
Exercised
(13,461
)
2.38
—
Forfeited
(10,907
)
34.55
—
Outstanding as of March 31, 2011
379,633
$
4.80
4.75
Exercisable at March 31, 2011
352,739
$
5.07
4.46
Vested and expected to vest at March 31, 2011
352,739
$
5.07
4.46
(11) Subsequent events
On April 26, 2011, the Company issued approximately 1.3 million stock options to directors, officers and employees of the Company at an exercise
price of $2.37 per share. These options were issued out of the 1999 Plan and primarily vest over a four-year term.
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Table of Contents
Shares
Common Stock
Prospectus
Joint Book-Running Managers
J.P. Morgan
Barclays Capital
Oppenheimer & Co.
Raymond James
Roth Capital Partners
,
2011
Table of Contents
Part II
Information not required in the prospectus
Item 13.    Other expenses of issuance and distribution.
Estimated expenses, other than underwriting discounts and commissions, payable by the Registrant in connection with the sale of the
common stock being registered under this registration statement are as follows:
SEC registration fee
$11,610
FINRA filing fee
$10,500
NASDAQ Global Select Market initial listing fee
$25,000
Listing fee
*
Printing and engraving expenses
*
Legal fees and expenses
*
Accounting fees and expenses
*
Blue Sky fees and expenses (including legal fees)
*
Transfer agent and registrar fees and expenses
*
Miscellaneous
*
Total
*
*      To be filed by amendment.
Item 14.    Indemnification of directors and officers.
On completion of this offering, the Registrant's amended and restated certificate of incorporation will contain provisions that
eliminate, to the maximum extent permitted by the General Corporation Law of the State of Delaware, the personal liability of the Registrant's directors and executive officers for monetary damages for
breach of their fiduciary duties as directors or officers. The Registrant's amended and restated certificate of incorporation and bylaws will provide that the Registrant must indemnify its directors
and executive officers and may indemnify its employees and other agents to the fullest extent permitted by the General Corporation Law of the State of Delaware.
Sections 145
and 102(b)(7) of the General Corporation Law of the State of Delaware provide that a corporation may indemnify any person made a party to an action by reason of the fact that he or
she was a director, executive officer, employee or agent of the corporation or is or was serving at the request of a corporation against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her in connection with such action if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not
opposed to, the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful, except that, in the case
of an action by or in right of the corporation, no indemnification may generally be made in respect of any claim as to which such person is adjudged to be liable to the corporation.
The
Registrant has entered into indemnification agreements with its directors and executive officers, in addition to the indemnification provided for in its amended and restated certificate
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of
incorporation and bylaws, and intends to enter into indemnification agreements with any new directors and executive officers in the future.
The
Registrant has purchased and intend to maintain insurance on behalf of each and any person who is or was a director or officer of the Registrant against any loss arising from any claim asserted
against him or her and incurred by him or her in any such capacity, subject to certain exclusions.
The
Underwriting Agreement (Exhibit 1.1 hereto) provides for indemnification by the underwriters of the Registrant and its executive officers and directors, and by the Registrant of the
underwriters, for certain liabilities, including liabilities arising under the Securities Act.
See
also the undertakings set out in response to Item 17 herein.
Item 15.    Recent sales of unregistered securities.
During the last three years, we sold the following unregistered securities:
(1)
From
January 1, 2008 through December 31, 2010, we sold and issued to our employees, consultants or former service providers an aggregate of
37,234 shares of common stock pursuant to option exercises under the 1999 Stock Option Plan, as amended, at prices ranging from $0.052 to $4.16 per share for an aggregate purchase price of $25,928.06.
(2)
From
January 1, 2008 through December 31, 2010, we sold and issued to our employees, consultants or former service providers an aggregate of
46 shares of common stock pursuant to option exercises under the 2007 Stock Plan at $4.16 per share for an aggregate purchase price of $194.88.
(3)
On
July 24, 2008 and September 22, 2008, we sold and issued 2,228,666 shares of Series C Preferred Stock to 37 accredited investors, at
$14.36 per share, for a total consideration of $32,003,074. 1,540,145 of such Series C Preferred Stock was repurchased from certain investors who elected to participate in our Offer to
Repurchase which closed on January 13, 2011.
(4)
From
January 13, 2011 through February 10, 2011, we sold and issued 7,692,307 shares of Series C-1 Preferred Stock to nine accredited
investors, at $6.50 per share, for a total consideration of $49,999,996.
None
of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering, and the registrant believes that each transaction was exempt from the
registration requirements of the Securities Act in reliance on the following exemptions:
•
with respect to the transactions described in paragraphs (1) and (2), Rule 701 promulgated under the
Securities Act as transactions pursuant to a compensatory benefit plan approved by the registrant's Board of Directors; and
•
with respect to the transactions described in paragraphs (3), Section 4(2) of the Securities Act, or
Rule 506 of Regulation D promulgated thereunder, as transactions by an issuer not involving a public offering. Each recipient of the securities in these transactions represented his or
her intention to acquire the securities for investment only and not with a view to, or
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Table of Contents
for
resale in connection with, any distribution thereof, and appropriate legends were affixed to the share certificates issued in each such transaction. In each case, the recipient received adequate
information about the registrant or had adequate access, through his or her relationship with the registrant, to information about the registrant.
There
were no underwriters employed in connection with any of the transactions set forth in Item 15.
Item 16.    Exhibits and financial statement schedules.
(a)
Exhibits.
The
exhibits to the registration statement are listed in the Exhibit Index to this registration statement and are incorporated herein by reference.
(b)
Financial
Statement Schedule.
All
financial statement schedules have been omitted because they are not applicable or the required information is included in the consolidated financial statements or notes thereto.
Item 17.    Undertakings.
Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is, therefore, unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted
by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933, as amended, and will be
governed by the final adjudication of such issue.
We
hereby undertake that:
(a)
We
will provide to the underwriters at the closing as specified in the underwriting agreement certificates in such denominations and registered in such
names as required by the underwriters to permit prompt delivery to each purchaser.
(b)
For
purposes of determining any liability under the Securities Act of 1933, as amended, the information omitted from a form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in the form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act of 1933, as amended, shall be deemed to be part of this registration statement as of the time it was declared effective.
(c)
For
the purpose of determining any liability under the Securities Act of 1933, as amended, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide
offering thereof.
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Table of Contents
Signatures
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of Breinigsville, State of Pennsylvania, on August 12, 2011.
CYOPTICS, INC.
By:
/s/ ETTORE J. CORINGRATO, JR.
Ettore J. Coringrato, Jr.
President and Chief Executive Officer
Power of attorney
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Ettore J. Coringrato, Jr. and
Matthew C. Riley, jointly and severally, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign the Registration Statement on Form S-1 of CyOptics, Inc. and any or all amendments (including post-effective
amendments) thereto and any new registration statement with respect to the offering contemplated thereby filed pursuant to Rule 462(b) of the Securities Act, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises hereby ratifying and confirming all that said
attorneys-in-fact and agents, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated below:
Signature
Title
Date
/s/ ETTORE J. CORINGRATO, JR.
Ettore J. Coringrato, Jr.
Director, President and Chief Executive Officer
August 12, 2011
/s/ MATTHEW C. RILEY
Matthew C. Riley
Chief Financial Officer
August 12, 2011
/s/ EREL N. MARGALIT
Erel N. Margalit
Chairman of the board of directors
August 9, 2011
II-4
Table of Contents
Signature
Title
Date
/s/ MARK DENINO
Mark DeNino
Director
August 12, 2011
/s/ ROBERT FINZI
Robert Finzi
Director
August 12, 2011
/s/ JOHN PILITSIS
John Pilitsis
Director
August 12, 2011
/s/ SEAN SEBASTIAN
Sean Sebastian
Director
August 12, 2011
/s/ NOAH D. YAGO
Noah D. Yago
Director
August 12, 2011
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Table of Contents
Exhibit index
Exhibit number
Exhibit title
1.1*
Form of Underwriting Agreement.
3.1
Amended and Restated Certificate of Incorporation of the Registrant, to be effective on the date this Registration Statement is declared effective by the Securities and Exchange Commission.
3.2*
Form of Amended and Restated Certificate of Incorporation of the Registrant, to be effective upon the completion of this offering.
3.3*
Form of Amended and Restated Bylaws of the Registrant to be effective upon the completion of this offering.
4.1*
Form of Common Stock certificate of the Registrant.
4.2
2011 Amended and Restated Investor Rights Agreement dated as of January 13, 2011 by and between the Registrant and certain stockholders, and amendments thereto.
5.1*
Opinion of Goodwin Procter LLP
10.1+*
Form of Indemnification Agreement between the Registrant and each of its directors and executive officers.
10.2+
1999 Stock Option Plan and forms of agreements thereunder.
10.3+
2007 Stock Plan and form of agreement thereunder.
10.4+*
2011 Equity Incentive Plan and forms of agreements thereunder.
10.5+
Employment Agreement dated as of January 1, 2005 by and between the Registrant and Ettore J. Coringrato, Jr.
10.6
Loan and Security Agreement dated as of May 21, 2008 by and between the Registrant and Silicon Valley Bank, as amended.
10.7
Export-Import Bank Loan and Security Agreement dated as of May 21, 2008 by and between the Registrant and Silicon Valley Bank, as amended.
10.8
Growth Capital Facility Loan and Security Agreement dated as of May 21, 2008 by and between the Registrant and Silicon Valley Bank.
10.9
Promissory Note dated as of May 21, 2008 issued by Silicon Valley Bank to the Registrant.
10.10
Intellectual Property Security Agreement dated as of May 21, 2008 by and between the Registrant and Silicon Valley Bank, as amended.
10.11
Borrower Agreement under the Export-Import Bank of the United States Working Capital Guarantee Program dated as of May 21, 2008 by and between the Registrant and Silicon Valley Bank.
II-6
Table of Contents
Exhibit number
Exhibit title
10.12
Lease Agreement dated as of April 29, 2005 by and between TriQuint Optoelectronics, Inc. and the Registrant and related amendments and renewals.
10.13
Lease Agreement dated as of May 26, 2001 by and between the Registrant and 47.07 Associates L.P. and related modifications.
21.1*
Subsidiaries of the Registrant.
23.1
Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.
23.2*
Consent of Goodwin Procter LLP (contained in Exhibit 5.1)
24.1
Power of Attorney (contained in the signature page to this registration statement.)
+      Indicates
management contract or compensatory plan or arrangement
*      To
be filed by amendment
II-7